Escolar Documentos
Profissional Documentos
Cultura Documentos
2009-2010
(Analysis)
By
Muhammad Danish(FA07-BB-0051)
For
20 Nov 2009
Respected Sir,
As you requested 5-10-2009, here is our report on OIL and GAS industry of
Pakistan.
.
This report includes the details of the world issues and the complete data of the
most scare resource of the world that is oil and gas ,and also having 50 year
history of Pakistan and current volumes of oil and gas sector both in comparison
with power sector and their consumption and production difference, there
backward and forward linkages and industries depend on this sector, SWOT
analysis and remedies of this sector.
We are certain that the report will be of immense help to enable you to evaluate
the situation finally and to encourage the Student’s Morale .It was great
experience which is accomplished by the hilarious work behind it .
Yours Sincerely
Muhammad Danish
Mohsin Hassan
This report is a case Oil and Gas Industry which has been prepared as a part of
the course requirement for Analysis of Pakistani Industry .The material
compiled and presented in this report is a result of comprehensive work.
This report has proved to be a great experience. For this, I would like to thank
our course instructor “Mr. Afaq Ali Khan” for providing us with the opportunity,
as well as his guidance in the light of his vast experience.
THANKS
1:OIL
2:NATURAL GAS
3:COAL
Pakistan has a great potential of Oil and Gas reserves many foreign
countries interested to invest in this sector.
Almost 5000 different products are in the forward linkage use for the
consumption of domestic and industrial purposes.
Pakistan has the 5th largest coal field in “Thar desert” a substitute for
energy formation.
In Automobile gasoline, petroleum, diesel, cng, and lpg are used, on the
other hand aero planes need jet fuel. Gas is needed in our Domestic and
industrial purposes
Oil was formed from the remains of animals and plants that lived millions of years
ago in a marine (water) environment before the dinosaurs. Over the years, the
remains were covered by layers of mud. Heat and pressure from these layers
helped the remains turn into what we today call crude oil . The word "petroleum"
means "rock oil" or "oil from the earth."
IMPORTANCE
An Economy depend on crude Oil if we see the history .We analyze crude
oil is the basic issue of global conflicts.
80 % of future reserves of (oil, gas & coal) are in Eurasia (Iran, Iraq, Saudi
Arabia and countries near khaleej etc)..
• The Chinese recognized early the importance and potential use of oil and
gas around 500 B.C.
The total contribution of gas distribution in GDP during 2001-02 was 3.6 per cent
including electricity. Separately oil and gas are not indicated in the official
documents but their contribution is estimated at around 1 per cent. The indirect
contribution of oil and gas, however, is enormous. Investment on electricity and
gas is Rs. 48 billion, constituting 10 per cent of the total. In the oil and gas sector,
an investment of Rs. 16 billion or over 3 per cent of the total is estimated. It
accounts for over 80% of total energy supplies with an average growth rate of 6%
a year.
Oil and gas as a priority sector (beside other three sectors e.g. agriculture, small
and medium industry and information technology), primarily motivated by the
reduction in import of oil. Over the last couple of years, substantial progress was
made in the sector like commissioning of PARCO, White Oil Pipeline (from
Karachi to Mahmoodkot), oil and gas prospecting and consequently policy
measures such as deregulation were undertaken. Between 1990-91 and 2000-
01, the crude oil imports rose from 28,178,000 barrels to 52,505,000 barrels or
by 6.4 per cent a year. Compared to this, the increase in import of petroleum
products was 8.8 per cent, from 4.3 million tones to 10 million tones, over the
same period. In value term, the import doubled from $1.7 billion to $3.4 billion or
by an annual 7.2 per cent. In total imports, the share soared from 22 percent to
32 percent. During 2001-02 oil imports fell 17 per cent to $2.8 billion due to both
decline in prices and in quantity, primarily because of world slump following 9/11
event as well as the recessionary trend in Pakistan as the growth rate was
restrained to only 3.6 per cent below the target of 4 per cent. Nonetheless, the
import of crude continued to surge from 6.85 million tones to 7.1 million tones or
by over 4 per cent during 2001-02 over the preceding year, but below the
average of 6.4 per cent over the period 1990-91 to 2000-01. While the import of
refined oil has remained stagnant t at 10 million tones over the last few years,
that of crude has continued to surge mainly because of commissioning of
PARCO during 2000-01. During 2001-02, the price of crude has averaged $172.4
per tone ($22.99/barrel), which is unlikely to persist during the current fiscal year
2002-03 as in the first quarter (July-September 2003) the average price of crude
went up to $194 per tone ($25.87/barrel), 12.5 per cent higher than the average
of last year. During the first quarter of 2002-03, the share of oil was 25.5 per cent
of total imports compared to 29.1 percent in 2001-02. By the end of February
2003, the price of oil has jumped to $40 per barrel, 55 per cent higher than the
first quarter. The value of oil import during the year, estimated at $3 billion (on
The heavy oil bill is stoked by the emergence of power projects dependent upon
imported furnace oil and more recently by decline in hydroelectricity generation
as a result of drought prompting further reliance on thermal power generation.
