Offshore oil and gas

Published February 10, 2013

SOME time ago over a dinner in Rome an Italian friend had introduced me to Enrio Marcella, a marine scientist from Naples.

Enrio had a charming demeanour and with his sunburnt face and inquisitive eyes it was not difficult for me to visualise him lugging his fishing gear and adjusting scientific instruments on board his catamaran as it left the rugged Amalfi coast heading into a sun-drenched Mediterranean.

During our conversation he developed a keen interest not just in visiting Pakistan but bringing his boat too. It wasn’t exactly a catamaran from what he explained because his exploration vessel was in fact fitted with sonar and acoustic equipment which could carry out seismic investigations to map and estimate resource potential deep below the ocean floor.

This data could then be turned into intellectual property and using various subscriber models, revenue could be generated.

Of course it takes a lot of money to run the vessel up and down an 1100-kilometre coastline and where the coastal water extends some 200 nautical miles (370km) into Pakistan’s exclusive economic zone.

He told me he’d be happy if in the end a slice of the intellectual property could be given to him as his royalty. He was confident that the initiative would spur the development of Pakistan’s offshore resources leading to possible discoveries of offshore oil and gas.

It was much later that I learnt that a clunky, old Russian vessel with primitive equipment while on a mapping expedition of the Arabian Sea in the 1960s had discovered the Bombay High. This single oilfield, located 160km offshore from Mumbai today produces 14 per cent of India’s total requirement of crude oil.

The neighbouring Indian state of Gujarat has abundant oil and gas reserves, as has Sindh including underneath Badin, almost touching the ocean. With Gujarat having recently struck offshore gas, the prospect of a gas find offshore from Sindh is bright. The region is also close to refineries, pipelines, consumption centres around Karachi, power plants and planned LNG terminals.

And whilst Pakistan can boast an impressive success rate for new discovery — 30 per cent of all exploration wells that have been dug and have yielded oil or gas — very little offshore exploration has been done.

Even then the dozen or so wells that have been drilled have not yielded anything in commercial quantities. The seismic investigation data that Enrio was proposing to generate would not only spur offshore exploration activity but also potentially improve the success rate.

The problem with the royalty formula was that Enrio would not receive any form of remuneration for quite some time.

On the other hand he would need some cash flow to sustain operations for the months and years he would spend charting our territorial waters. To partly finance that he could access research grants from the European Union and for that a nod from the Pakistan government would greatly help. For the remainder he suggested that if he could be granted a fishing licence he could then bridge the remaining gap.

Now I am aware of the controversy that surrounds deep sea fishing and yet in Pakistan the production levels are well within sustainable yields. It is another matter that the sector is not properly regulated. When regulations are not properly enforced some of the practices of the foreign operators result in collateral damage to marine life.

He would get a head start if he could get his hands on any oceanographic information on fish zones and on ocean topography which refers to the highs and lows of the seabed inside Pakistani territorial waters.

Now usually governments, including ours, have legislation and methods to evaluate and process such — unsolicited — proposals received from educational, commercial or nonprofit entities.

So on returning to Pakistan I forwarded Enrio’s suggestions to the Board of Investment that operates as a ‘one window’ facility and is supposed to process proposals on fast track. To give it the necessary clout it is kept under the prime minister’s secretariat. On a lighter note, I have overheard investors scoff at this, terming it one more window.

I do not know what happened after that but let me conjecture — because it will offer a glimpse into the underlying reasons behind the investors’ cynicism as well as the governmental paralysis and the inability of the Pakistani state to function at any level. And before we start pointing figures at the ruling coalition it is my contention that the following would have happened regardless of who the political masters may have been.

A file was opened and “parawise [sic] noting” begun, from one office to another, routed to the Ministry of Science and Technology, from there to the Ministry of Ports and Shipping, and yes, because the proposal includes deep sea fishing, that approval would need to come from the Ministry of Food, Agriculture and Livestock (MinFAL).

If its functions haven’t been devolved already then MinFAL would have wanted to bring on board the two provincial governments (Sindh and Balochistan) with their own layers of bureaucracy.

Then of course the defence ministry would have to be consulted because ‘strategic’ offshore resources (even if presently nonexistent) are involved. The ministry of course would not decide without taking the Navy, the Coast Guards and the Maritime Security Agency into confidence and of course the intelligence agencies because high-tech equipment is involved.

And all this even before any commercial or legal evaluation has begun.

Round and round and round, there is nowhere for the buck to stop; where every government office is a post office and every official is either a gatekeeper or a postman.

Endless activity, reams of paper, meetings, committees, task forces but nothing moves on the ground, and that, dear reader, is the story of how Pakistan is run.

The writer is an international business strategist and entrepreneur.

moazzamhusain@yahoo.com.au

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