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News Headlines for the month of
DECEMBER 2015

PPL MAKES DEEPEST-EVER OIL DISCOVERY IN DHOK SULTAN X-1

Pakistan Petroleum Limited (PPL), the operator of Dhok Sultan block, located in District Attock, Punjab, along with its joint venture partner Government Holdings (Private) Limited (GHPL) has announced the discovery of oil and gas from its first exploratory well Dhok Sultan X-1. PPL holds 75 percent working interest while GHPL shares 25 percent interest in the block. Dhok Sultan X-1 was spud on December 25, 2014 and reached the final depth of 5827 meters on November 7, 2015. Based on wireline logs, a hydrocarbon bearing zone was identified within the Lockhart formation, which flowed 468 bbl/day oil along with 0.617 mmscfd gas at 20/64 inches choke size during testing. This is the deepest oil discovery in Pakistan and has opened up a new play in the western Potwar area. An acid stimulation is planned to be carried out after completion of the well which is expected to increase the flow rates.

Copyright Business Recorder, 2015

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MINING, COAL-FIRED POWER PLANT: PROJECT APPROVED BY CHINA'S STATE COUNCIL

Ministry of Water and Power said on Wednesday that Chinese Investment of $1.2 billion for surface mining of 3.8 million tons per annum ( MTPA) coal and establishment of 660MW power plant on indigenous coal in Thar Block-II has received the final nod as the project is approved by the China State Council for financing. Prime Minister's House, Ministry of Water and Power, Planning Commission and M/s Engro held negotiations with Chinese authorities for years to materialise the loan. This announcement has come at a time when President Mamnoon Hussain is on an official visit to China. Thar coal-fired project of 660 MW is included in the list of Early Harvest Programs. According to an official statement, final lending documents will be signed on December 21, 2015 in Beijing. However, it is unclear who will represent the government. The Chinese side confirmed the approval of financing of the mega project by the China State Council to the Ministry of Water and Power in its letter addressed to the Secretary Ministry of Water and Power, Younus Dagha. M/s Sinosure and Sindh Engro Mining Company are jointly undertaking the Surface Mining of 3.8 MTPA and establishment of 660MW Power Plan projects in Thar Block-II and it is part of the CPEC projects. Reaching at this stage is considered a major achievement in a short time. Arrangement of finances and completion of lending documents is the most critical part in any project which signifies starting of actual work on the project. This project has been on the highest priority which helped get it to the advanced stage among CPEC mega projects, after signing of CPEC energy projects agreement in November, 2014. "Due to tireless efforts of Ministry of Water & Power and NEA China, all the regulatory requirements have been completed in one year's time, "said the official statement.

Copyright Business Recorder, 2015

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INTERNATIONAL INVESTORS INTERESTED IN GAS SECTOR: PARACHA

International oil and gas companies and some leading global investors are interested in Pakistan's promising gas sector which is a very healthy sign, a business leader said Sunday. The oil and gas majors in US, Russia, China, UAE and Singapore have realised Pakistan's interest in gas prompting them to explore opportunities in gas import, terminals and pipelines, said Ghiyas Paracha, leader of the CNG sector. In a statement issued on Sunday, he said that the confidence of investors is rising which will help government to bridge gas shortfall of two billion cubic feet. He said the government is framing policy for gas import by CNG sector which will relieve government of burden, reduce prices as compare to petrol and allow CNG sector to work as per the market mechanism. He said the gas utilities are improving transmission and distribution system, their swap capacity would increase by December 2016 while completion of LNG pipeline and more terminals will settle the energy crisis.

