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News Headlines for the month of
AUGUST 2010

Petroleum Minister visits Gambat South to mark PPL discoveries

Federal Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi visited Gambat South Block in District Sanghar on Monday to mark recent discoveries made by Pakistan Petroleum Limited (PPL), the operator of the block. A PPL statement issued here said that the visit reiterates the government's stake in promoting oil and gas exploration to plug the energy deficit faced by the country on the one hand and the importance of the discovery by PPL on the other. PPL, that has 65 percent working interest in the block along with its joint venture partners Government Holdings (Private) Limited and Asia Resources Oil Limited, with 25 percent and 10 percent interests, respectively, made two back-to-back gas-condensate discoveries at exploration wells Wafiq X-1 and Shahdad X-1 within a span of approximately one month. Welcoming the minister and other guests, which comprised representatives of the Ministry of Petroleum and Natural Resources (MP&NR), provincial government, local administration and media besides PPL management and staff, MD and CEO Asim Murtaza Khan highlighted the importance of the discoveries, particularly in light of the prevailing energy crisis, adding that PPL is striving to fast track production from the two wells through Extended Well Testing. "As a key public sector E&P company, we are cognisant of our responsibility to optimise production and reserves replacement of hydrocarbons to decrease reliance on oil imports and secure a safe energy future for the country." Asim Murtaza also spoke about the various steps and protracted time lines required in carrying out technical evaluation of potential oil and gas reservoirs, identifying optimal location and drilling of exploration wells and developing infrastructural back-up before starting production. Similarly, he underscored the company's commitment to spurring development and well-being of stakeholder communities residing in its operational areas and gave a brief outline of initiatives launched in Sindh in the field of healthcare, education and civic infrastructure development. In his address on the occasion, the minister congratulated PPL and its joint venture partners on the discoveries and urged them to continue efforts to optimise production of hydrocarbons so that much-needed oil and gas can be added to national supply at the earliest. Shahid Khaqan Abbasi assured PPL of MP&NR's full support in fulfilling its ambitious exploration plan and growth targets. Taking note of the Corporate Social Responsibility initiatives by the company in Sindh, the minister advised the company to continue plugging development gaps affecting local communities. The minister also visited the rig at Shadad X-1 well site and ignited the gas flare to mark the discovery. Wafiq X-1, the first exploration well at Gambat South Block, was spud in on February 17 and reached the final depth of 3550 metres on May 21. Based on wireline logs evaluation, multiple zones were tested within massive sands of lower Goru Formation and cumulative flow potential estimated at about 58 MMscfd gas and 400 bbl/d condensate. This was followed shortly by Shahdad X-1, which was spud in on March 30 and reached final depth of 3665 metres on June 19. According to wireline logs, potential hydrocarbon bearing zones were identified and initial testing flowed about 30 MMscfd of gas and over 337 bbl/d condensate. Final flow potential of both wells will be ascertained on completion and cumulative flow added to the national grid following first-gas.-PR

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Eight oil, gas fields in Balochistan: OGDC facing difficulty in starting drilling

ISLAMABAD (August 31 2010): The Oil and Gas Development Company Limited (OGDC) is facing difficulty in starting drilling on eight oil and gas fields which are still under force majeure due to the inability of the Balochistan government to provide security, Business Recorder has learnt. The federal government has extended representation of Balochistan on OGDC board of directors (BoD) in an effort to expedite drilling on different fields. These fields include Zin, Samandar, Shahana, Jandran, Jandran West, Kohlu, Saruna and Lakhirud. Zin Block, covering area of 5559.74 kilometres (km) in districts Nasirabad, Dera Bugti and Bolan, Balochistan, was granted to OGDC for exploration for a period of three years effective from June 23, 1996. However, from the very beginning, this block has been under force majeure due to adverse law and order situation except for a brief period when OGDC carried out some collection of seismic data and marked the location of Zin Well. Troops are simply not available to provide security cover for drilling. Inspector-General (IG) Frontier Corps (FC) Balochistan has, however, committed to providing in the second week of September and OGDC is expected to commence work in the third week of September 2010. Samandar, located in districts of Awaran and Lasbella, was awarded to OGDC on July 6, 2005. Geological work in the area was carried out in 2005-06. Based on the geological work, 2-D seismic acquisition programme of 375 km was designed for further exploration of the area. Meeting with Commissioner of Kalat was held at Hub on July 15, 2010 for necessary co-ordination. Work on the concession is expected to start soon. Shahana block was awarded to OGDC on December 29, 2004 located in district Kharan and Ranjgur. OGDC has not started exploration activities yet due to lack of security cover. Jandran is located in Kohlu Agency and Loralai district. The area is under force majeure since May 7, 2000. As per directive of the government of Balochistan, a meeting will soon be held with the Commissioner of the area to get security cover. Jandran West was granted to OGDC effective from February 16, 2010 located in Kohlu and Barkhan districts. Right from the outset, the concession is under force majeure. Lakhirud block was granted to OGDC with effect from October 10, 2009. This area falls in Loralai, Musakhel Bazar, Barkhan and Kohlu districts. The area is still not clear for drilling activities.

