oil and gas resources andr rights of provinces

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All Rights Reserved

Book Title: Oil & Gas Resources and Rights of

Provinces: A case study of Sindh

Subject: Discussion Paper 2

Authored by: Naseer Memon

Year: June 2010

Published by: Center for Peace & Civil Society

House No: 127, Sindhi Muslim

Cooperative Housing Society, Hyderabad,

Sindh, Pakistan

Title DesigningComposing &: Suleman Samejo

Price: Rs. 30

Books are available here:Mr. Books Islamabad - Saeed Book Shop Islamabad Feroze

Sons Mall Road, Lahore Thomas & Thomas Book HouseKarachi Kathyawar Book House Karachi Sindhica KitabGhar Hyderabad Fiction House Hyderabad Rabel KitabGhar Larkano Gul Kitab Ghar Shikarpur Junaid Kitab GharDadu Sindhica Kitab Ghar Sukkur Marvi Kitab GharTando Allahyar Mehran Kitab Ghar Mirpur Khas HillalKitab Ghar Mirpur Khas

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History and Background: Sindh, the southern province ofPakistan has two major regions of Hydrocarbons (i) Sindh

Monocline, commonly known as Badin Block Area. It ismainly oil and gas bearing region (ii) Outside SindhMonocline. The region includes Sukkur Rift Zone, MazaraniFold Zone, Khirthar Depression and Karachi Depression.This region is mainly gas bearing. 1

History of oil and gas exploration in Sindh is now almost acentury old. The first well in Sindh was drilled in Khairpur

by Burmah Oil Company in 1925. It did not yield any output.After the discovery of Sui (Balochistan) in 1952, northernSindh became focused area for hydrocarbons exploration.Pakistan Petroleum Limited discovered gas in Khairpur(1957), Kandhkot (1959) and Mazarani (1959). In 1957 ahuge gas reserve of 6.8 Trillion Cubic Feet was discovered inMari by Pak-Stanvoc Petroleum Project. The same companyalso drilled wells in Talhar (1957), Mirpur Bathoro (1958),

Nabisar (1958) and Badin. Only Nabisar showed some gasand Talhar showed some gas and oil. Burmah Oil Companydrilled wells in Lakhra (1958), Badro (1958-59) and Phulji-Dadu (1958). These reserves only showed some gas. In1961, Oil and Gas Development Corporation was

1 Dr. Allah Dino Memon and Imdadullah Siddiqui, Petroleum Geologyand Hydrocarbon Prospects of Sindh and Pakistan: Aug 2005


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Sono OGDC 19.244 15.865 3.388

Tando Alam OGDC 22.56 16.226 6.334

Thora OGDC 31.2 17.982 13.218

Akri North BP 6.111 5.919 0.192

Dhabi and Dhabi S BP 9.108 7.648 1.46

Dhabi North BP 7.498 5.919 1.579Ghungro BP 10.467 7.041 3.462

Jagir BP 7.349 4.736 2.613

Khaskheli BP 13.654 12.194 1.46

Laghari BP 21.413 21.452 0.155

Liari and Liari Deep BP 8.113 7.897 0.3

Mazari BP 22.455 22.099 0.356

Mazari South andDeep

BP 24.59 23.041 1.549

Sakhi, Sakhi Deep BP 8.32 5.283 3.037

Tangri BP 12.933 11.43 1.503

Zaur, Zaur Deep,South

BP 7.806 5.616 2.19

The above table also indicates that much of the oil reserve ofSindh has already been sucked out and the province wouldsoon be without oil reserves unless some new majordiscoveries occur.

Contribution of Sindh in Oil and Gas Production ofPakistan: According to Pakistan Energy Year Book 2008(published by the Ministry of Petroleum and NaturalResources), Sindh produced 13.87 million barrels of oil (i.e.38,000 barrels/day) that makes 56 percent of the totalnational oil production during 2006-07. For details, referTable.3

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Table.3 Province-wise Oil Production in Pakistan, 2007-08

Province Oil Production(Million Barrels)

Percentage

SindhPunjabNWFP

Balochistan

14.376.514.680.024

56.1325.4618.320.1

Pakistan 25.60 100%

Source: Pakistan Energy Yearbook 2008, Ministry of Petroleum and

Natural Resources, GOP

During the same year, Sindh produced 1,033,110 Millioncubic feet of gas, which makes approx 71 percent of the totalnational gas production. For details, refer Table.4

Table.4 Province-wise Annual Gas Production: 2008-09

Province Non-Associated Gas(MMCF)

Associated Gas(MMCF)

Total (MMCF) %

SindhPunjabNWFP

Balochistan

1,032,19866,72828,677305,359

15,4759,5602,682

0

1,047,67376,28731,359305,359

71.725.222.1420.9

Pakistan 1,432,962 27,717 1,460,678 100%

Source: Pakistan Energy Yearbook 2009, Ministry of Petroleum and NaturalResources, GOP


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These tables highlight the following facts.