One of the reasons of recent stagnation in refined oil import is the commissioning
in February 2001 of PakArab Refinery Company (PARCO) with a capacity of 4.5
million tones a year which increased the country's refining capacity by 40 per
cent to 11per cent.
OIL
Average Daily employment in numbers=11790
GAS
Average Daily employment in numbers=20854
1996-97
21270 697762
2000-01 875308
21084
Crude oil and refined products are significant imports. Their value varies with
internal demand and changes in the world oil price. In FY 1982, oil products
accounted for around 30 percent of Pakistan's imports, falling to an annual
average of 15 percent in FY 1987 to FY 1990, rising to over 21 percent in FY
1991, but dropping back to 15 percent in FY 1992.
OIL
Pakistan's first oil field was discovered in the late 1952 in Balochistan near a
giant gas field at Sui in Balochistan. It is 122.67 sq. km. In area and covers the
sandy Datta Formation in Pakistan. Pakistan Petroleum Ltd. (PPL) and Pakistan
Oilfields Ltd. explored and began drilling these field with Soviet help in 1961 and
activity began in Toot during 1964.
Since the late 1980s, Pakistan has not experienced many new oil fields coming
online. As a result, oil production has remained fairly flat, at around 60,000
barrels per day (bbl/d).
The Toot area is one of the oldest oil producing regions in Pakistan with the first
oil well was drilled in 1964. It is located in the Potwar region, Punjab Province,
which is near the capital city of Islamabad. It has grown steadily since then,
producing both oil and, to a lesser degree, natural gas
Gas
Pakistan's first gas field was discovered in the late 1952 near a giant gas field at
Sui in Balochistan. The Toot oil and gas field was discovered in the early 1960's
the Islamabad in the Punjab. Some promising natural gas fields have also been
found near the Punjab Toot oilfield, in Sindh province and off the coastline of
Pakistan; but contain smaller reserves.
1948 - 49:
Establishment of Pakistan Petroleum Limited (PPL) and Pakistan Oilfields
Limited (POL) for exploration and production was occurred.
1952:
1952 Discovery of Pakistan's Largest Gas Reserves at Sui by PPL.
1954 :
The Government of Pakistan executed agreements with Standard-
Vacuum Oil Company.
1955:
Hunt International oil Company.
1956:
Shell oil Company.
1957:
Sun oil Company.
1954-59:
Further discoveries of natural gas were made as a result of these activities
during 1954-59, which included ,
Despite Significant new gas discoveries during this period, the exploration
activities registered a downward trend because of lack of oil discoveries.
1961:
Oil and gas Development Company Limited (OGDCL) in September 1961.
1965:
OGDCL's first success was the small gas discovery at Sari Singh (Sindh).
1968:
POL discovered oil at Meyal (Potwar, Punjab).
1970:
1970 - Gas at Hundi (Sindh).
1972:
On 2nd January,1972.Zulfiqar Ali Bhutto, after the fall of East Pakistan,
announced the nationalization of all major industries, including iron and
steel, heavy engineering, heavy electricals, petrochemicals, cement and
public utilities.
1973:
1973 Kothar (Sindh).
1975:
American oil Company (AMOCO) discovered a small gas accumulation
at Jandran (Balochistan). 1975 - Gas / condensate at Dhodak (Punjab).
1976:
BP came to Pakistan after the modification of the petroleum regulations in
1976 .
1978 :
1978 PPL Crude Oil discovery at Adhi field.
1981:
When BP (formerly known as Union Texas Petroleum (UTP), a USA
Company), discovered oil at Khaskeli (Sindh) in the Lower Goru
Sandstone.
1984:
The US-based Occidental Petroleum who discovered a major oil field at
Dhurnal in 1984.
1987:
1987 Start of Commercial Production From Kandhkot Gas Field.
1989:
OGDCL made very large gas discovery at Middle Indus Basin (Qadirpur).