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TAPI gas pipeline project: Turkmenistan and Pakistan meet today

ISLAMABAD (August 25 2010): Pakistan and Turkmenistan are scheduled to meet today to resume talks on United States (US)-backed Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project, costing over $7.5 billion, Business Recorder has learnt. The offer to use Gwadar port as an export point for Turkmenistan gas is also under consideration. The two countries will focus on resolving issues related to the TAPI gas pipeline, including its price, route and certification of gas reserves. The Federal Minister for Petroleum and Natural Resources, Syed Naveed Qamar will hold a meeting with a delegation from Turkmenistan, headed by the Deputy Premier/Foreign Minister of Turkmenistan. In April 2008 during 10th Steering Committee (SC) meeting, Pakistan and India had jointly offered a gas price of $200 per million cubic meters (MCM) $5.7 per mmbtu) but Turkmenistan rejected the offered price insisting on a price not less than $11.4 per million British thermal unit. Due to Taliban insurgency in Afghanistan, Pakistan has proposed an alternative route to Turkmenistan - from Iran to Pakistan with entry point through Balochistan. "The TAPI pipeline will pass near Rakho Diq copper mines project in Balochistan Chaghi area and onward to Gwadar port," sources said. Pakistan has conveyed to Turkmenistan that more than 72 percent insurgency-related cases by the extremists' elements are taking place on a weekly basis on the earlier proposed TAPI gas pipeline route - from Herat to Kandahar. Sources said that "If the proposed alternative western route is acceptable to all countries the length of gas pipeline will be reduced to 1490-kilometre from 1680-kilometre on Herat-Kandahar route". Though Turkmenistan has said that it has gas reserves of 8 trillion cubic meters yet Pakistan and India want certification of gas reserves before taking any further steps on the TAPI gas pipeline project. Under the proposed project, Turkmenistan will supply 3.2 bcfd gas to Pakistan, Afghanistan and India. Copyright Business Recorder, 2010

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Pakistan wants to get Turkmen gas through IP pipeline

ISLAMABAD (August 26 2010): Pakistan has proposed to Turkmenistan to supply gas via Iran by using the Iran-Pakistan (IP) gas pipeline, instead of laying a pipeline through the war-torn Afghanistan, under swap arrangement, Business Recorder has learnt. Experts of the two countries will review the proposal in the 11th Steering Committee meeting on TAPI gas pipeline project scheduled for September 15-20 in Ashgabat, Turkmenistan. Pakistan had proposed a swap arrangement during a meeting held between Minister for Petroleum Naveed Qamar and Deputy Chairman of the Cabinet of Ministers of Turkmenistan and Minister for Foreign Affairs Rashid Meredov who was heading the delegation here on Wednesday. Under this arrangement, imported gas volume agreed between Pakistan and Turkmenistan will be supplied to the northern provinces of Iran in lieu of which Iran will supply equivalent gas volume through the IP pipeline to Pakistan. Talking to Business Recorder, Secretary, Petroleum, Kamran Lashari said that Pakistan had asked Turkmenistan to submit certification of gas reserves. Lashari said that experts' meeting will be held in Ashgabat on September 15 to sort out technical issues regarding the TAPI gas pipeline project. He said that Pakistan wants to resolve all technical issues on TAPI gas pipeline project by December end. Meanwhile, according to an official statement, the Federal Minister for Petroleum and Natural Resources Naveed Qamar underlined the need for fast tracking Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project and putting in place effective institutional mechanism for bilateral and multilateral progress on the matter. Qamar made these remarks while talking to Rashid Meredov, Deputy Chairman of the Cabinet of Ministers of Turkmenistan and Minister for Foreign Affairs, who was heading the delegation from Turkmenistan that called on him here on Wednesday. Qamar, congratulating his counterpart on huge discovery of natural gas in Turkmenistan, said that both countries could benefit from each other's resources and technical expertise to a great extent. The Minister, assuring assistance from his side, said that Pakistan was fully committed to early implementation of the TAPI project and considered that the collective and bilateral matters must be streamlined on priority basis to foster progress and prosperity between the two countries. The two sides reviewed the status of signing of the Heads of Agreement (HoA) and negotiations on the Gas Sales and Purchase Agreement (GSPA) between Pakistan and Turkmenistan and also discussed possibly early commencement of the 11th Steering Committee meeting and holding the same in Ashgabat. Meredov said that he looked forward to further co-operation in the energy sector between the two brotherly countries and expediting the projects underway. The meeting was attended by Secretary, Petroleum and Natural Resources, Kamran Lashari, and Hilal A Raza, MD Inter State Gas Systems Ltd, and others. Copyright Business Recorder, 2010

