PSO's Role in the Petroleum Industry in Pakistan

By Khan, Raja Navaidullah | Economic Review, October 1994 | Go to article overview

PSO's Role in the Petroleum Industry in Pakistan


Khan, Raja Navaidullah, Economic Review


About a century ago the first oil producing well in Pennsylvania. USA, was drilled and this was how modern oil industry, which has literally speeded the world to its phenomenal progress of the past century, was born. Crude Oil has very little value. either as a fuel or as a lubricant. Practically, every barrel produced has to be transported to the Refineries, which breaks its down to many products useful to mankind.

The consumption of energy in a country is a direct measure of its rate of economic development. Petroleum products are a very substantial source of energy in the world today and it, therefore, follows that the rate of growth of their consumption indicates the rate of a country's economic development. In a country like Pakistan, where other sources of energy, such as Coal, Hydro-Electricity and Atomic Power are still to be developed, the importance of Petroleum Oils cannot be over-emphasised. This essential commodity is needed in very part of Pakistan and its consumption ranges from providing the only source of light in a small dwelling of a villager in a remote area, to making the wheels of industry move and keeping the means of communication open for us, on the land, at the sea and in the air.

According to statistics available in the 'Economic Survey 1993-94', about 7 per cent of energy in Pakistan is obtained from Oil and Gas, 16 per cent from Hydel Power, 5 per cent from Coal and 1 per cent from LPG and Nuclear. The share of oil in total energy picture comes to 42 per cent and the share of natural gas 36 per cent. The installed Electric Generation Capacity has increased from 10,598 MW during July/March 1992-93 to 11,346 MW up to July/March 1993-94, showing an increase of 7 per cent.

The production of gas also increased from 1,492 MCF to 1581 MCF, showing an increase of 6 per cent during the same period. However, production of Oil slightly declined from 61,144 to 60,755 barrels per day. PMDC coal production has also declined by 10.5 per cent over a corresponding period last year due to rains and floods.

During 1993-94, a number of policy decisions were taken with a view to reduce the existing supply-demand gap in the energy sector. A task force on energy sector was set up and its recommendations are being implemented. Ghazi Brotha Hydel Electric Project with a capacity of 1425 MW generation has been proposed. Similarly, a Thermal Power Project at Hub, 60 km from Karachi, has been undertaken in the private sector and is expected to generate 1292 MW electricity. A new Petroleum Policy which offers enormous Incentives for investment in this sector was announced on February 20, 1994.

Due to new Oil and Gas discoveries and improvements in the energy sector, the oil import bill has been reduced to some extent. During 1993-94 (July/March) Petroleum Crude and Petroleum Products worth $ 1052.6 million were imported as compared to $ 1136.1 million over the corresponding period last year. The recoverable resources of crude oil as on March 1, 1994, were 197 million US barrels. Currently 18 Local and Foreign Oil Companies are engaged in Petroleum Exploration activities in the country over an area of 174,000 Kms. The new policy is aimed at accelerating Petroleum Exploration and thus to enhance Gas and Oil Production.

The new concession terms offered by this Government are expected to attract foreign investment in this field. The average oil production during the period remained at 57,800 barrels per day. A major find of coal in Tharparkar would play a pivotal role in the Energy Sector and a Thermal Power Station with a generation capacity of about 1000 MW is on the anvil.

A consumers item which is used in such varied forms and is therefore produced in a large spectrum of specifications, obviously needs a complex system of marketing to make it available to each type of consumer. Marketing of any product means making the product available in the manner and at the location where it is required by the consumer.

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