The petrol bomb | By Farukh Saleem


The petrol bomb

THE United States Energy Information Administration (EIA) claims that “Pakistan may have over 9 billion barrels of petroleum oil…” That is 45 years worth of consumption.

EIA also claims that “Pakistan holds sizable shale gas reserves of 105 trillion cubic feet (Tcf).”

That is 58 years worth of consumption (these numbers are from a report titled ‘Technically Recoverable Shale Oil and Shale Gas Resources: India and Pakistan’ by the U.S.

Department of Energy Washington, DC). EIA is a part of the United States Department of Energy. E

IA is a “principal agency of the United States Federal Statistical System responsible for collecting, analyzing and disseminating energy information to prompt sound policymaking, efficient markets and public understanding of energy and its interaction with the economy and the environment.

EIA programs cover data on coal, petroleum, natural gas, electric, renewable and nuclear energy.”

Imagine, we may have 9 billion barrels of petroleum oil but right now we are producing a meagre 90,000 barrels a day.

Imagine, we may have 105 trillion cubic feet of gas reserves 9 but right now we are producing a meagre 2.8 billion cubic feet of gas a day. Imagine, indigenous crude oil meets only 15 percent of our total requirement.

Imagine, indigenous gas production meets only 55 percent of our total requirement. We spend $20 billion a year to import oil (mostly from Kuwait Petroleum); $3 billion to import coal (mostly from South Africa) and $3 billion to import LNG (mostly from Qatar). As a conse-quence, our trade deficit this year could hit a colossal $40 billion.

Imagine, we end up spend-ing more than 60 percent of our export earnings to import oil. Imagine, we end up spending 75 percent of our export earnings to import our energy needs.

On October 16, our government exploded a petrol bomb by announcing a mas-sive increase in the price of petrol, diesel and kerosene oil. Diesel went up by Rs12.44 a litre and petrol by Rs10.49 a litre.

To be fair to the PTI government, the interna-tional price of oil has moved from $37 a barrel last year to $85 a barrel while the price of coal has gone up from $60 a ton to $250 a ton.

To be certain, petrol at Rs137 a litre is going to break millions of poor bones and make life even more miserable.

The ‘oil cartel’ must also be held ac-countable. The ‘oil cartel’ takes away Rs80 billion a year under the head of ‘Inland freight’ while the actual cost is half that much.

Refineries in Paki-stan are charging ‘refining margins’ that are twice as high as margins paid out to refineries outside of Pakistan. This day-light robbery must be put to sleep.

Oil Marketing Companies (OMCs)-including Pakistan State Oil, Hascol, Go, Shell, Total-Parco, PUMA, AOSPL, BE, ZOOM, ANPL, OILCO, Taj, Euro, OIPPL, Flow and Fossil-are all laughing all the way to the bank.

Refineries-including Byco, National Refinery, Pak Arab, Pakistan Refinery, PARCO Coastal, Attock and Indus-are also laugh-ing all the way to the bank.

Who is safeguarding the interests of the 220 million? The Ministry of Energy lists Hammad Azhar as the Federal Minis-ter for Energy, Zahoor Hussain Qureshi as Par-liamentary Secretary and Ali Raza Bhutta as the Federal Secretary. OMCs keep on blaming the Ministry of Energy.

OGRA keeps on challenging the Petroleum Division. Abubaker Khuda Bakhsh, FIA’s Additional Director General, had recommended disbanding OGRA.

On March 24, our Ministry of Finance prom-ised the IMF three things: additional taxation of Rs1,200 billion; electricity tariff increase of Rs6 a unit and additional taxes of Rs30 a litre on petrol and diesel

On October 16, we found out that our negotiations with the IMF have failed. The reality is that this year our gross external financing re-quirement is $29 billion.

The billion dollar ques-tion is: can we survive without the IMF? Yes, we can survive without the IMF by putting our house in order. Our government’s first and fore-most goal ought to be self sufficiency in oil and gas.

According to Engineer Arshad Abbasi, “The domestic oil and gas sector has enormous poten-tial.” In this regard, Arshad Abbasi’s report titled ‘Self sufficiency in oil and gas’ must be taken se-riously.

Why are we bent upon importing 85 percent of our oil requirement? Why are we bent upon importing 45 percent of our gas require-ment? Why are we bent upon throwing away 75 percent of our export earnings to import our energy needs.

EIA’s report ‘Technically Recover-able Shale Oil and Shale Gas Resources: India and Pakistan’ has four recommendations for Paki-stan.

Recommendation number 1: a new Hydro-carbon Exploratory Licensing Policy. Recom-mendation number 2: an independent, profes-sional upstream regulator. Recommendation number 3: open acreage licensing.

Recommenda-tion number 4: removing regulatory uncertainty caused by the 18th Amendment. Petrol bombs will keep on exploding-breaking poor bones and making life miserable.

Unless we break the car-tel. Our energy security shall remain under threat. Unless we become self-sufficient in oil and gas.

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