Zahid Muzaffar, chairman of Pakistan’s Oil & Gas Development Company (OGDC), speaks in an exclusive interview with Pipeline Magazine’s Nadia Saleem about new oil and gas projects planned and the role China-Pakistan Economic Corridor will play in serving energy needs
Pakistan stands at one end of the China-Pakistan Economic Corridor, where it is poised to benefit from US$46 billion in new roads, bridges, wind farms and other China-backed infrastructure projects such as Balochistan’s Gwadar port which links to China’s Westerns region of restive Xinjiang.
Q: Can you give an overview of Pakistan’s energy needs and what options are you looking at to serve these?
Pakistan is a country which is growing very fast – the population is now over 200 million. The energy demand is growing at a very fast pace because of the economic development within the country.
Primarily a gas-consuming country, we discovered gas about 50 years ago and we have a brilliant infrastructure for clean fuels.
We are producing about 4 billion cubic feet of gas and we are at the moment facing unconstrained demand. The country’s gas requirement is twice as much as its production.
As a way forward, we are pressing ahead on exploration to increase the production of gas and secondly, we are looking at importing natural gas in the form of LNG.
We have been very successful in this so far– we developed the first LNG terminal over a year ago and the second LNG terminal will be coming online in November this year. Additionally, we’ve given approvals to private entrepreneurs to bring two-three more terminals.
Q: What role will the China Silk Road play in serving Pakistan’s energy needs? What opportunity does the route through Pakistan present for regional energy players?
There is a massive demand for energy in Pakistan and with the China-Pakistan Economic Corridor, there is a great opportunity for the Middle East suppliers.
There is also a serious demand for energy from China, who imports a large chunk of oil and gas from Middle East. With the new route or economic corridor created between China and Pakistan, there is a great opportunity for Middle East producers to supply their crude oil and gas through this corridor, which will reduce the transport cost and time and make the energy demand grow much faster in China and within Pakistan.
China is starving for energy and Pakistan is in development mode and will be requiring a lot of energy in the next couple of decades.
This relationship, between China and Pakistan, is going to be very significant for Pakistan and also for the Chinese because they will be able to bring products through this route and it will also be much easier and quicker to deliver the refined products to the Middle East and Africa regions.
Pakistan, being a country with a lot of land and manpower which can be used in developing industrial zones along the infrastructure being built between Pakistan and China, will provide a lot of opportunities for investors in the Middle East and even Europe to capitalise on these investment opportunities which, will be made available in due course because of this strategic partnership between China and Pakistan.
Q: Is there a pipeline being considered to support the Silk Route through Pakistan to Gwadar port?
We are definitely looking into various options on how we can develop an integrated network. At the moment, we’ve got the road and rail infrastructure - but the pipeline is also being seriously considered by both the countries. This will be a great opportunity for Middle East investors and various hedge funds to put their capital and have constant returns.
Shipping products from the Middle East to China takes about 35 days. If we have a pipeline connecting China through Pakistan’s new port at Gawader, the transport time could be cut back to a handful of days.
The process of supplying will be far quicker and also far more cost effective because it takes a lot of both to ship crude and gas to China.
Q: What’s the latest update on the TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline? Is there a completion-date envisioned?
TAPI pipeline is good to go – the exploration has already started on the Turkmenistan-side and the TAPI Co has already been established with all the stakeholders and the headquarters will be in based out of Dubai, to make it easier for all stakeholders to meet and discuss the way forward.
The Turkmenistan government has taken a major leap forward by bringing in major capital investment for the exploration and production of gas – this was a distant reality, but now I think this is a close reality as the investment on this pipeline has already commenced from Turkmenistan side. Other stakeholders are also very keen because energy is a great requirement for Afghanistan and Pakistan and India. It will happen and surely take place in due course.
Pakistan has a commitment to the project and we will be able to build the pipeline from the Afghan border up to Pakistan mid-country. Likewise, the Afghans and the Indians will also be building theirs.
This is something which is extremely important for all stakeholders and they are very keen to push it through. And I think this could develop into a peace pipeline between Afghanistan, Pakistan and India so this is politically and economically very important for the stakeholders.
On completion date, there have been estimates which have been put forward to the joint working group but we expect it to take between three to four years of time.
Q: What projects is OGDC working on for developing the country’s hydrocarbon resources?
At OGDC, which is the flagship company of Pakistan, we have a very aggressive exploration programme. In the last couple of years, we have exceeded our target of geological and geophysical (G&G) surveys work. We’ve tripled our effort on the seismic survey and now the delineation of the structures is in the process and we expect to drill about 25 exploration wells in the next financial year. We will be entering into new geological areas of Pakistan which have not been explored in the past and have tremendous potential for hydrocarbons and these are Khyber Pakhtunkhwa and Baluchistan. OGDC and PakPetro Serve, along with international oil exploration companies like ENI, MOL, and United Energy will be taking the lead forward in the exploration in these areas.
Since the last three years, there have been a lot of discoveries but these haven’t been significant in terms of reserves – they’ve been small discoveries and we expect to go and drill where there are large structures, which can only be determined once we’ve carried out a detailed seismic survey.
Large structure are of between 1 Tcf (trillion cubic feet) to 2 Tcf gas reserves - we had a discovery many years back, which was between 3.5 to 5 Tcf so those are large structures in relative terms in Pakistan.
These are our targets and we have a cohesive program for them. We expect in the next few years to drill one of these structures and hopefully find a significant gas discovery, which will be of great help to the economic development of Pakistan.
The geological and geophysical survey work has already commenced and after the delineation of those structures, we expect drilling to start.
The seismic surveys have already been done and we expect to drill about 70-80 exploration wells next year. We hope these result in discoveries and give us further confidence to explore more areas in the country.
Q: Are there sufficient finances available or arranged for the G&G work and exploration wells?
All funds are very much available within the budget programme of the national oil companies and obviously international exploration companies have their own respective budgets allocated for these exploration works within the country. So there’s no special funding that needs to be brought in for this especially as there are enough funds available with the producers within the country.
Q: How is Pakistan addressing the regional ports competition as Gwadar becomes operationally ready?
I think Gwadar will compliment other ports in the vicinity. There is no competition as such because of the strategic advantages of each of these particular locations and we can capitalise on that and the synergies by working together.