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Pepco wants new Sujawal block gas for power sector

ISLAMABAD (August 25 2010): The Pakistan Electric Power Company (Pepco) has urged the Petroleum Ministry to allocate newly discovered gas from Sujawal block of Mari Gas (MGCL) to public sector power projects, official sources told Business Recorder. MGCL, a petroleum exploration and production company, has made a significant gas/condensate discovery with its tested maximum flow rate of 11.5 mmscfd in Sujawal X-1 in the Sujawal Exploration Block located in Sindh. This success of the Sujawal Block will be an addition to the nation's gas reserve base, which would result in saving of foreign exchange. The first exploratory well was spud in on February 6 this year and drilled down to a depth of 3,000 meters in Lower Goru Formation of Cretaceous age. Based on the wire-line logs, drilling data and geological information, the well was tested using drill stem testing methods. As a result, the Sujawal X-1 discovery was made in the Lower Goru Sands (Upper Sands) which tested maximum gas flow rate of 11.5 mmscfd and condensate of 70 bbld with wellhead pressure of 2270 psi at 32/64" choke size. The discovered gas has a heating value of 1024 BTU/Cu.Ft and condensate API gravity is 51.7 @ 60F. MGCL is a major exploration and production company of the country. Besides this Sujawal discovery, the company has made four earlier gas/oil discoveries over the last five years viz: (i) Mari-Sui Main Limestone, (ii) Mari - Pirkoh Limestone Formation, (iii) Ziarat Field, and (iv) Koonj-1A. Cognisant of the increasing gap between the country's energy demand and supply shortages and in acknowledgement of government's endeavour in resolving this crisis, MGCL feels obliged to play its part in the country's efforts in enhancing its indigenous resources. MGCL presently operates two development and production leases, seven exploration blocks and has joint venture interest shares in six other exploration blocks. The company has also acquired working interest in one overseas Oman exploration block." Keeping in view with the federal government policy that affordable power has to be generated, it is requested that entire gas from Sujawal block should be allocated to Pepco for use at Gencos so that oil firing can be replaced with gas," said, Khalid Rasheed General Manager (Thermal) Pepco in a letter to Director General Gas. At present, approximately 6,687 tons of furnace oil is being consumed daily at Pepco's Gencos' at a cost of Rs 323.386 million. Allocation of gas from Sujawal block will result in saving of RFO consumption amounting to Rs 12.8 million daily as well as reducing the volume of circular debt, he added. Copyright Business Recorder, 2010

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Oil imports rise to record 1.9 million tons in July

KARACHI (August 25 2010): The country's oil imports rose to the highest-ever level of 1.9 million tons in July 2010 as compared to 1.6 million tons in the same month in 2009, showing a growth of 20 percent on year-on-year basis. "The major reason for such high growth in oil import volumes is mounting demand of furnace oil, a major fuel for thermal power generation as its imports grew by 51 percent on yearly basis to 0.7 million tons," analysts said. "With restricted local refinery production due to circular debt and growing oil needs, the country recorded highest ever oil imports, in volume terms on a monthly basis in July 2010, that can be a worry for economic managers after the devastating floods that may affect the trade deficit," Farhan Mahmood, senior analyst at Topline Securities said. According to oil import statistics released by the Oil Companies Advisory Committee (OCAC) both refineries and oil marketing companies imported 1.9 million tons of oil (crude and oil products) in July 2010 as compared to 1.6 million tons during the same period last year, with an increase of 20 percent on year-on-year basis. Farhan said though import of crude oil grew by 7 percent to 0.6 million in July 2010, it stood close to last 12 years average monthly crude oil import of 0.5 million tons. However, on the other hand, import of petroleum products which mainly include diesel (32 percent) and furnace oil (56 percent) grew by 27 percent to 1.3 million tons. This is 30 percent higher than average monthly oil products imports of one million tons during last 12 months. He said after witnessing 34 percent rise in the import of furnace oil during FY10, import of furnace oil grew by stunning 51 percent to 0.7 million tons only in the month of July 2010. This is primarily on the back of continuous increase in demand from thermal power plants and relatively lower furnace oil production by local refineries, he said, adding that with growing circular debt and negative refinery margin on FO, refineries have scaled down FO production. This has created a big concern as more than 80 percent of the local FO demand is being met through imports (which was 56 percent three years ago) which is crucial in the event of force majeure. The underlying factor behind continuous rise in imports is the growing circular debt problem, which has reduced local crude and refined oil production. Despite a few big oil discoveries in recent times, oil production is relatively flat on an average during last couple of years. Moreover, refineries are producing 20-30 percent less than their capacity. The local E&P companies produced only 65,000 barrels per day of oil during FY10 as compared to 66,000 barrels last year. However, refineries produced only 8.1 million tons of oil products in FY10 against 8.9 million tons in FY09, with a decline of 8 percent. "With circular debt hovering around Rs 130 billion of which more than 70 percent is being borne by local E&Ps, there are chances that their drilling activities could reduce going forward," Farhan said. The drilling activities had reduced by 26 percent as only 90 wells were drilled (including carry-over wells) in FY10 as compared to 121 wells drilled in FY09. He said the government needs to support new refineries via long-term refinery policy, he said. The upcoming 4.5 million tons BYCO refinery (expected to be commissioned in next few months) could reduce oil products imports by 36 percent. However, the government needs to ensure that this circular debt will reduce so that new refineries operate efficiently otherwise we might see the situation gets worsened, he added. Copyright Business Recorder, 2010

