DESPITE massive investment being made by both the local and the foreign oil companies, Pakistan’s hunt for sustainable oil reserves still appear to be an elusive goal but extensive deposits of natural gas, instead of oil, have an added charm for the prospective investors and worth the costs.

Over the year,under the new oil policy about $1 billion has been spent on oil exploration and more funds are in the pipelines for the development of gas fields and for putting them into the mainstream.

According to oil industry sources,proven gas reserves have touched the high mark of above 20 trillian cubic feet,which will put Pakistan on the map of the prominent world gas producers after the developments of new finds.

But despite massive investment,crude oil production did not cross the highest mark of 64,000bpd so far in 1990-91 and is fluctuating between 54,000 and 64,000bpd since then.

Pakistan annual demand for the petroleum products is estimated to increase to 20 million tonnes from the current 17 million tonnes during the next couple of years but the share of the local production is not expected to rise from the existing about four percent.

The significant feature is,however, that Pakistan is now both an exporter and importer of oil products after the mid-country Mahmoodkot Refinery went into commercial production late last year. The Badin oil belt in southern Sindh,which has in its fold large gas reserves and potohar areas in the central Punjab may not have reached the saturation point in terms of oil and gas and may have the potential to spring pleasant surprises to the foreign investors.

Owing to relative peace,the venue for oil hunt has now been shifted to Balochistan where initial surveys indicate that explorers may hit the target not in a very distant future.

“They may not be close to the main underground oil flowing from the central Asian states via Afghanistan and Iran but the Afghan war has brought in focus many hidden facts about the possible future oil war”,some oil experts predict.

While an extensive search for new oil finds is on,Pakistan’s import bill on this account has dropped sharply owing to worldwide recession on the world oil markets amid falling demand and larger OPEC production.

The steep decline in petroleum prices over the last four months since Sept 11,2001 could work both ways of the economy and the corporates,notably the marketing giants including the Pakistan State Oil and Shell Pakistan but it is difficult to assess its cumulative impact on the both at the yearend.

According to oil market analysts petroleum products’ prices have declined by 11 to 27 percent over the last four months in response to falling world prices, crude oil being the major casuality.This will cut the import bill to $1 billion from $1.3 billion a year ago.

“Switching over of a vast number of industrial units and vehicles to cheaper sources of energy ,notably gas, is claimed to be the major factor behind the falling oil imports”,they said.

Crude oil was,however,an exception as its imports showed a considerable increase to meet the processiong demand of the newly set up Pak-Arab Refinery,which in turn markets motor spirit and other oil products to meet the local demand .That saves on foreign exchange earnings.

The import bill showed a modest rise since the US-led coaliation started bombing in Afghanistan and the country’s oil refineries were obliged to build up strategic reserves in case the war prolongs and there is a pressure on local supplies and the consequent price flare-up.

The interesting feature is that the cut in oil import bill is not the direct result of higher local production of the indigenous crude oil from the Badin oil belt but because of wide use of natural gas.

The foreign companies engaged in oil exploration, both in Sindh and Balochistan, have found more gas reserves than the curde oil,bulk of which is now being processed to be used by the industry.

The following table shows the production figures for the last five years.