To sort out issues in the gas sector: Update regulatory changes and foreign investment.

• Author: Nisar, Ahsan

Byline: Ahsan Nisar

The policy for oil and gas exploration and production could be described as confused at best. Although the government has eliminated the quota system and is preparing a draft in order to separate the functions of policymaking, regulation and administration of the exploration and production (EandP) sector, still it would be an uphill task to streamline the policies and procedures prevalent since last few decades. Simplification and elimination of redundant steps for getting approval to start drilling activities in potential areas will attract further investment.

The petroleum sector has been divided into five key areas, which included oil and gas, EandP, refining and marketing, pipelines and gas distribution, liquefied petroleum gas (LPG) and liquefied natural gas (LNG). Oil and gas exploration and production companies could not find any major exploration site since long and the country's existing hydrocarbon reserves are depleting gradually. In this situation, the importance of imported LNG, Liquefied Petroleum Gas (LPG) and trans-country gas pipeline projects with Turkmenistan, Russia and Iran could not be emphasized further. The government had decided to encourage the private sector to make investment in the LNG sector.

The Petroleum Division of Energy Ministry is working on a strategy to further add around 400 million cubic feet per day (MMCFD) Liquefied Natural Gas (LNG) in distribution network of the two state companies, SNGPL and SSGC, by end of this year. Currently, around 1200 MMCFD LNG was being added in the distribution network to meet the country's energy needs. The capacity of Floating Storage and Re-gasification Units (FSRUs) is also being increased. Pakistan's two LNG terminals currently have 1.2 billion cubic feet per day of capacity, and a third expected to come on line next year will add 600 million cubic feet per day.

Pakistan is chronically short of gas for power production and to supply manufacturers such as fertilizer makers, crippling the country's economy. Five groups selected to build LNG terminals are Tabeer Energy, a unit of Mitsubishi Corp; Exxon and Energas; Trafigura Group and Pakistan GasPort; Shell and Engro Corp; and Gunvor...