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Iran completes main part of gas pipeline

TEHRAN (August 24 2010): Iran on Monday inaugurated a major section of a multi-billion-dollar pipeline, which is due to transfer its rich gas reserves to Pakistan. Officials said this section of pipeline transfers natural gas from Assalouyeh Energy Zone in the south to south-eastern city of Iranshahr, near the Pakistani border. The project was inaugurated by First Vice-President Mohammad Reza Rahimi in a special ceremony also attended by the country's Oil Minister Masoud Mir-Kazzemi. The project had taken five years with a cost of $1.3 billion. The 902-kilometer pipeline, which will supply gas to eastern regions, is also aimed at exporting gas to Pakistan and India. In March, Tehran & Islamabad signed a final agreement to launch project to export Iran's gas to Pakistan. The 2700-km long pipeline was to supply gas for Pakistan and India which are suffering lack of energy sources, but Delhi later evaded talks. Last year Iran and Pakistan said they would finalise agreement bilaterally if India continued to be absent in meetings. The pipeline will begin from Iran's Assalouyeh Energy Zone in the south and stretch over 1,100km through Iran. In Pakistan, it will pass through Balochistan and Sindh provinces. Gas will be supplied from South Pars field. Initial capacity of pipeline will be 22 billion cubic meters of natural gas per annum, which is expected to be later raised to 55 billion cubic meters. It is expected to cost $7.4 billion. Copyright Pakistan Press International, 2010

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Bangladesh hails offer to join IPI gas pipeline

DHAKA (August 24 2010): Bangladesh has welcomed the Iranian proposal of tagging the South Asian country with the proposed 7.5 billion dollars cross-border gas pipeline to meet its mounting natural gas requirements in industries and power plants, senior officials said Monday. "We would be very happy to be a part of the proposed multi-country gas pipeline," chairman of state-owned oil and gas corporation Petrobangla Chairman Dr Hossain Monsur said. He said it would be very useful for Bangladesh if it could bring energy-rich Iran's gas inside the border. Joining the proposed Iran-Pakistan-India (IPI) gas pipeline would also help ease energy crisis of this region, said the Petrobangla Chairman. Bangladesh's Deputy Leader in Parliament Syeda Sajeda Chowdhury earlier said the government should consider the proposal of the Iranian government to take their gas through the proposed pipeline. She also informed parliament that a process was under way to bring gas from Iran to Kolkata, the main city of the Indian State of West Bengal bordering Bangladesh through the pipeline and it could be extended up to Bangladesh. Iran recently proposed the energy-starved Bangladesh to get involved with the proposed cross-border gas pipeline. Copyright Associated Press of Pakistan, 2010

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Chinese oil exploration company discusses investment prospects

HYDERABAD (August 23 2010): A delegation of Chinese oil exploration company Zhenhua called upon Federal Minister for Petroleum and Natural Resources, Syed Naveed Qamar Zaman Shah here on Sunday and showed interest in enhancing the investment portfolio in Pakistan Petroleum Limited (PPL). The delegation was led by the company's Vice President Heyang Zuxi and included Sang Huaiyu and Ms. Wong Qing. Managing Director PPL Khalid Rehman, who was also present in the meeting, told APP that the company was already a partner with PPL in its joint ventures. The MD informed that Zhenhua delegation apprised the federal minister about its plan of investment in the PPL, however, he did not pronounce the proposed size of the capital likely to be invested by the company. He further informed that the minister briefed the delegation about the prevailing flood situation and the disaster wreaked by it in the country, on which the company assured of providing all possible help for the relief to the affected people. Copyright Associated Press of Pakistan, 2010

