A PERCEPTION OF PAKISTAN

Transcription

1 A PERCEPTION OF PAKISTAN Asia Upstream Singapore Peter Cockcroft

2 The Perils of Talking Late in the Day

3 Section I - Exploration History NWFP Peshawar Islamabad Dhodak Faisalabad Lahore Quetta Zarghun Pirkoh Loti Sui Multan Punjab Iran Balochistan Qadirpur Mari Miano Sawan Zamzama Kadanwari Bhit Badhra India Arabian Sea Karachi Hyderabad Badin Sindh km

4 Natural Gas Picture of Pakistan 93

5 Natural Gas Picture of Pakistan Existing Fields Field Name Operator Remaining Btu/Cf Reserves TCF Prod. Bcf Mari MGCL Uch OGDCL Qadirpur OGDCL Sui PPL Northern Feilds Various Kandhkot PPL Pirkoh OGDCL Badin UTP Dhodak OGDCL Panjpi OGDCL 0.50 Nil 330 Loti OGDCL Kadanwari Lasmo TOTAL New Fields Field Name Operator Reserves TCF Sales Btu/Cf Status Mari deep MGCL 2.5 Nil 600 Appraisal Zamzama BHP / GSA/MoU Bhit Lasmo GSA Sui Deep PPL 1.0 N/A 908 Producing Sawan OMV LoI Badhra Lasmo 0.5 Nil 800 Appraisal Miano OMV GSA Zarghun PSP 0.4 Nil 900 Appraisal Sara Tullow GSA TOTAL

6 Gas Development in Pakistan Ultimate Recovery of Gas in Pakistan Qadirpur Sui Deep Mari Deep Bhit Zamzama Sawan 30 Pirkoh 25 Mari 20 TCF 15 Sui on Production Not on Production No. of Exploration wells drilled

7 Section II - Market for Gas NWFP Peshawar Islamabad Dhodak Faisalabad Lahore Quetta Zarghun Pirkoh Loti Sui Multan Punjab Iran Balochistan Qadirpur Mari Miano Sawan Zamzama Kadanwari Bhit Badhra India Arabian Sea Karachi Hyderabad Badin Sindh km

8 Percentage of Gas in Total Energy Mix PAKISTAN 25% Fertilizer 23% Domestic / Commercial Power Industrial USA 32% %of Total Energy Mix 20% Power 15% Other Domestic / Commercial 33% Industrial 22% 30% %of Total Energy Mix

9 Percentage of Gas in Total Energy Mix India Thailand Industry 8% 10% Sponge Iron 8% Other Fertilizer 43% Petrochems 2% Power Power 39% 90% 7.74 % of Total Energy Mix % of Total Energy Mix Indonesia Australia Domestic 8% 16% Industry Other 1% 5% LPG Fertilizer Power 32% Commercial 6% Other 2% 13% Domestic Power Industry 19% 38% 60% % of Total Energy Mix Source: WOOD MACKENZIE 1999 & BP % of Total Energy Mix

10 Oil and Gas in the Energy Mix 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% % of total energy supply 10.0% 0.0% Oil Gas Source: Energy Year Book

11 Primary Energy Usage in Pakistan 50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Oil Gas Coal Electricity Source: Energy Year Book

12 Gas Consumption By Sector 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Domestic/Commercial Industrial Fertilizer Power Source: Energy Year Book

13 Cost Difference - Gas Vs. Other Fuels Fuel RS / MMBtu US$/MMBtu Natural Gas Domestic Commercial Industrial LPG Kerosene Furnace Oil Fire Wood Coal Percentage of Gas Prices Vs Other Fuels % age Domestic Sector LPG 22 % Kerosene 23 % Furnace Oil 31 % Fire Wood 60 % Coal 53 % Commercial Sector LPG 45 % Kerosene 46 % Furnace Oil 61 % Industry & Power (Excluding Fertilizer Feedstock) LPG 40 % Kerosene 41 % Furnace Oil 54 % Source: Government of Pakistan

14 Natural Gas Demand and Supply in Pakistan 9, , , , MMCF/D 5, , , , , Years Low Demand High Demand High Supply Base Supply

15 National Power Capacity Demand - Low Demand/High Hydel MW 35,000 30,000 25,000 20,000 15,000 10,000 5, Existing Hydel New Hydel Coal & Nuclear Existing Thermal New Thermal Power Demand Reserve Margin

16 National Power Capacity Demand - High Demand/Low Hydel 60,000 50,000 40,000 MW 30,000 20,000 10, Existing Hydel New Hydel Coal & Nuclear Existing Thermal New Thermal Power Demand Reserve Margin

