Talking to Business Recorder here on Friday, Abbasi said that his ministry has submitted draft of the long-term SPA to the Economic Co-ordination Committee (ECC) of the Cabinet for final approval under which PSO will import up to 400 million cubic feet per day (MMCFD) LNG from Qatargas, but so far the ECC has not approved it.
Talking about overall performance of the Ministry in 2015, he said the ministry for the first time started importing LNG, finalized outstanding issues between the partner countries of Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project which on December 13, 2015 was formally inaugurated and first flow of gas will start in January 2019.
"Within next two years our aim is to take local gas production from current level of 4 billion cubic feet per day (BCFD) to 5 BCFD as well as construction of two LNG pipelines which include Gawadar to Nawabshah and Karachi to Lahore. Both the LNG pipelines will have a total capacity of carrying 2.4 BCFD of LNG which will be provided to power, industrial, Compressed Natural Gas (CNG) stations, fertilizer plants and other sectors," the minister maintained.
When he was asked about increase in consumer gas prices, the minister stated that such a proposal was rejected by the Prime Minister and as yet there was no plan on the cards to increase gas prices. He said that Pakistan State Oil (PSO) recently has awarded a contract of supplying 120 LNG cargoes over the next five years to two foreign firms namely Gunvor and Shell which does not mean that the government has shelved the LNG deal with Qatar, adding that PSO was regularly issuing tenders for LNG supply as there is a huge gap between Pakistan's gas supply and demand. "Gunvor will supply 60 cargoes at 13.37 percent of Brent crude price and Shell will also supply the same 60 cargoes at 13.80 percent of Brent crude price," according to an official of Director General (DG) Liquefied Gases, Ministry of Petroleum.
When he was asked that LNG prices quoted by Gunvor, which are relatively lower than the price of long term Qatar LNG of 13.9 percent, Abbasi said that this is spot purchase agreement and there was a difference between spot purchase and long-term agreement prices.
PSO has purchased LNG at $7.20 to $8.64 per MMBTU. Though the Oil and Gas Regulatory Authority was asked to approve the price of $12 per MMBTU, it gave approval for $8.6 per MMBTU. Successive governments over the past 24 years focused on three gas import projects, including LNG, Iran-Pakistan (IP) Gas pipeline and TAPI pipeline but failed and PML-N government started work on all the projects-LNG import has already started-TAPI inaugurated and construction on 700 kilometres Gawadar Nawabshah LNG pipeline is underway which will be added by another 70 kilometres to connect with Iranian side of IP once international sanctions against Iran are removed.
He said that the state owned Exploration and Production (E&P) companies - Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company Limited (OGDCL) in 2015 started drilling of country's first ever shale oil/gas well in Sindh. As per a new study of Director General Petroleum Concession (DGPC) with financial support from United States Agency for International Development (USAID) the shale gas revised in place resources of the country stand at 10,159 Trillion Cubic Feet (TCF) against previous estimated resources of 586 TCF. The minister said that out of this an estimated 200 TCF of shale gas resources are recoverable against 105 TCF of previous study.
He added that it will be around $10 per Million British Thermal Unit and on the basis of the pilot project the government will devise shale oil/gas policy to formally invite the local as well as international E&P companies to invest in the sector. He said that in the past year the Ministry after taking all provinces on board finalized Model Petroleum Concession Agreement (MPCA) and Model Exploration Licence (MPCA) and awarded 46 new petroleum exploration licenses which was a record.
The government has fulfilled its commitment and has so far processed 94 applications for conversion to the new Petroleum Policy 2012 through execution of Supplemental Agreements. During past two and half years, total 227 wells were drilled which resulted in 65 new oil and gas discoveries, around 560 MMCFD of additional gas and 27,000 barrels of crude oil per day was injected in the system. For the first time in the history of Pakistan, domestic oil production has touched the highest level of 100,698 bbl per day of oil on 07.12.2014, the minister maintained.
He said that for the first time in Pakistan's history the government also took serious actions against the non-performing E&P companies including those who were holding licenses for the last 25 years without any physical activity. It is expected that this action will act as a wakeup call for non-performing E&P companies and will boost up the exploration and production activities in the country.