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Drilling in 'Zin Block': OGDC Board approves action plan

ISLAMABAD (August 15 2010): The Board of Directors (BoD) of the Oil and Gas Development Company () has approved an action plan to initiate drilling work in 'Zin Block', located in Balochistan province next month, Business Recorder has learnt. Earlier, the OGDC management had moved a proposal to the board of directors to sell 'Zin Block', located in Balochistan province, to a local exploration company, Pakistan Exploration Limited (PEL), but the board had turned down the proposal in its meeting in December 2009, expressing fear that the move could further aggravate hatred in Balochistan against the federal government. The OGDC administration was directed to chalk out the plan, in a month's time, regarding the drilling activities on Zin field in Balochistan province. "OGDC management has tabled a plan to start drilling work in Zin field in board meeting held on August 12, 2010," sources said, adding that the board has approved the action plan directing to initiate drilling in September. Sources said that after Balochistan Package, announced by the federal government, the security situation had improved in some parts of the province and now time is ripe to start drilling activities. "OGDC is the strategic asset of the government, and no decision can be made to destroy it," sources added. In the Balochistan Package, the government has given representation to Balochistan and Sindh provinces in the Board of Directors to take them into confidence over the decisions regarding oil and gas exploration activities. "OGDC powerful lobby's move was against the spirit of Balochistan package to sell Zin field which have might lead to a new controversy between federal and provincial governments if Zin block would have sold to a local private company," sources said. Officials said that OGDC had completed the survey and seismic study regarding the Zin field and now it was at the advance stage to start field drilling. They said that some powerful lobbies in OGDC were working for the vested interests of the private sector to make OGDC a failed organisation. OGDC employees had also protested over management move to sell Zin field. They had raised slogans against the OGDC management saying that it was hatching conspiracies against the organisation. Copyright Business Recorder, 2010

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50mmcfd from PPL, Mari surplus gas to be supplied to Guddu plant

ISLAMABAD (August 14 2010): The Ministry of Petroleum has agreed to not only supply 50 MMCFD from Pakistan Petroleum Limited (PPL) but also to divert surplus gas from Mari Deep to Guddu power plant, sources told Business Recorder. In a ministerial level meeting held on August 3, the following decisions were taken: (i) 50 mmcfd Kandhkot gas to be supplied to Guddu by operator PPL; (ii) temporarily divert surplus gas not likely to be used in the near future from Mari deep to Guddu power plant immediately instead of curtailing the gas to the fertiliser industry; (iii) gas curtailment decisions need to be revised; and (iv) fertiliser Policy 2001 and Gas Allocation Policy 2005 are being followed by dedicating the Mari shallow field gas output to the fertiliser sector. Fertiliser manufacturers had previously strongly protested against the continuation of gas cut to their industry beyond July 31, 2010 and said that Mari gas must be restored to the fertiliser industry, as it was not pipeline quality and contained 'carbon dioxide' and 'nitrogen' which was wasted by the power sector. "This was the reason for dedicating Mari shallow to the fertiliser sector as part of the fertiliser policy 2001," fertiliser industry representative maintained. Manufacturers' representatives said that two decisions were urgently required: (i) to give additional gas to Guddu power plant without jeopardising the interests of the fertiliser industry; (ii) to supply 50 mmcfd Kandhkot gas to Guddu power plant on priority basis by PPL. Secretary, Petroleum, Kamran Lashari, stressed that any decision taken to resolve the energy crisis should be well thought out through and should not only benefit one sector exclusively at high costs to the others and the economy as a whole. He said that the energy situation may worsen till new initiatives taken by the government start supplementing the current energy supply. Director General (DG) Gas Petroleum Ministry said that the delay regarding diversion of surplus gas to Guddu power plant was not due to any decision taken by the ministry. "The Private Power Infrastructure Board (PPIB) and Ministry of Water and Power, were to decide whether to divert gas allocated to Star Power that was lying surplus to Guddu Power Plant or not," he clarified. Copyright Business Recorder, 2010

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Ogra issues first ever LPG autogas marketing licence