1993:
1993 - OMV of Austria at Miano.
1995:
In may 1995 formation of Pakistan Petroleum Exploration and Production
Companies Association (PPEPCA).
1997:
1998:
1998 - ENI discovered gas at Bhit .
1999 -2002:
1999 - BHP at Zamzama (Kirthar foldbelt and foredeep).
2002 - 28th March Oil and Gas Regulatory Authority (OGRA) has been
set up.
2007:
3 discoveries;
“The government will take benefit from the expertise of local and
foreign oil and gas exploration companies to meet the growing energy
demand in the country.”
He said the government has set a target of drilling 100 new oil and gas
exploratory wells during the year 2009 to meet the country’s growing
energy demand. He said presently about 45 rigs are producing and
supplying oil and gas across the country. The E&P companies would
pay 12.5 per cent royalty and 40 per cent income tax to the
government. The disputed biddable Gas Price Gradient (GPG) factor
had been eliminated in the new policy, he added.
The discount during Extended Well Test (EWT) phase had been
reduced from 15 per cent to 10 per cent to encourage the companies
for early production. To fulfill the Corporate Social Responsibility (CSR)
for local population of the area, several steps had been taken. 50 per
cent job quota would be ensured for local population from where
discovery had been made. The amount of social welfare obligation in
the exploration phase had been razed from $25,000 to $30,000 in each
zone. He claimed that the new Petroleum Policy 2009 would attract
more foreign investment in the sector despite having law and order
problem.
He said the government has set a target of drilling 100 new oil and gas
exploratory wells during the year 2009 to meet country’s growing
Giving a brief account of oil and gas production he said presently about
45 rigs are producing and supplying oil and gas across the country. He
informed that the work in 25 blocks of Balochistan was held up for
want of security clearance but with hectic efforts the government
succeeded and obtained clearance in 16 blocks. He said the seismic
survey of Dhaddar Block in Balochistan was completed in 2004 but the
law and order situation the well could not be drilled.
Now after taking the stakeholders in to confidence, the well had been
spud on March 29 2009. The adviser informed that Pakistan Petroleum
Ltd (PPL) had entered into joint venture with a Yemeni company for
undertaking exploration work in Yemen. Further a MoU had been
executed with ENI, Italian company, to further boost exploration and
production activities particularly in offshore.
About downstream oil sector, the adviser said when the oil prices
peaked, the ex-refinery pricing formula was revised to stabilize the
prices and bring relief to the customer.
Now when the prices have dropped, resultantly the refineries were
financially unmanageable to run.
About IPI gas pipeline project, Dr Asim stated that the ECC had
approved the project in principle and details would be given
separately, after a final decision had been taken by the cabinet very
shortly. The work on TAPI was also in progress, he maintained.
MISSION STATEMENT
INTRODUCTION
• Oil and Gas Regulatory Authority (OGRA) has been set up under the Oil
and Gas Regulatory Authority ordinance to foster competition, increase
private investment and ownership in the midstream and downstream
petroleum industry, protect the public interest while respecting individual
rights and provide effective and efficient regulations
• The Federal Government has now assigned functions for the regulation of
activities relating to LPG (Liquefied Petroleum Gas) and CNG
(Compressed Natural Gas) sectors in the country to the Oil and Gas
Regulatory Authority and has designated the OGRA as an Authority in
place of the Director General (Gas) of the Ministry of Petroleum and
Natural Resources.
• All properties and works done by the Natural Gas Regulatory Authority
(NGRA) were transferred to and protected under the OGRA Ordinance.
• No licensee shall charge for any regulated activity any fixed or variable
amount in excess of the relevant tariff the Authority may, from time to time,
approve and publicized by the licensee in the print and electronic media or
provide service on terms and conditions other than those approved by the
Authority from time to time in accordance with the Natural Gas Regulatory
Authority (Tariff) Rules, 2002.
• No company shall, without first obtaining a license for the purpose from
the Authority, undertake or cause to be undertaken under any agreement,
the construction and operation of any works.
In the eighties the rising curve of activities and the unprecedented surge in the E&P
activities necessitated frequent coordination among those engaged in this sector
and the need to exchange ideas on a variety of subjects of common interest. After
consultation between the concerned organizations a need was felt to establish an
umbrella organization which, while playing an advisory role, could safeguard the
interest of its member companies.
The few E&P companies operating in Pakistan at that time undertook to form the
umbrella organization.