Copyright Business Recorder, 2015

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KP GOVERNMENT, GULF FIRMS AGREE TO SET UP OIL REFINERY

Khyber Pakhtunkhwa government and the Gulf Company "Almotahedoon Petroleum Refinery" have agreed to establish Oil Refinery at Khushal Garh area of district Kohat for which the provincial government will acquire the required land with the condition that "Almotahedoon" being private company will pay 25% charges instead of 15% for the land acquisition under the Land Acquisition Act. A formal agreement on this account will be signed later. This was decided in a meeting of the provincial government and official of the foreign company held at Khyber Pakhtunkhwa House, Islamabad with the Chief Minister Pervez Khattak in the chair. The Advisor to the Chief Minister for Communication and Works, Akbar Ayub Khan, Chairman of Almotahedoon Muhammad Ahmed Alkaitoob Al Naeemi, the Provincial Secretary Interior, Senior Member Board of Revenue, the Chief Economist, and Commissioner Kohat Division attended the meeting. The company expressed its willingness to fulfil the pre-conditions presented by the Chief Minister Pervez Khattak for acquiring land for the refinery and agreed to prefer local population in employment opportunities for the proposed refinery and local level consumption of Liquid Petroleum Gas will be allowed for them which will be covered by legislation or a formal agreement. It also ensured to take over one Technical Education Institute of the area and also to commence execution of the project soon after the land acquisition. The chief Minister on this occasion welcomed the project and directed the provincial revenue authorities to draft the land agreement in light of the conditions agreed upon by the both parties. The company told that it had obtained the Hydrocarbon quota from the federal government and presented documents of the quota so acquired to the Chief Minister. It is worth mentioning that allocation of the quota by the federal government was one of the pre-conditions of the KP government for permitting any company to install oil refinery in southern districts of the province and the provincial government had rejected many proposals, presented by many companies, for the reason that they had failed to obtain quota from the federal government under the laws.

Copyright Business Recorder, 2015

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MARI GAS TO BOOST SPENDING ON GAS EXPLORATION TO $106 MILLION

Finance Minister Ishaq Dar Saturday met a delegation of Mari Petroleum Company Ltd (MPCL) led by its Managing Director Lieutenant General Nadeem Ahmed (r). At the outset, Lieutenant General Nadeem Ahmed (r) thanked the Finance Minister for the government policies as well as his role which had helped turn the company around. He briefed the Finance Minister about the company''s exploration, development and production efforts, with reference to post-dismantling of Mari Cost-Plus Gas Price Agreement (GPA). He stated that the decisions taken by the ECC relevant to the gas sector had enabled the Mari Gas Company to raise spending on exploration activities to $106 million this year as compared to $32 million spent last year. The Finance Minister was also informed that MPCL will add up to 200 MMcf gas per day to the system within a couple of months that will result in annual saving of $250-300 million for the country. The MD on the occasion also referred to the company''s application for conversion to 2012 Policy which would allow MPCL to bring on stream substantial new production (around 100-150 MMcf) by end-2016. The MD also informed the minister that with improvement of security conditions in Balochistan, a number of new opportunities are likely to open up. The Finance Minister welcomed the company''s plans to beef up supply of natural gas that would help meet the growing needs of power and fertiliser sectors in the country. He stated that the country was endowed with precious natural resources and it was imperative that we make full use of them. He appreciated Mari Gas''s exemplary exploratory work saying that utilisation of indigenous resources was the way to preserve precious foreign exchange and boost economic development. He said the government has embarked on the path to growth and development and it was important that energy requirements for the development activities are catered for. The minister stated that the government would ensure that the exploration activities continue all over the country in a safe and secure environment and all necessary measure would be taken to achieve that objective. He assured MD Mari Petroleum of full support in its good work and hoped that other Pakistani exploration companies would be encouraged by the success that Mari Gas has achieved. Senior officials of the Ministry of Finance also attended the meeting.-PR

Copyright Business Recorder, 2015

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PPL ANNOUNCES BIGGEST GAS DISCOVERY IN MATIARI

Pakistan Petroleum Limited (PPL) has announced another gas discovery at its exploration well Hatim X-1 located in District Matiari, Sindh. PPL is the operator of Gambat South Block with 65 percent working interest (WI) along with its joint venture partners Government Holdings Private Limited and Asia Resources Oil Limited with 25 percent and 10 percent WI, respectively. Hatim X-1 was spud on October 8, and reached the final depth of 3,800 meters on November 26, company statement said on Tuesday. Based on wire line logs, potential hydrocarbon bearing zones were identified in Lower Goru Formation. Initial testing in Massive Sand of Lower Goru Formation flowed 56 mmscfd gas at 48/64 inches choke size, thus confirming the presence of commercial quantity of natural gas at Hatim X-1. The well is being flowed at different choke sizes to measure gas flow rates, and the actual flow potential of the well will be determined after completion of the test.