LAHORE (August 12 2010): In the wake of fast depleting natural gas resources in the country, the Oil & Gas Regulatory Authority (Ogra) has finally issued marketing licence to a private LPG Company for setting up first ever LPG Auto Gas Station in Sialkot. This licence represents a breakthrough for the LPG Industry which has been struggling to establish Autogas Stations in conformance with Ogra's stringent safety standards. More than 10 million vehicles operate on Autogas globally and the fuel is gaining popularity due to its environmental friendliness and the ease with which it can be made available, Belal Jabbar, CEO of LPG Autogas Station said while talking to Business Recorder. According to him, the first-ever LPG Autogas station will start its operation in Sialkot within one week. With this, the Autogas market in Pakistan is expected to mushroom in the coming years, as LPG is emerging as a popular alternative to CNG. It may be mentioned that LPG is used in most of the European countries being environmentally friendly and cheaper fuel. Belal Jabbar said that the issuance of this licence has finally put an end to the debate as to whether Autogas stations will ever be established in the country. 'The path is now clear for the LPG Industry and all stakeholders to work together for the development of Autogas stations. The success of one station depends on the establishment of more,' he added. He thanked the LPG Association of Pakistan for its unreserved support and also the Oil & Gas Regulatory Authority, Ministry of Petroleum and Ministry of Industries for facilitating the issuance of the licence. According to him, the Auto sector accounts for more than 50 percent of the total LPG consumed in Pakistan; albeit through illegal decanting which poses a serious risk. 'Autogas stations will help in eliminating this menace whilst providing rickshaws and four wheelers with an alternative to petrol and CNG. Experts of the field told this scribe that with the setting of LPG Autogas stations across the country, not only the vehicles user will get cheap fuel but it will also help minimise environmental pollution. Copyright Business Recorder, 2010

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Minister urges expatriates to invest in Thar Coal projects

KARACHI (August 11 2010): The Senior Minister Sindh, Pir Mazharul Haq, said that the overseas Pakistanis would be given top priority if they would invest in Thar Coal projects. He was speaking as chief guest at a luncheon meeting held at a local hotel the other day in honour of business leader and President, Pakistan-India Chamber of Commerce and Industry. S M Muneer and President, Pakistan Businessmen and Intellectuals Forum (PBIF), Mian Zahid Husain. He said that by investing in Thar Coal projects the expatriates could get huge profits besides contributing in Pakistan's energy sector and overcome worst ever power crisis prevailing across the country. He said that country needs overseas Pakistanis' help at this hour of the need as three provinces have affected due to worst ever floods in Pakistan. He appealed to the overseas Pakistanis as well as countrymen to come forward and contribute in helping the flood stricken people and send relief goods to rescue them. The PBIF President, Mian Zahid Husain said in his welcome address that industrialists and businessmen of this country had never stayed away in helping the needy whenever any catastrophe occurred in Pakistan.-PR Copyright Business Recorder, 2010

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WB to help Pakistan cut energy losses

The World Bank (WB)will help Pakistan reduce its power sector line losses from 22 to 17 percent and gas losses from 10 to 6 percent to enable the public sector entities to grow on sustainable basis and provide their services more efficiently and cost effectively. This was revealed by the WB in the Pakistan Country Partnership Strategy (CPS) 2010-13 results framework on Wednesday, August 18, which was agreed with the government of Pakistan. For increased power provision, efficiency and reliability of energy supply, the banks financial support to help reduce load shedding in power sector is reduced from 25 percent of peak demand to 15 percent and total elimination of gas load shedding in the country. The third and key goal of the WB’s help is to improve the financial viability of the public sector entities, zero budget support for power sector subsidies and enable these entities to finance 20 percent of their investment plans through internal cash generation. According to the Pakistan CPS 2010-13, the reforms in the energy sector aim at strengthened electricity and gas networks leading to improved technical and commercial performance of energy networks, gas and electricity. It also aims at expansion of hydro generation capacity in the public sector through expansion in Tarbela extension project, investment in cross border energy supply infrastructure initiated under the Central Asia-South Asia Electricity Transmission and Trade Project (CASA 1000). The CPS 2010-2013 released by the World Bank stated that available and affordable power is critical to long-term growth and for improved quality of life. Some progress has also been made in filling the shortfall in generating capacity in the sector through expedited processing of Independent Power Producers in the pipeline. Nonetheless, the demand-supply gap remains substantial and load shedding is likely to continue for some time. Sector finances were a major challenge when the current government took over two-year ago but the government has made progress substantially increasing cost recovery levels and putting in place regulatory processes to allow for more timely and less political tariff adjustment procedures to reflect underlying operating cost increases. Since 2008 consumer power tariffs have been increased by early 60 percent. During the CPS period, the bank group will support continued policy reforms in the sector. In addition to the continued focus on sector financial viability, the bank would support institutional reforms, such as streamlining the institutional setup within the government to increase the efficiency of decision making as regards policy formulation, planning and investments; strengthen the autonomy and accountability of the sector entities, especially distribution companies, and refine the industry structure to enable more private sector participation, including lessening the government’s contingent liabilities (power purchase guarantees). The bank group will help in addressing the investment deficit. In view of the importance of having sufficient gas for power production, the bank would support the gas sector to improve efficiency, reduce unaccounted for gas (UFG) and redeploy more gas to the power sector; and possibly support an LNG import facility through the bank’s guarantee instrument. An important focus of the bank’s support to the sector would be in the hydropower arena, where we plan to help finance the Tarbela power generation expansion project (about 1,000 megawatts additional capacity) ad help the government to complete feasibility and design studies for other potential project. Subject to the outcome of these studies, the bank will consider financing. In terms of regional cooperation, the WB and International Finance Cooperation (IFC), in concert with other financiers, will help finance the CASA 1000, sponsored by Pakistan and Afghanistan (as prospective importers of electricity), and Kyrgyz Republic and Tajikistan (as perspective exporters). Assistance to the electricity distribution industry would be continued through the ongoing Electricity Distribution and Transmission Improvement Project APL series. Copyright Business Recorder, 2010