In 1988 it was originally conceived under the name and style of Pakistan
Exploration and Production Companies Advisory Committee (PEPCAC) as a
representative body of local and foreign companies engaged in exploration and
production of petroleum. Its establishment was an important Landmark in the
history of petroleum industry of Pakistan.
Company Overview
The pioneer of the natural gas industry in the country, Pakistan Petroleum
Limited (PPL) has been a key player in the energy sector since the
1950s.The company has managed to sustain its positioning due to its robust
business programme and persistent efforts to optimize production from
existing fields and new discoveries, currently contributing about 25 percent
of the country’s total natural gas supplies in addition to crude oil, Natural
Gas Liquid and Liquefied Petroleum Gas.
The company operates five producing fields across the country at Sui
(Pakistan’s largest gas field), Adhi, Kandkhot, Chachar and Mazarani and
holds working interest in seven partner-operated producing fields. These are
Qadirpur, the second largest gas field, Miano, Sawan, Block 22 (Hasan,
Sadiq and Khanpur) and Tal Block (Manzalai).
Over the years, PPL has developed a reliable foundation and infrastructure
for providing clean, safe energy through sustainable exploitation of
indigenous natural resources while adhering to the highest standards of
health and safety and constraining the ecological footprint of its operations.
As a result, Monitoring and Inspection and Design & Construction
departments, Mazarani and Kandhkot gas fields, Adhi field, Sui Field Gas
Compressor Station, Sui Production, Sui Field Engineering and Purification
Plant were certified for ISO 9001:2000 Quality Management System.
As such, the company believes in value addition for all its stakeholders and
remains committed to a transparent financial and corporate regime. This
factor has been recognized by the prestigious Management Association of
Pakistan that selected PPL as the recipient of its 25th and 26th Corporate
Excellence Awards.
At PPL, the health and safety of employees and sustainable use of natural
resources are key requirements of operational excellence. Every effort is
made to enhance Health, Safety and Environment awareness among staff
and other stakeholders. This commitment is evident from the landmark
certification of Mazarani Gas Field, Sui Production, Sui Field Gas Compressor
Station and Adhi Field for ISO 14001 and OHSAS 18001 certification.
Besides, PPL was also awarded the Annual Environmental Excellence Award
in 2006, 2008 and 2009 by the National Forum for Environment and Health.
PPL has played a significant role as a responsible corporate citizen since the
inception of its commercial activities in Sui by establishing Model School Sui
in 1957 for children of workers and local communities. Over time, the
outreach of PPL’s Corporate Social Responsibility (CSR) portfolio has gone
well beyond obligatory requirements. In 2001, PPL Welfare Trust was
founded to provide geographical and thematic diversity within its CSR
initiatives, which include education, health, infrastructure development and
socio-economic uplift of disadvantaged communities, particularly those living
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The members of OCAC currently comprise of the country’s five Refineries (Pak-
Arab Refinery Limited PARCO, National Refinery Limited NRL, Pakistan Refinery
Limited PRL, Attock Refinery Limited ARL and Bosicor Pakistan Limited BPL),
Ten Oil Marketing Companies (Pakistan State Oil Co. Limited PSO, Shell
Pakistan Limited SPL, Chevron Pakistan Limited CPL, Attock Petroleum Limited
APL, Total Parco Pakistan Limited TPPL, Admore Gas (Pvt) Limited AGPL,
Hascombe Storage Limited HSL, Askar Oil Services (Pvt) Limited ASOPL,
Overseas Oil Trading Co. (Pvt) Limited OOTCL, Bakri Trading Company
Pakistan (Pvt) Limited BTCPL) and one Pipeline Transportation Company (Pak-
Arab Pipeline Co. Limited PAPCO). New entrants in the refining sector are
coming in the country and the number of member companies is likely to increase.
The oil industry has seen considerable change over the last 30 years. From an
era of nationalization and governmental controls in the 1970s, the Industry is
being gradually deregulated. Pakistan is deficit in crude oil, diesel and fuel oil.
The Government has given permission to bulk consumers and traders to import
fuel oil while bulk consumers have also been given permission to import diesel.
Health Safety and Environment (HSE) is a very important aspect within the oil
industry. There is also a growing awareness within the public that had hitherto
not been present. To coordinate implementation of HSE standards within the oil
industry, OCAC has set up a separate sub-committee for this purpose. This
provides a forum to member companies who, even whilst competing in the
market place, cooperate in HSE matters. This provides an opportunity to the
members in sharing information and expertise, which in turn helps them in safe
operations.
