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By:
Dr. Musadik MalikSpokesperson of the Prime Minister
Special Assistant to the Prime Minister on EnergyPh: +92 302 465 2709
Pakistan Investment Conference
Opportunities in Pakistan’s Oil and Gas Sector
October 2015
Page 2
Objectives
The objective of this presentation is to share the immensure opportunity Pakistan provides to investors in its oil and gas sector
Highlight salient features of Pakistan’s Investment Policy
Delineate opportunities in the gas sector in Pakistan
Compare the attractiveness of Investing in Pakistan with other opportunities
Opportunities in Pakistan’s Oil and Gas Sector
Page 3
With 100% ownership of foreign firms protected by law and complete remittal of capital, profits & dividends, Pakistan my be the next investor’s paradise
u
Ownership
Linkages
Link
ages
Profits & Taxes
• All sectors open to investments
• Up to 100% foreign ownership
• Same treatment for local and foreign investments
• Protection of FDI via acts of parliament (Acts 1976 & ‘92)
• Bilateral investment protection agreements: 47
• Double Tax treaties: 52
• No restriction on remitting capital, profits & dividends
• 0%-5% custom duty on machinery import
• 50% tax relief on initial depreciation allowance and plant, machinery and equipment costs
• No sales / withholding tax on machinery import
Linkages
Investment Policy
Protection
Investment Policy
Investment Policy
Page 4
The current gas shortage of 2,087 mmcfd growing at a staggering pace offers a tremendous investment opportunity
Gas Supply Demand Gap
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY25
Projected Supplies 4,187 4,346 4,309 4,315 4,183 4,065 3,816 3,671 3,390 3,165 2,938 2,694 2,522 2,167
Projected Demand 4,257 4,538 4,816 5,225 5,605 5,582 5,949 6,383 6,845 7,316 7,566 8,004 8,320 12,507
Surplus / Shortfall (70) (192) (507) (910) (1,422) (1,517) (2,133) (2,712) (3,455) (4,151) (4,628) (5,310) (5,798) (10,340)
Investment Opportunity - The Gas Sector
Page 5
Local exploration / production, LNG sector development, and system efficiency improvement constitute the hub of investment potential
Pakistan Energy Needs Solutions
Investment Opportunity
System
Efficiency LNG
Investment Opportunities - The Gas Sector
Exp
lora
tio
n a
nd
pro
du
ctio
n
Page 6
Any solution toward eliminating UFG, presents a gold mine opportunity
Gas Losses (mmcfd)
Source: MoPNR
Investment Opportunities – The Gas Sector Efficiency
Page 7
Pakistan’s Gas Reserves Need Efficiency
The efficiency differential between Pakistan and other nations presents an immense opportunity for oil and gas services companies
Investment Opportunities – The Gas Sector Efficiency
Source: World Bank
Page 8
At $6 / mmbtu, Pakistan offers an incredibly attractive wellhead gas prices as compared to $4.2 by India and $2.5 by Nigeria
Wellhead Gas Price per mmbtu
Source: MoPNR, KPMG, Wall Street Journal
Wel
l he a
d G
as P
r ice
/ m
mbt
uInvestment Returns - The Gas Sector
Page 9
At the same time, Pakistan demands one of the lowest oil production royalties in the world coming in at 0% for offshore and 12.5% for onshore
Royalty Percentage on Oil Production
Source: MoPNR, KPMG, BakerMcKenzie
Roy
alty
Per
c en
tag
e o
n O
il P
rodu
ctio
nInvestment Returns – The Gas Sector
Page 10
Pakistan offers 17% dollar denominated returns on equity for pipeline construction, and $0.66 per mmbtu tariff for LNG regassification terminals
Returns on LNG Investment
Source: MoPNR
Returns on LNG Pipeline Construction LNG Terminal Regassification Toll
Per
c en
tag
e R
e tur
ns t
o In
vest
o r
$ /
mm
btu
Investment Returns – The Gas Sector
Page 11
With nearly 250% higher returns as compared with the junk bonds, is Pakistan a good investment … hmmm?
Comparative Returns on Investments
Source: MoPNR, NYSE, Fidelity
Per
c en
tag
e R
e tur
ns t
o In
vest
o rInvestment - The Fundamental Question
Page 12
Summary
How can you not invest in Pakistan’s gas sector?
Pakistan Offers Excellent Exploration Returns Pakistan Is Prime Investment for O&G Services
Pakistan LNG Investments Are Highly Lucrative Pakistan LNG Investments Yield More
Investment - The Fundamental Question
