THE new petroleum policy announced by the government is a bold step and long overdue. It ought to be clear enough to all by now that new supplies of vital fuels like petroleum and gas cannot be arranged without substantial reform in pricing. So petroleum adviser Asim Hussain’s announcement of the government’s second Petroleum Exploration and Production Policy is a welcome and unexpected step. It is particularly good to see a detailed pricing policy for offshore exploration and incentives for the first offshore discoveries as well as provision for a ‘production-sharing agreement’. The adviser took the opportunity afforded by the press conference to also talk about his efforts to advance the TAPI pipeline project for which a road show is being prepared, and about the prospects of importing liquefied natural gas from India via the Wagah border. Even though he didn’t specifically mention it, the Iran-Pakistan pipeline also deserves its place at the table. It is unfortunate that this project has been sucked into extreme geopolitical tensions that have nothing to do with Pakistan’s interests, a reminder to us all of the costs of delay.

Pakistan needs to knock on every door there is to arrange future supplies of gas. Some calculations performed by industry experts have forecasted Pakistan’s oil import bill rising beyond $100bn by 2025 if oil prices remain around $100 and no new supplies are arranged as production from existing gas fields declines. This could be a catastrophic situation and it is worth noting that the year 2025 is not very far away. The country’s possible plunge into a hydrocarbon famine of sorts is one of the biggest challenges facing us all and the urgency of arranging new supplies cannot be overstated.

Everybody should understand very clearly that arranging new supplies without substantial price reforms is not possible. Pakistan’s era of cheap gas is fast drawing to a close and the government’s steps to provide incentives to private exploration and production companies, as well as to arrange imports, deserve the full support of all political players. Oil and gas companies have a very high tolerance level for political uncertainty and law and order problems. They operate in far more dangerous countries than Pakistan. Following the announcement of the incentives, the only thing they will look for will be political ownership across the spectrum, and judicial non-interference. It is vital that they see a reassuring picture on both fronts.