OCAC SUB-COMMITTEES
The Oil and gas sector, due to major reforms introduced during the last two and
half years, has so far benefited the economy to the tune of Rs.25 Billion and in
US$420.88 millions.
Crude Oil
Petroleum
Product
million US$
Total 83 57 25 1
GAS:
S# Company Total Wells (Province wise) Production
OIL
Average Daily employment in numbers=11790
GAS
Average Daily employment in numbers=20854
1996-97
21270 697762
2000-01 875308
21084
1985 35 159.67
1986 42 165.75
1987 42 180.43
1988 45 194.2
1989 48 205.63
1990 62 220.05
1991 62 221.06
1994 55 282.17
1996 55 326.9
1997 57 333.04
1999 53 368.5
2003 60 336.6
2004 62 326.85
PROVINCE SHARE %
SINDH 56.36 %
PUNJAB 31.91 %
NWFP 11.619 %
BALOUCHISTAN 0.1 %
PAKISTAN 100 %
DRILLING ACTIVITIES:
AGRICULTURE 0.7 %
TRANSPORTATION 51.1 %
POWER 39.4 %
M. Tons
POLYPROPYLENE 15,000
POLYETHYLENE 200,000
Pricing also depends upon the type of consumer according to demand and
consumption such as,
• Domestic consumers.
• Commercial consumers.
in consumer items for direct commercial sale like cafes, bakeries, milk-shops, tea
cinemas, clubs, theaters and private offices, clinics, maternity homes, etc.
• Industrial consumers.
in consumer items for direct commercial sale like cafes, bakeries, milk-shops, tea
cinemas, clubs, theaters and private offices, clinics, maternity homes, etc.
INTRODUCTION
The oil and gas sector has a considerable impact on the economy – the sector attracts
by far the highest level of foreign direct investments in the country, and raises significant
tax income for the government. At the same time, high imports of crude oil and
petroleum products affect the balance of payments adversely. In addition, the annual
economic cost of guarantees and subsidies in the sector is significant as it is estimated
at about Rs. 33 billion (in the form of direct and implicit subsidies, and foregone taxes).
Substantial progress has been made in the restructuring and reform of the oil and gas
sectors, deregulation of prices, and privatization of selected assets. The reforms have
enhanced transparency, making decision makers aware of the various aspects of the
business.
Michael Porter developed a technique for analyzing industrial structure and its
competitive forces known as Porter’s five forces model. This model describes an
enterprise in relation to its economic environment. The competitive position of an
industrial enterprise depends on five competitive forces.
1. Industrial rivalry.
2. Potential substitutes.
3. Bargaining power of buyers.
4. Bargaining power of suppliers.
5. Threats of new entrants.
All five forces together provide a good overview of the attractiveness of the oil and gas
industry, and can help to estimate its further profit potential.
INDUSTRIAL RIVALRY
This describes the intensity of competition between existing firms in an industry. In case
of oil and gas industry the major competing companies are National refinery limited
(NRL), Pak-Arab refinery limited (PARCO) and Pakistan refinery limited (PRL). They are
competing with each other on the basis of their products and pricing making it heard for
any new rivals to enter. The major competing products of National refinery limited are
motor gasoline (Rs22.61), kerosene (Rs28.75), JP1 (Rs27.27), JP4 (Rs24.66), High
speed diesel (Rs29.99) Light diesel oil (Rs27.44) Furnace oil (17576 RS / MT) LPG
(17000 RS / MT) Naphtha (for export). Pak-Arab refinery limited maintaining the
products such as furnace oil (35795 Rs/ton), LPG (45,878.10 Rs/ton), Sulpher
(12,157.80 Rs\ton). In Pakistan refinery limited the products are motor spirit (48.55
Rs\liter), kerosene (31.60 Rs\liter), JP1 (58.53 Rs/liter), JP8 (61.30 Rs\liter), HSD (64.43
Rs\liter), furnace oil (36165 RS / MT), LPG (39809 RS / MT). The rivalry is intense
Oil and gas have barriers to entry which are more than the normal equilibrium
adjustments that oil and gas markets typically make i.e. when the earnings
increases it is expected that the additional firms will enter in the oil and gas
markets to take the advantage of high profit levels and when the income
decreases the some of the firms exit the market restoring the market equilibrium.