Copyright Business Recorder, 2015

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COAL-FIRED POWER PLANTS AT PORT QASIM: UAE, CHINESE FIRMS SIGN JV AGREEMENT

A Joint Venture Agreement between Metal Investment Holding Corporation UAE and Power China E&M International China to undertake 3x1320 MW Coal Fired Power Plants at Port Qasim Karachi was signed on Tuesday at the Board of Investment (BoI). The investment of $5 billion is being injected into the economy of Pakistan and at the same time adding much needed capacity into the national grid as per present policy of the Government of Pakistan. Haji Amin Pardesi, Chairman, Metal Investment Holding Corporation said it would support to fulfil the energy requirements of the country and to further enhance its economic development as well as to encourage the international investors to develop the Project through Foreign Direct Investment (FDI) and international expertise. The Joint Venture Agreement was signed by Haji Amin Pardesi, Chairman Metal Investment Holding Corporation, UAE and Ms Zhou Xinwei, GM Finance, Power China E&M International, China. Minister of State/Chairman, BoI, Dr Miftah Ismail ensured to extend full assistance and support to the Metal Investment Holding Corporation UAE and Power China E&M International China in obtaining all administrative and regulatory approvals, consents and permissions for the development of the Project, including acquisition of land for the project and the import of plant and machinery to complete the project well in time. He further highlighted that the government had identified the energy sector as an engine of growth and had taken a number of initiatives to attract foreign investment for exploration of new energy resources and to make the existing power system efficient. "The hallmark of the new energy policy of Pakistan is efficiency, transparency, provision of relief to the common man and maximum return to the investor. The Government of Pakistan has assured maximum facilitation to investors and is committed to attain maximum returns on their investment. "The bonds of friendship between China and Pakistan are expanding from Free Trade Agreement (2006) to China Pakistan Economic Corridor (2013). We have completed many important milestones. Trade has increased manifolds."

Copyright Business Recorder, 2015

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STRATEGIC SELL-OFF OF FESCO: PC TO HOLD ROAD SHOW IN TURKEY

Privatisation Commission (PC) is all set to hold a road show for strategic sale of Faisalabad Electric Supply Company (FESCO) not only in China but also in Turkey for the very first time. An official of PC told Business Recorder that Chairman PC Muhammad Zubair will proceed next week to China and Turkey for the road show of FESCO. He said that this is for the first time that PC will hold a road show in Turkey and the second to be held in China. Previously, PC held a road show in China on privatisation of Pakistan Steel Mills. Faisalabad Electric Supply Company workers protested the government's decision to privatise the company fearing job security. FESCO has over 19,000 employees of which meter readers and bill distributors are 5,000. The company's annual net profit is around Rs 3 billion, up from Rs 1.9 billion in 2010. The PC official however told Business Recorder that interests of FESCO employees will be safeguarded and were assured in the expression of interest (EOI) of the entity. The Privatisation Commission had invited EoI from prospective bidders for the strategic sale of 74% shares of FESCO envisaging handing over management control. The deadline for submission of the state of qualification is December 31, 2015. FESCO is one of the top-ranked distribution companies in terms of profit, recovery and sharply lower transmission and distribution losses. As the government has fast-tracked the process of privatising one of the profitable power distribution companies, the financials and clientele leads to the conclusion that the purchaser will profit from the sale. Pakistan has assured the International Monetary Fund (IMF) that it will sell FESCO by June 2016, adding that FESCO's recovery ratio is close to 100% as against 90.91%, of its Islamabad counterpart. FESCO transmission and distribution line losses are 11 % compared to IESCO's 9.4%. According to a report, FESCO's performance was second only to IESCO in fiscal year 2014-15.