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OGDCL discovers gas from Gopang Well

ISLAMABAD (August 20 2010): Oil & Gas Development Company Limited (OGDCL) has discovered gas from its exploratory well Gopang Well No 1 in the joint venture of Nim Block comprising OGDCL, as operator (95 percent) and Government Holding (Pvt) Limited (GHPL) (5 percent carried) in district Hyderabad, Sindh Province. The structure of Gopang well No 01 was delineated, drilled and tested using OGDCL's in house expertise. The well was drilled down to the depth of 2451 meters, targeting to test the hydrocarbon has been found at Gopang well No 01. The Zone has tested 3.25 MMSCFD of gas and 100 BPD of condensate through 32/64" choke. The discovery of Gopang well No 01, will add more reserve to the hydrocarbon reserves base of the OGDCL.-PR Copyright Business Recorder, 2010

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China to set up oil refinery at Karachi

BEIJING (August 06 2010): China on Thursday agreed to establish an oil refinery in Pakistan to meet the growing demand of fuel. The China International Project Investment Management Centre in this connection signed an agreement with Pakistan's Indus Refinery Limited here on Thursday. The refinery will be set up in Karachi with a capacity of 203,000 barrels per day. Pakistan's Ambassador to China, Masood Khan witnessed the signing ceremony, which took place in a local hotel. Copyright Associated Press of Pakistan, 2010

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1. LNG import, terminal for power generation: EVTL and Kapco jointly seek government approval

ISLAMABAD (August 02 2010): EVTL and Kapco have jointly sought approval from the government to import liquefied natural gas (LNG) and setting up terminal for power generation purposes, Business Recorder has learnt. The Kapco intends to import LNG for power generation purposes. SSGC/SNGPL have already assured transport of RLNG to Kapco's power plants, subject to finalisation of GTRA with Kapco. Sources said that EVTL and Kapco wrote a joint letter on April 9, 2010, on the proposal to import LNG for power generation and setting up a terminal. In a meeting, chaired by Secretary, Petroleum and Natural Resources, on May 14, 2010 the proposal of LNG import and setting up a terminal was discussed. The meeting was informed that EVTL planned to establish an open access floating terminal (tolling type) in the private sector, and Kapco was interested to import LNG, using EVTL's terminal, for its own use. "It is understood that the proposal of LNG import and terminal can be developed under 'LNG Policy 2006', without bringing about any major amendment(s)," the meeting was informed. In the process, EVTL will require a licence from the Oil and Gas Regulatory Authority (Ogra), under Clause 4 of LNG Policy 2006, and other necessary NOCs/ Implementation Agreement with the concerned Port Authority. Additional Clause 6 of the Policy provides regulatory framework for terminal as well as third-party access. Since Kapco will be importing LNG for its own use, under Clause 3.1 (f) of the policy it would not require any licence for import of LNG. However, under Clause 6.4 of Policy, Kapco will have to seek Third-Party Access, from Ogra, for transmission of LNG under a Gas Transmission/Tariff Agreement (GTA) with SSGC/SNGPL. Ogra would also approve the negotiated LNG price, under the Policy. SSGC/SNGPL have already assured of transporting LNG to Kapco's power plants, subject to finalisation of GTRA with Kapco. The Petroleum Secretary directed co-ordination between concerned agencies for requisite licences/NOCs, and noted that in case of any bottleneck in LNG Policy 2006, specific proposals/amendments may be suggested. Copyright Business Recorder, 2010

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90 percent of power restoration work in flood-hit areas over: PESCO