On the other hand raising prices or expectation that future prices of oil and gas
will rise encourage rivals to enter in the market. But if the firms individually keep
the prices low as a strategy to prevent potential entrants from entering the market
it can be an established entry deterring pricing barrier. Barriers to enter in oil and
gas industry are arising from following sources which are Government created
barriers (taxes, fright margin, petroleum development levy etc), patents and
proprietarily knowledge to restrict entry into an industry(ideas and knowledge that
provide competitive advantages treated as private property) , asset specificity that
inhibits entry in to an industry (asset specification to the extent to which the firm’s
asset can be utilize to produce a different product) and organizational internal
economies of scale (cost efficiency level of production).
Chanda, Tando Alam, Thora, Sono, Bobi, Pasakhi, Lashari, Toot, Chak Nurang,
Fimkasar, Dakhni, Sadkal, Rajian, Missa Kiswal, Kal, Dhodak, Missan, Loti,
Qadirpur, Nandpur, Uch, Daru, Kunnar, Palli and Pirkoh.
o Net profit after tax stood at Rs.31,782 million resulting in earning per share
7.39 as Rs.24,093 million and earning per share 5.60 respectively during
last year.
Hycarbex Inc.(USA)
BHP billiton.(AUSTRALIA)
Eni Pakistan Ltd.(ITALY) MOL Oil & Gas Company B.V. (HUNGARY)
SOURCE:MINISTRY OF PETROLEUM
NEW PROJECTS:
Khalifa Coastal refinery (KCR) near the coastal area of balouchistan completed
in half quarter of 2011 have the capacity of producing 35 to 45 million barrels per
year of HSD.
PARC0-PEARL 1.3%
The Company has an authorized capital of Rs. 10 billion of which Rs 6.7 billion is
issued and fully paid up. The Government owns the majority of the shares which
is presently over 70%.
GLOBAL OVERVIEW:
The Organization of the Petroleum Exporting Countries (OPEC)
These were OPEC’s formative years, with the Organization, which had started
life as a group of five oil-producing, developing countries, seeking to assert its
Member Countries’ legitimate rights in an international oil market dominated by
the ‘Seven Sisters’ multinational companies. Activities were generally of a low-
profile nature, as OPEC set out its objectives, established its Secretariat, which
moved from Geneva to Vienna in 1965, adopted resolutions and engaged in
negotiations with the companies. Membership grew to ten during the decade.
The 1970s
Arab oil embargo in 1973 and the outbreak of the Iranian Revolution in 1979, but
fed by fundamental imbalances in the market; both resulted in oil prices rising
steeply. The first Summit of OPEC Sovereigns and Heads of State was held in
Algiers in March 1975. OPEC acquired its 11th Member, Nigeria, in 1971.
The 1980s
The 1990s
A fourth pricing crisis was averted at the beginning of the decade, on the
outbreak of hostilities in the Middle East, when a sudden steep rise in prices on
panic-stricken markets was moderated by output increases from OPEC
Members. Prices then remained relatively stable until 1998, when there was a
collapse, in the wake of the economic downturn in South-East Asia. Collective
action by OPEC and some leading non-OPEC producers brought about a
recovery. As the decade ended, there was a spate of mega-mergers among the
major international oil companies in an industry that was experiencing major
OECD
ORIGINIZATION OF ECONOMIC CO- OPERATION AND DEVELOPMENT
The forerunner of OECD was the Organization for European Economic Co-
operation (OEEC). OEEC was formed in 1947 to administer American and
Canadian aid under the Marshall Plan for the reconstruction of Europe after
World War II. Its headquarters were established at the Château de la Muette in
Paris in 1949.
OECD took over from OEEC in 1961. Since then, its mission has been to help its
member countries to achieve sustainable economic growth and employment and
to raise the standard of living in member countries while maintaining financial
stability – all this in order to contribute to the development of the world economy.
OECD's 30 members
In May 2007, OECD countries agreed to invite Chile, Estonia, Israel, Russia and
Slovenia to open discussions for membership of the Organization and offered
enhanced engagement, with a view to possible membership, to Brazil, China,
India, Indonesia and South Africa. The approval of so-called "road maps" in last
December marks the start of accession talks with Chile, Estonia, Israel, Russia
and Slovenia.
Oozing trouble
Crude World: The Violent Twilight of Oil. By Peter Maass. Knopf; 288 pages; $27.
Allen Lane; £20. Buy from Amazon.com, Amazon.co.uk
THE story of oil has many villains: greedy oil-company executives, rapacious dictators,
shady middlemen and the like. And it has many victims: a warming atmosphere, sullied
soils and water, and fragile societies. It is tempting to draw a straight line from one to the
other—the bad guys cause the damage. It is a selling point of “Crude World”, a new book
by Peter Maass, an American journalist, that it avoids this easy connecting of the dots.