17 Section III - Natural Gas Infrastructure Field of Dreams Build it - and they will come!

18 Gas Infrastructure Development in Pakistan , , K.M ,500 MMCF/D 1, Total Pipeline Length Average Gas Production

19 Existing Natural Gas Infrastructure Govt. Augmentation & Expansion Plan MM US $ SNGPL 460 SNGPL Length (km) 2000 Capacity (MMCFD) 2005 Capacity (MMCFD)* a. Sui to Bhong ,300 b. Qadirpur to Bhong c. Bhong to Multan ,600 d. Multan to Faisalabad ,100 * Assuming GOP augmentation and expansion Plan Peshawar SSGC Length (km) 2000 Capacity (MMCFD)* 2005 Capacity (MMCFD)** a. Indus Right Bank Pipeline b. Indus Left Bank Pipeline (60) 110 c. Kadanwari Pipeline * Numbers in parentheses denote estimated derating of line ** Assuming GOP augmentation and expansion Plan NWFP Islamabad SSGC 90 Lahore TOTAL 550 Dhodak Faisalabad PSP Estimate of required Investment by 2005 MM US $ SNGPL 304 SSGC 173 TOTAL 477 Iran Balochistan Quetta Zarghun Loti Sui Pirkoh Qadirpur Mari Miano Sawan Zamzama Kadanwari Bhit Badhra Multan Punjab India Arabian Sea Karachi Hyderabad Badin Sindh km

20 Potential Private Pipeline Projects Demand Centre MMCFD in 2005 High Low Multan Area Power Plants HUBCO Power Plant Peshawar NWFP Islamabad Bin-Qasim Power Plant Dhodak Faisalabad Lahore Quetta Zarghun Pirkoh Loti Sui Multan Punjab Iran Balochistan Qadirpur Mari Miano Sawan Zamzama Kadanwari Bhit Badhra India Arabian Sea Karachi Hyderabad Badin Sindh km

21 Section IV - Policy Framework

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23 Pakistan - IPP and Petroleum Initiatives 1985 First IPP Policy on cost plus basis Resulted in only one project (HUBCO) Took more than a decade to develop 1994 IPP Policy Streamlined Bureaucracy: One window operation Bulk supply tariff (6.5 cents first ten years) Enthusiastic response (30,000MW applications, 7000 MW letters of support) 1994 Petroleum Policy Increased incentive to explore gas with price of % of crude oil imports Government guaranteed price only if president nominated gas Interpreted as guaranteed price for sale to any govt. entity Option of direct sales from certain areas

24 Pakistan - Major Energy Sector Reforms Initiatives 1992 Strategic plan for power sector Commercialize/unbundle utility into generation, transmission and distribution Establish Independent regulation (NEPRA) Privatization Generation competition Direct sales to Bulk consumers Plans to Restructure Gas Sector Privatize integrated gas utilities Establish independent gas regulatory Authority.(GRA) Hint of Open Access What happened Renegotiations of Power and Gas Tariffs NEPRA established 1997 but slow development WAPDA legally unbundled into 12 companies 1998 but no real effect GRA established 1997, lapsed, finally enacted 1999 but none in place No progress in privatization except one generation plant in 1996.

25 Renegotiations of IPP Power Contracts

26 Erosion of the 1994 Petroleum Policy Government has effectively renegotiated wellhead prices New pricing formula Floor and Gradual ceiling unattractive to petroleum companies Government fiat rather than negotiation Pricing point Govt. wants industry to pay for transportation to the existing network Policy price vs. New Pricing Policy" Government wants partial rupee payment to foreign companies Other difficult issues: Royalty, etc.

27 Efforts of the Present Government Establishment of a Policy Cell in the Ministry of Petroleum and Natural Resources Establishment of GRA and Approval of PRA formation Incorporation of Government Holdings Company Increase in Natural Gas Consumer Prices Gas Market Un/Rebundling - Approved in Principal by Cabinet Oil and Gas Privatization: Privatization of LPG Units & Govt. Holdings underway $ 400 Million Infrastructure Investment Approved Most of Recently Discovered Fields have signed GSAs / LOI or MOUs Oil Sector Deregulation Off Shore Policy Ready - On Shore Policy on the Cards

28 Section V Where do Petroleum Companies go from here?

29 Exploration by Foreign Companies No. of Exploration Wells Drilled (on-shore) by Foreign Companies No. of Exploration Licenses granted to Foreign Companies No. of Wells Local Foreign Year Year * * July Feb 2001

30 Suggestions Sovereign Guarantees required until real free market develops Ten year comprehensive Energy Plan, followed by a Gas and Infrastructure Plan. Agreed by Successive Governments New Petroleum Policies Energy Ministry to cover all aspects of Market Chain Clarify Regulatory Structure and Implement Satisfactory Transition Period. Removal of Uncertainties for Third Party Sales Medium and Long Term Sector Deregulation Investment Local Investment Constraint - Need to bring back the money Foreign Investment still required

31 Future Scenarios Relatively Stable, Well-meaning Government Investment, particularly foreign investment, takes time to recover Temporary Power and Gas Over Capacity undermines impetus to reform Crisis Country awakens to looming shortages of Power and Gas Likely to remain in Economic and Financial squeeze Return to Democratic setup? -- Return to political instability Possible Results on a New Crisis Galvanize Meandering Reform Process New IPP Cycle - Desperately offering unrealistically attractive terms without real reforms Autarchy Obsession (Pakistan for Pakistanis) General Economic Malaise leads to political turmoil.

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