Copyright Business Recorder, 2015

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RUSSIA TURNS FOCUS TO PAKISTAN’S ENERGY MARKET

In a significant development, Russia has offered to lay a pipeline for gas export to Pakistan, a proposal that stems from fears that Moscow will lose the European Union energy market because of a standoff with the US and Europe over the Ukrainian issue, officials say. Russia has been a major gas supplier to the EU to meet the bloc’s energy needs. However, trade and energy ties between the two sides have soured since last year in the wake of annexation of Ukrainian region Crimea by Moscow, which has slapped a ban on food imports from the EU. Russian investors interested in Pakistan’s energy, auto sectors last week, another dispute erupted when Turkey shot down a Russian fighter jet over the Syrian border. Turkey has been meeting 50% of its gas requirements through imports from Russia. Now, the US is expected to jump in and start exporting gas to capture the EU market, which will deal a big blow to Russia. On its part, Russia, which is the second largest producer of natural gas in the world, is looking for alternatives and diversifying its export markets. It has already signed a multibillion-dollar energy deal with China. Pakistan could also prove to be a huge market as it faces annual gas shortage of over 2 billion cubic feet per day. Karachi to Lahore pipeline: Pakistan, Russia seal $2 billion energy deal “A Russian delegation during a visit to Pakistan last month discussed plans for building a gas pipeline in a meeting of the Pakistan-Russia Inter-governmental Commission,” an official aware of the development said. They expressed keen interest in laying the pipeline for gas export to Pakistan, which would snake through Turkmenistan and Afghanistan, he said. Separately, Turkmenistan, Afghanistan, Pakistan and India are working on a transnational gas pipeline, called Tapi, which will also pass through Afghanistan and reach Pakistan and India. According to officials, the Russian pipeline will run parallel to the Tapi pipeline and extend to Gwadar, Balochistan. Already, Russia has offered liquefied natural gas (LNG) supplies to Pakistan in the next two years to meet its growing energy requirements. Pakistan and Russia usher in new era of cooperation. They have signed a government-to-government deal for building a pipeline for transporting LNG from Karachi to Lahore. Moscow will provide $2 billion in financing for the project. In return, Pakistan will award the pipeline-laying contract to Russian firm RT Global Resources without inviting any bids. The company, a Russian state corporation, will build a 1,100km-long pipeline with a capacity of 12.4 billion cubic metres per annum to connect LNG terminals in Karachi and Lahore. Under the agreement, Pakistan will provide 15% of equity whereas 85% of funding will come from the Russian company. First phase of the project is expected to be completed by the end of December 2017. Deepening partnership: Pakistan looks to Russia for satiating energy demand, Inter State Gas Systems, which helps develop and implement gas import projects, is working on two pipelines – one from Iran and the other from Turkmenistan. The pipeline from Russia will be the third one if the project is executed.

Copyright The Express Tribune, 2015

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MAJOR ENERGY BREAKTHROUGH: TAPI LAUNCHED

Leaders of Turkmenistan, Afghanistan, Pakistan and India during a ceremony in the Turkmen desert broke ground Sunday on a major pipeline that could help ease energy deficits in South Asia. Presidents Gurbanguly Berdymukhamedov of Turkmenistan and Ashraf Ghani of Afghanistan were on hand for the ceremony outside the city of Mary in the Karakum Desert, marking the beginning of work on the Turkmenistan-Afghanistan-Pakistan-India (TAPI) link. They were joined by Prime Minister Nawaz Sharif of Pakistan and Indian Vice President Mohammad Hamid Ansari, an AFP correspondent reported from the scene. "Today we were participants and witnesses of a historic event. Today marks the start of a project of great scale - the TAPI pipeline," said Berdymukhamedov at the ceremony, held in a pavilion imitating a traditional Turkmen nomadic dwelling. "TAPI is designed to become a new effective step towards the formation of the modern architecture of global energy security, a powerful driver of economic and social stability in the Asian region," he added. Turkmenistan has earlier said it expects the gas link with an annual capacity of 33 billion cubic metres to be fully operational by the end of 2018. However uncertainty hangs over the project, whose cost is estimated at $10 billion (9.0 billion euros). Aside from the risks associated with a link traversing war-torn Afghanistan, the four-country consortium has yet to confirm the participation of a major foreign commercial partner willing to help finance TAPI. Berdymukhamedov noted that Sunday also marked the beginning of the third phase of development of the Galkynysh gas field which will provide the resource base for the TAPI project. The next phase of development at Galkynysh - the second largest natural gas field in the world - will be overseen by a consortium of Japanese and Turkish companies in addition to Turkmenistan, Berdymukhamedov said.

Copyright Agence France-Presse, 2015

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