So the villain of the piece is neither oilman nor despot but oil itself. The stuff oozes out
of Mr Maass’s portraits of countries afflicted, never blessed, with the presence of oil. It
fills the streams in Ecuador where Chevron, an oil concessionaire, is accused of dumping
its wastewater during a long period of drilling. Natural gas flares give the sky a hellish
glow in Mr Maass’s dispatch from Nigeria, in which he canoes around with the “king” of
a band of Niger Delta locals fighting Shell, the biggest oil company in the region.
The recurring tragedy of oil is that it produces wealth but not what is needed most in poor
countries: jobs. Once wells or refineries are built, they take few men to run them. So the
money just pours out of the ground, much of it hauled off by foreign companies, and the
rest sucked up by greedy regimes. Equatorial Guinea’s tiny population and recent oil
discovery should make it one of the richer countries in the world. Its capital, Malabo, has
a direct flight to Houston. Yet most of its people remain miserably poor while its
cartoonish and bloodthirsty ruler gives himself a presidential Boeing 737 with gold-
plated bathroom fixtures.
Oil companies are not particularly greedy; after all, as Mr Maass notes, Apple does not
exactly give away its iPods, but sells them at the highest price it can. He admires the
cunning and devotion of the oilmen he meets. But, from his perspective, few businesses
are as unrewarding, in the sense of providing jobs or useful infrastructure, as the oily one.
For many poor countries oil is the villainCrude World: The Violent Twilight of Oil. By
Peter Maass. Knopf; 288 pages; $27. Allen Lane; GBP20. Buy from Amazon.com,
Amazon.co.uk THE story of oil has many villains: greedy oil-company executives,
rapacious dictators, shady middlemen and the like. And it has many victims: a warming
atmosphere, sullied soils and water, and fragile societies. It is tempting to draw a straight
line from one to the other—the bad guys cause the damage. It is a selling point of “Crude
World”, a new book by Peter Maass, an American journalist, that it avoids this easy
connecting of the dots. ...
Natural gas obtained from soil ,alone or along with petroleum it have low
molecular weight.
Oxygen 0.02 %
Nitrogen 0-5 %
Uses:
o Power generation.
o Automobiles.
o Residential use.
Pakistan has become the largest CNG consuming country among Natural
Gas Vehicle (NGV) countries.
There are about 2,068 established CNG stations in the country and
approximately 1.7 million vehicles are using CNG.
A large number of vehicles auto ,cars and buses) have been and are still
being converted to CNG.
The Govt. has made program to convert vehicles on to CNG which are
commonly used by general public (it includes buses, mini-buses and
wagons) in Karachi ,Hyderabad, Lahore, Faisalabad, Peshawar, Quetta
and Islamabad/Rawalpindi. This program will have a major impact on air
quality of urban areas and will improve health standards as well.
LPG supplies have been increasing at annual rate of 12.6 percent during
the last few years with supply of 648,572 Metric Ton in 2006-07.
The PGPL (Philips Gas Pipe line Company) has signed an Implementation
Agreement with Port Qasim Authority for establishment of an off-shore
LNG Import Terminal at Port Qasim, Karachi having a capacity of 3 million
tones/annum (400 mmcfd).
PROVINCE %
SINDH 70.7 %
PUNJAB 4.52 %
NWFP 1.84 %
BALOUCHISTAN 22.5 %
PAKISTAN 100 %
The consumption of petroleum products, gas, electricity and coal during the first
nine months (July-March 2007-08) of the current fiscal year increased by 10.1
percent, 2.8 percent, 5.7 percent and 11.9 percent, respectively over the
corresponding period of last year.
Petroleum Products
During the first nine months of the outgoing fiscal year 2007-08, the consumption
of petroleum products increased by 10.1 percent. The consumption of petroleum
products declined by 29.7 percent in industry, but registered an increase in
household, agriculture, transport, and power sector by 2.5 percent, 29.9 percent,
19 percent and 10.4 percent, respectively (See Table-15.2). Overall, the
consumption of petroleum products has been declining in the household sector
well as surge in their prices. On the other hand ,consumption in the agriculture
sector shows a massive increase due to higher demand in this sector and less
availability of electricity in the last two years in particular. Similarly, consumption
in the power sector increased due to non-availability of alternative sources of
energy. The annual growth in the consumption of petroleum products by major
sectors and their relative shares during
1997-98 to 2007-08.
