Pakistan

[Report] Hydrocarbon Exploration & Licensing Policy (HELP), Way Forward to Self-Sufficiency in Oil & Gas

Pakistan is currently looking for cheap energy solutions. It is also looking for ways to increase productivity and generate employment opportunities. Here is a Report by Engineer Arshad Abbasi, a water and energy expert as well as a member of the CRSS Board of Trustees. Mr. Abbassi is also a consultant to many international agencies and countries on the issue. We would welcome any comments/suggestions that may reinforce this brief.

Kindly find the abstract and full brief below:

ABSTRACT

The new government in Pakistan has inherited an economy mired in multi-pronged crises. Foreign-reserves’ crunch, massive unemployment, devaluation of the Pakistani rupee, and high inflation are among the challenges it will need to tackle. One of the fundamental causes of the economic crisis is energy imports. This dependence on energy import has crippled Pakistan. Meeting almost 85 percent of the energy demand through imports weighs heavily on Pakistan’s trade and current account deficit. To address these challenges on an economic front, Pakistan needs to enhance the domestic production of oil and gas on war-footing by removing the structural constraints. Proven oil and gas reserves are enough to meet national demand and make the country self-sufficient but a lack of a conducive policy and regulatory environment hinders the boosting of domestic exploration and production. Pakistan is thus groping for cheap energy solutions. It is also looking for ways to increase productivity and generate employment opportunities. Therefore, this report proposes an introduction of petroleum policy, given the acronym of HELP (Hydrocarbon Exploration and Licensing Policy) and a better regulatory environment. The report finds that unnecessary regulatory burdens could be reduced through new institutional arrangements – principally the new hydrocarbon exploration and licensing policy, establishment of an upstream regulator along with implementation of best practices in regulatory principles in all jurisdictions. The objective of this brief report is to help government make better Oil & Gas Exploration policy for self-reliance in production. It chalks out a road-map for exploration of hydrocarbons to make the country self-sufficient in minimum lead time and set it on a new trajectory of economic growth. The report reviews and highlights shortcomings in petroleum policies and suggests reforms to be able to attain self-sufficiency.

View the full report here.

Reviews for the Report:

HELP is an illuminating document emphasizing the need for policy structures that will enable exploitation of indigenous oil and gas resources. This will lead to energy security and economic well-being of the country through creation of jobs, import substitution and savings in precious Forex, stabilizing the currency in the process that is fast dwindling.

Sustainability through self-sufficiency is the key. Transparency in decision making and operations will help to overcome some of the systemic challenges that confront the oil and gas sector in PK. The catch point, the single most overriding recommendation, is that the GoP should transform from government control to government support in the E &P sector. Facilitation and enabling takes precedence over monitoring and control. This will create environment that is conducive to local and overseas investment.

The GoP will do well to formulate independent and impartial boards of governance to allow the cushion for educated and evidence-based policy making and implementation. It must do head- hunting to attract and recruit the best talent inland and overseas to put the E & P on professional footing.

The suggestion for public-private partnerships along with fostering effective academia-industry linkages is highly commendable as research and innovation ensures that we remain competitive and sustainable. We should consider the successful Turkish model of investment, namely, non- recourse funding, according to which investment accrues from the cash flows of the project design rather than the balance sheets of a company! Further, the Oil companies in Pakistan must pitch in with a share of investment from their revenues.

In essence, HELP offers a viable and effective policy framework and footprint to harness the vast indigenous E & P resources, imploringly waiting for exploitation. Given the stance of the incumbent GoP on promoting merit, transparency and honest business, this goal seems more likely to be accomplished than in the past.

Dr. Mohammad Bilal Khan

Founding Dean and Principal

US.-Pakistan Center for Energy

NUST, Islamabad

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