Pakistan Development Forum Islamabad: November 15, 2010

Oil and Gas Sector Reforms

Syed Naveed QamarMi i t f P t l & N t l RMinister for Petroleum & Natural Resources

Government of Pakistan

Energy Mix

63 Million TOE

Oil 32%

LPG 1%

Gas 48%

Nuclear 1%

Coal 7%

Hydro 11%

Oil Import Bill: $10 billion

Oil and Gas ShortfallYear Oil

(bpd)Gas

(bcfd)(bpd) (bcfd)

2010 350 000 22010 350,000 2

2015 550,000 4

2020 700,000 6,

Oil and Gas Sector HighlightsInvestor friendly Exploration Policy introduced 2009

Independent Regulator for oil and gas – OGRAIndependent Regulator for oil and gas – OGRA

27 E&P companies, 137 blocks, success ratio 1:3.3

68% electricity generation from oil and gas

100,000 km natural gas transmission and distribution network

Gas consumers increasing at 7% per yearGas consumers increasing at 7% per year

Crude oil local production only 15% of demand

5 refineries, 12 OMCs

Proven ReservesOil

(million barrels)

Gas (trillion cubic

feet)

Coal (million tonnes)barrels) feet) tonnes)

Discovered 965 54 15,000Produced 659 26 200Remaining 306 28 14,800

Annual Production

24 1.5 3.5

Reserves to Production

13 19 4200

(R/P) Ratio

Gas Shortfall Mitigation

10

8

4

6

Bcf

d

2

4

Existing Gas Fields

0

0 1 2 3 4 5 6 7 8 9 0

Existing Gas Fields

6

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gas Import Pipeline ProjectsTAPI HIGHLIGHTS

Gas Source in Turkmenistan South Yolotan / Osman Length: Turkmen to Indian Border 1,680 km

Total Gas Volume 3.20 bcfd

Gas Volume for Pakistan 1.35 bcfd

First Gas Flow 2015

IP HIGHLIGHTS

Pakistan Pipeline Segment 785 km

Gas Volume 0.75 bcfd

First Gas Flow 2014

Exploration for New Resources

• 39 exploration licenses granted in 2009-10• 39 exploration licenses granted in 2009-10

• New bidding round to be done jointly with Provincial G tGovernments

• Policies for non-conventional gas resources:Tight Gas (est. 4 tcf)Shale Gas (est. 10 tcf)Low Btu Gas (est. 4 tcf)Low Btu Gas (est. 4 tcf)Stranded Gas through virtual pipeline (est. 0.5 tcf)

Gas Sector Reforms

• No government subsidies on natural gas• No government subsidies on natural gas

• LPG being introduced as formal auto fuel

• LPG-Air mix being used as town gas as an alternate to natural gas in towns and villages

• Syngas to be used as natural gas substitute

• Gas line losses to be controlled through capital investment in transmission and distribution systems

Oil Sector Reforms

• Governmental and cross-subsidies on oil products removed

• Pricing, import and movement of oil products deregulated

• Barriers to new oil marketing companies minimized

• New incentives for establishing oil storages

• Product storage increased to 53 days coverg y

• Ethanol (E10) introduced as motor fuel

Coal Sector Reforms

• Coal is a Provincial subject

• Huge deposits of lignite coal discovered in Sindh at Thar

• Several private companies interested in coal mining and power generation

• Coal bed methane potential estimated as 2 tcf

• Pilot project for coal gasification in hand

Thank You