Gas exploration

Published September 24, 2017

THE country’s gas reserves are dwindling and our reliance on imported gas is growing at a rapid pace. For almost two decades, it has been known that the present reserves of the vital fuel that accounts for almost half our primary energy requirements would start declining from 2010 onwards, but little was done to avert the shortages that are now a reality. Imported gas can help tide over the growing gas deficits, but eventually action needs to be taken to ramp up exploration and production from domestic fields, since Pakistan still has a strong inventory of inferred reserves. The petroleum policy of 2012 introduced some incentives for exploration and production, hiking up the well-head price in three zones to $6 and above. It had some effect in increasing exploration in fields that are already active though in an advanced stage of decline. Unfortunately, little headway was made in spurring exploration in areas where the untapped potential lies. The future of our gas security is in new discoveries. And that is where a large part of the government’s efforts in energy should focus.

It is with this background in mind that one must approach the new proposal doing the rounds for a separate regulator for the upstream gas sector. The idea to separate the various segments of the sector for regulatory purposes is sound, since the requirements and operational dynamics of each segment are very different from each other. It should now be understood that price incentives alone will not be enough to spur exploration. We have to move beyond price incentives. However, the objections of the provinces need to be taken seriously before advancing the proposal, especially considering the history of their resentment to federal control of the gas sector. The idea to bifurcate the sector for regulatory purposes is a novel one, and it should only be advanced with proper consensus because the provinces are already feeling alienated over their place in the new LNG regime that is emerging in the country. Security is another important concern in upstream exploration, since many of the inferred reserves lie in affected areas where access is a problem, though there is little that the regulator can do about this. With domestic gas in decline, ramping up exploration is a crucial priority, and novel approaches to bringing this about are welcome.

Published in Dawn, September 24th, 2017

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