Sindh is the largest oil producing province ofPakistan Sindh is the largest gas producing province ofPakistan

Sindh and Balochistan together contribute more than93 percent of the national gas production andtherefore can be considered energy basket ofPakistan.

The same data source however reveals that Sindh andBalochistan consume only a small portion of theirproduction. According to statistics, Sindh consumed only 46percent of its production whereas Balochistan consumed just29 percent of the gas it produced. Punjab utilized astaggering 852 percent against its production in the nationaloutput of gas. Higher consumption of energy is considered asmajor indicator of higher development. One can safelyconclude that much of the development is centered in oneprovince that consumes natural resources produced by otherprovinces. Table.5 provides revealing details of theconsumption pattern of gas.

Table.5 Province-wise Gas Production and ConsumptionTrend, 2008-09

Province Total Gas

Produced(MMCF)

Total Gas

Consumed(MMCF)

Ratio

(Consumption VSProduction in %)

SindhPunjabNWFP

Balochistan

1,047,67376,28731,359

305,359

485,271649,93844,70689,519

4685214229

Source: Pakistan Energy Yearbook 2008

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The above table reveals interesting facts as under

Sindh consumes less than the half of the gas againstits production

Balochistan consumes just around a quarter of the gasagainst its production

Punjab consumes 8.5 times more gas than itsproduction

These facts can also be gauged from the Table.6 showingsector-wise details of gas consumption in the provinces.

Table.6 Sector-wise Consumption Trend of Gas inProvinces, 2007-08

Type ofConsumption

Province-wise Number of Consumers

Sindh Punjab Pakhtunkhwa Balochistan Total

Domestic1,866,585 2,760,238 375,325 179,372 5,181,520

36% 53% 7% 3% 100

Commercial20,671 41,111 8,065 1,887 71,734

29% 57% 11% 3% 100

Industrial3,515 4,792 650 46 9,003

39% 53% 7% 1% 100

Total1,890,771 2,806,141 384,040 181,305 5,262,257

36% 53% 7% 3% 100

Source: Pakistan Energy Yearbook 2008


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Employment: Local employment is another matter ofserious concern. Oil and gas fields are mostly located inremote and underdeveloped areas. Oil and Gas companieshave their head offices in big cities like Islamabad andKarachi where Sindhi local staff hardly makes a smallfraction of their human resource. Former Minister forPetroleum, Mr. Amanullah Jadoon told National Assemblyon 14th April 2007 that out of 11,613 employees in SSGCand SNGPL, Sindhs share was 3,613 whereas Punjabsshare was 5,454.

The oil and gas companies often extend an excuse that theydo not find qualified and experienced people from ruralSindh and Balochistan. This argument has lost its validity asthe provinces now have reputed universities and technicalinstitutes producing sizeable number of professionals withrequired qualification. Unfortunately the graduates of thesedistricts do not get even opportunities like managementtrainee or auxiliary staff. Hence educated youth of oil and

gas producing districts is deprived from learning and trainingopportunities in the companies. Table.7 shows two casestudies on employment of a multi-national oil and gascompany operating in Sindh.

Table.7-A Statistics of local employment in a company

Office Total Employees Local StaffIslamabad 60 2 (3.3%)

Karachi 176 10 (5.6%)

Field 204 175 (85.7%)

Source: Personal Contacts

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Table.7-B Statistics of local employment in acompany

Office Total Employees Local StaffHead Office 225 15

Field 300 20

Source: Personal Contacts

The situation is not much different in other companies andcan easily be generalized. The Petroleum Exploration &

Production Policy 2009 also makes it obligatory oncompanies to invest in the training of Pakistani employees.The amount obligatory in this regard is mentioned inTable.8.

Table.8 Amount to be spent on Training

Phase of Operation Amount per year(US$)

Onshore Zones

During Exploration 25,000

During Development andProduction

50,000

Offshore ZonesDuring Exploration 50,000

During Development andProduction

250,000

Source: Petroleum Exploration & Production Policy 2009

This amount can be used to build capacity of unskilled orsemi-skilled locally hired human resource. Hence the excuseof unavailability of trained local human resource would lose justification. Statistics on employment in the sub-contractor

companies are equally pathetic. Oil and gas companies


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Environmental Protection Agency (EIA) shouldcommission an independent committee of experts formaking the IEE/EIA process effective. This committeeshould approve ToRs, monitor process, reviewdocuments and monitor compliance of the stipulations ofIEEs/EIAs. Local representation from the concerneddistrict should also be ensured during the whole processof any IEE/EIA/SIA. The expert committee should assistEPA in making the IEE/EIA process effective at allstages.

All IEE/SEIA documents should also be available inlocal languages of the concerned area so that localstakeholders can effectively participate in the process.

Public hearings of EIA/SIAs should also be held in theconcerned district where local stakeholders can raisetheir concerns and suggestions before the body ofindependent experts.

Environmental Audits should also be made legalrequirement to ensure effective compliance of the social

and environmental commitments.

oil and gas resources andr rights of provinces

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