Pakistan Approves Shale Gas Policy

Brian Hicks

Written By Brian Hicks

Posted February 26, 2013

As of last Wednesday, it looks as though Pakistan has taken its first step into the exploration of its shale gas reserves, where it is believed as much as 51 trillion cubic feet (TCF) of gas can be found.

The Federal Cabinet met in Islamabad, overseen by Prime Minister Raja Pervez Ashraf, to discuss policy and decide on many key issues presently facing the country of Pakistan; the subject of shale gas was at the forefront of debate.

Many pressing issues were discussed in the gathering, such as a recent Hazara massacre, the Business Recorder reports. In that matter, an operation has been launched and military forces will be deployed.

Still, it is Pakistan’s shale gas that held main focus on Wednesday. If discoveries are made and gas can be extracted, it would help the country overcome the fuel shortages it faces. And the group ultimately agreed to allow foreign companies explore for shale gas under licenses.

Information Minister Qamar Zaman Kaira says the Petroleum Ministry has been directed to implement a policy for the exploration of shale and said Pakistan’s shale reserves could provide its people gas for a “long time,” Business Recorder reported.

As part of the policy, a committee headed by Law Minister Farooq H. Naik will overlook the Oil and Gas Regulatory Authority (Ogra).

Tensions flared when the Cabinet was informed by the Petroleum Ministry that Ogra withheld important information to its Pakistani consumers. It stated that Ogra had neglected to increase utility prices to reflect the Rs11 billion in losses incurred due to gas theft.

Ogra vehemently denies the accusation, as reported by Dawn:

The Ogra informed the Cabinet that under the Ogra act, the regulator was required to allow recovery of only prudent cost of gas supply from consumers and was not bound to implement policy directions inconsistent with the law as also ruled recently by Supreme Court.

“The cabinet considered policy guidelines under section 21 of Ogra Ordinance 2002 and decided that the decision of the cabinet committee on this issue will be implemented,” said an official statement.

Licensing was another part of the shale gas discussions. Pakistan plans to allow foreign companies to bid for exploratory licenses.

Some areas, dubbed ‘pilot projects,’ will be designated for bidding to all international competitors interested. From there, the companies would be chosen based on “lowest price and highest work programme and investment,” reported Dawn.

Depending on the amount of success with the pilot projects, the policy would be amended as needed.

Currently, no shale is being drilled, but after Wednesday’s meeting all that is about to change, adding 51 TCF to a conventional gas reserve that is already close to 58 TCF, Dawn reported. But it’s a large undertaking, and one that requires technical expertise and capital.

The Prime Minister’s adviser on petroleum, Dr. Asim Hussain, spoke with Dawn:

He said that according to a study conducted by a group of gas exploration and production companies, shale gas production would become economical at about 80 per cent of Brent Crude but this would have to be brought down to 70 per cent of Brent Crude Oil…

Dr Hussain said an investment of about $1.5 billion was required for about 500 exploration and development wells because such projects were capital intensive and required high level technological expertise.

Pakistan’s voyage into shale gas is imminent. Soon, gas companies from all over the world will be making claims on pieces of Pakistan’s shale gas deposit, and big changes are ahead.

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