The transport sector is the largest user of petroleum products accounting for 51.1
percent of consumption, on average, followed by power sector (39.4 percent),
industry (6.5 percent), agriculture (0.7 percent) and household (0.6percent).
Natural gas has been gaining immense substance around the world due to its
quality of being a cleaner fuel compared to coal and oil. Pakistan depends
heavily on its natural gas reserves for different sectors of the economy. Because
of its importance as an alternative and relatively cheaper fuel, the share of gas in
total energy is on the rise.
Table 15.4 depicts the annual change in the consumption of gas by various users
during 1997- 98 to 2007 08. During July-March 2007-08, the consumption of gas
in transport sector increased by 27.8 percent, while household consumption grew
by 11.6 percent followed by fertilizer (3.5 percent). However, the consumption of
gas declined in commercial sector (-7.1 percent), cement (-5.1 percent) and
power sectors (-1.2 percent).
The balance recoverable reserves of crude oil in the country as on January 1st
2008 have been estimated at 339 million barrels. The average crude oil
production during July- March 2007-08 was 70,166 barrels per day as against
66,485 barrels per day during the corresponding period of last year, showing an
increase of 5.54 percent. During the period under review, 31,378 (44.72 percent)
barrels per day were produced in Northern region and 38,787 (55.28 percent)
barrels per day in Southern region, as against 28,507 (42.87 percent) barrels and
37,978 (57.12 percent) barrels produced per day, respectively in the same period
last year. During July-March 2007-08, production of crude oil has increased by
10.1 percent from Northern region whereas production increased in Southern
region by 2.1 percent, in comparison to the production in the same period of last
year, resulting in an increase of 5.54 percent oil production in the country. The
company wise details of production of crude oil during July- March 2007-08 and
corresponding period of the last fiscal year is given in Table 15.10.
As on January 1st 2008, the balance recoverable natural gas reserves have
been estimated at 31.266 trillion cubic feet. Consumption of natural gas from July
2007- March 2008 is anticipated to increase from 3,352 million cubic feet per day
POWER 33.5 %
FERTILIZER 15.6 %
CEMENT INDUSTRY 0.9 %
GENERAL INDUSTRY 23.8 %
DOMESTIC (HOUSE HOLDS) 18.1 %
Gasoline (petrol)
Kerosene oil
Jet fuel
Lubrications (Adhesives)
Sulphur diesel
Hi-octane
Fertilizers
Grease
Turpentine
Ink industry
Plastic industry
Paint industry
Automobile industry
• The government does not invite private tenders for the transportation of
crude oil and requires all crude oil to be transported by the state-owned
Pakistan National Shipping Corporation. Though a member of the WTO,
Pakistan has yet to agree to the WTO Government Procurement
agreement.
STRENGTH:
Sector attracts by far the highest level of foreign direct investments and
raises significant tax income for the government.
Pakistan is among the most gas dependent economies of the world. About
52 TCF of gas reserves have been discovered of which 19 TCF have
already been produced.
Government sets target to drill 100 new oil, gas exploration wells in year
2009.
OGDCL and PPL is being expanded to other countries like Yemen, Iraq,
Nigeria and Sudan.
Two gas distribution companies (SNGPL) and (SSGPL) investing over 200
million US $ a year to increase the capacity of existing distribution network
of 80,000 kilometers.
WEAKNESS:
In Pakistan demand of oil and gas is higher then the supply it only meets
the 18 % of domestic demand.
There are total 7 refineries working in Pakistan still not fulfill the local
demand of oil and gas.
OPPORTUNITIES:
The government has demonstrated a strong political commitment and
taken a number of steps to deregulate the oil and gas sector in keeping
with the overall vision of a liberalized economy. This will be resulting in a
number of structural changes and contributed to a somewhat competitive
market and generally improved quality of service.
Thar field is the 5th largest (185 billion tones) coal field in the world but
has remained un-exploited. The reserves could be used in the production
of electricity to overcome power shortage.
960 Appraisal wells of oil and gas estimate by ministry of petroleum in the
country which shows how much potential in the country.
Ministry has so far awarded 119 exploration licenses to public and private
sector.
RECOMMENDATION:
Government takes steps to improve Hydel power, solar power & Wind
power generation. It supplies the power at cheaper rate to both industrial
and residential sector. It shows high reduction on import of crude oil.