he pricing of petroleum products plays a crucial role in shaping the overall costs and inflationary trends in any developing economy. The pressing question for Pakistan’s vulnerable economy currently is about the choice between indigenising or importing. The strategy or approach to tackling this challenge is of great importance.

Pakistan’s energy crisis is multifaceted. It is marked by a widening gap between demand and supply, which exerts immense pressure on the foreign exchange reserves and impedes economic growth. Projections of a 3.5-fold surge in the energy import bill over the next two decades underscore the severity of the situation. Immediate policy interventions are essential to alleviate this crisis and steer the country towards a sustainable energy future.

Pakistan possesses substantial indigenous energy resources, including substantial onshore reserves and significant gas potential, offering a potentially promising solution to reverse the current production decline and achieve energy self-sufficiency. However, unlocking this potential requires a substantial financial commitment estimated at $25-30 billion. Attracting foreign direct investment, therefore, is paramount. This necessitates comprehensive policy reforms to create a conducive environment for investment in the exploration and production sector.

Comprehensive policy reforms, encompassing regulatory frameworks, fiscal incentives, and ease of doing business are essential to attract both domestic and foreign investments in the energy sector. Collaboration between the public and private sectors is key for sustainable energy development in Pakistan. The E&P industry is poised to play a major role in harnessing indigenous energy resources and attracting requisite investment.

Pakistan’s E&P sector is undergoing a transformative phase, characterised by significant advancements such as, exploration drilling initiatives, and anticipated production additions. Recent discoveries have highlighted the untapped hydrocarbon potential. Basin studies, policy incentives and industry collaboration are poised to attract substantial investments and ensure energy security.

In recent years, Pakistan has made significant progress, marked by five successful bid rounds, resulting in the award of 31 blocks. Seismic acquisition efforts have been robust, covering 9,903 L Km of 2D data and 4,449 Sq Km of 3D data.

Exploration drilling has seen considerable activity, with 72 wells drilled. Additionally, production additions have been noticeable, with gas production reaching approximately 350 MMCFD and oil/ condensate production averaging around 17,300 bpd. These achievements underscore Pakistan’s potential.

A significant milestone in Pakistan’s energy journey is the inauguration of the Sachal Gas Processing Complex in the Mari Field. Commencing production in March 2022, the facility swiftly ramped up to deliver 110 MMCFD of gas. The Wali (Bettani) Gas Processing Plant began operations in June 2023, reaching a capacity of 14 MMCFD of gas and 1,000 bpd of condensate.

The Shewa Early Production Facility in North Waziristan holds promise for the future, with expectations of generating 70 MMCFD of gas by March 2024, contingent upon the completion of a pipeline.

Pakistan’s strategic vision for its energy sector hinges on strategic reforms, global collaboration and concerted efforts by all stakeholders. It needs to harness its indigenous energy potential, attract investments and implementing forward-looking policies. 

In line with fostering growth in the E&P sector, Pakistan has initiated several key initiatives. One such endeavour is the Pakistan Offshore Benchmarking Study, spearheaded by Wood Mackenzie. This study evaluates the attractiveness of Pakistan’s offshore fiscal regime relative to 15 peer countries, spanning shallow, deep and ultra-deep waters.

Sponsored by a consortium of four E&P companies, led by Mari Petroleum Company Limited, the findings of this study were presented to the Ministry of Energy-Petroleum Division on January 28. The recommendations put forth by Wood Mackenzie are poised to significantly aid the ministry in optimising fiscal terms ahead of the launch of offshore bidding rounds.

The Ministry of Energy’s (Petroleum Division) comprehensive roadmap shows a commitment to attracting investment, enhancing exploration activities and ensuring energy security in Pakistan. The approval of the groundbreaking recommendations by the Council of Common Interests aims at incentivizing and streamlining exploration activities and investment aimed at reducing dependence on imports, enhance energy security and improve the balance of payments. Sustained efforts are needed in areas such as investment facilitation, debt management, technological advancement, infrastructure development and policy reforms to achieve long-term success in the energy sector.

Meanwhile, several areas demand immediate attention to propel Pakistan towards energy independence and sustainable development. These include conducting comprehensive exploration and research, simplifying regulatory frameworks for investment facilitation, developing a structured debt management plan, investing in technological advancement, prioritising infrastructure development and reviewing existing policies to foster a supportive regulatory environment.

Pakistan’s energy sector transformation includes exploring alternative fuels for transportation. Sustainable aviation fuel and biofuels offer promising avenues to decrease the aviation industry’s environmental impact. SAF is a bio-derived fuel compatible with existing aircraft engines. It significantly reduces greenhouse gas emissions compared to conventional jet fuel. Biofuels, derived from renewable sources like plant oils and agricultural waste, can be blended with conventional fuels for a lower carbon footprint.

As a member of the International Civil Aviation Organisation, Pakistan is actively involved in its Sustainable Action Plan. The plan encourages member states to develop strategies to reduce carbon emissions from the aviation sector. The inclusion of SAF development and utilisation as part of Pakistan’s national plan demonstrates its commitment to international environmental goals.

While Pakistan’s SAF and biofuel industries are in the nascent stage, there’s potential for growth. The government can incentivise production and utilisation of these fuels through tax breaks, subsidies and blending mandates. Additionally, collaboration between airlines, fuel producers and research institutions is crucial for developing a robust domestic biofuel supply chain.

Pakistan’s strategic vision for its energy sector hinges on strategic reforms, global collaboration and concerted efforts from all stakeholders. By harnessing its indigenous energy potential, attracting investments, and implementing forward-looking policies, Pakistan can overcome its energy challenges and pave the way for a brighter, self-reliant future. With unwavering commitment and proactive measures, Pakistan can achieve energy independence and sustainable development.

The writer has served at the Energy Conservation Fund-NEECA. He can be reached at energyexpert.pk@gmail.com