PESHAWAR (August 20 2010): Chief Executive Peshawar Electric Supply Company (PESCO), Mohammad Wali on Thursday said that power supply to 90 percent flood affected areas has been restored while the remaining restoration would be completed within a week. Addressing a press conference at Wapda House, he said that power supply to Mingora city and its adjacent areas had been restored on Friday evening, which speaks the level of efficiency and commitment of the field staff of the company. He said that power restoration in the flood affected areas, particularly in Swat was a daunting task, but the PESCO teams worked tirelessly and achieved the targets within stipulated time period. He said floods had damaged 24 grid stations and 211 feeders since July 28, however, except Madian grid station that have been washed away the restoration of remaining Khawzakhela and Shangla grid station would be completed within a week. He said power supply to Madian would be restored from the alternative source of Khawzakhela grid station. Referring to load management, Mohammad Wali explained that D. I. Khan, Tank and Lakki were the areas, where power outages were more than usual due to the closure of Kot Adu power plant. He said efforts were being made to make this plant functional. He requested the consumers of these areas to cooperate with the distribution company in this process. He disclosed that two senior officers of the company were drowned in the flash floods, while restoring power supply to D. I. Khan that shows their commitment to the job and sacrifice they rendered for the people of flood affected areas. Giving details about the overall shortfall, the CEO said that the PESCO had allocated quota of 640MW for load management that was balanced in shape of six to seven hours load management in Khyber Pakhtunkhwa. He, however, informed that with addition of 700MW in the generation system, the shortfall would recede and improve the situation. Replying to a query, he lamented that in some areas PESCO was suffering 70 percent losses due to stealing and its recovery was not more than 50 percent. He said the company carries out power shutdowns more than regular because of system constraints. Wali further said the company had suffered a financial loss of Rs 2.5 billion in the aftermath of the flash flood and most of the restoration work was being done by utilising funds originally allocated for the development. Copyright Business Recorder, 2010

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CASA-1000 power project: Zardari, Rahmon agree to fast-track implementation

SOCHI (August 19 2010): Pakistan and Tajikistan on Wednesday agreed to fast-track implementation of the CASA-1000 mega project for importing power from Tajikistan and work together for building a trade and energy corridor through Central Asia. They also agreed to explore joint ventures in energy, pharmaceutical, textiles and manufacturing sectors. The agreement to this effect came during the bilateral meeting between President Zardari and Tajikistan's President Emomali Rahmon here on Wednesday. The meeting was also attended by Defence Minister Chaudhry Ahmad Mukhtar, Foreign Secretary Salman Bashir, Special Secretary Haroon Shaukat and Ambassador Khalid Khattak. The President said that a speedy implementation of the recently concluded trade and transit agreement between the two countries would open avenues for co-operation with other counties in the region also. The President also called for conclusion of a preferential trade agreement to further promote trade between the two countries, which was presently very low being 6.5 million dollars per year only. To step up trade President Zardari offered his Tajikistan counterpart, Pakistan's readiness to meet the cement needs of Tajikistan. The two sides also decided to revitalise the joint economic commission and explore a trilateral trade agreement with Afghanistan. They also decided to pursue with Afghanistan, the road project linking Pakistan to Tajikistan and beyond. The proposed road will pass through Durra Pass and the Wakhan Strip in Afghanistan. Pakistan has already completed feasibility of the portion of the road on its side. The Tajik President said that the World Bank was optimistic about the CASA-1000 project and said that Tajikistan will step up work on it. President Emomali Rahmon expressed sympathies and condolence over the deaths and destruction caused by floods in Pakistan and called upon the international community to help Pakistan overcome the devastating situation of the floods. President Zardari also invited Tajik President to visit Pakistan which the latter accepted. Copyright Associated Press of Pakistan, 2010

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Alternate sources of energy imperative for development: Afridi

ISLAMABAD (August 13 2010): Federal Minister for Environment Hameedullah Jan Afridi has said that it is imperative to promote alternative sources of energy in different sectors to overcome the current energy crisis in the country. "Without utilising the alternative energy resources the progress in many fields is not possible", the minister said in a briefing held here on Thursday. The Chief Executive Alternative Energy Development Board (AEDB) Arif Alauddin briefed the minister about various ongoing and new projects. The minister said that energy shortage has badly affected national economy besides creating difficulties for citizens, It is high time that agriculture and industrial sector to switch over renewable energy technology. "It could be made possible when relevant organisations should extend technical support and guidance to the agriculturists and industrialists to come forward and set up renewable industrial units in Pakistan", he added. The minister asked local and foreign investors to invest in energy sector to meet the energy requirements. He said although government had taken a number of initiatives in this regard, however, the cooperation of public sector is still required to deal with the critical situation. He said solar energy system is suitable for agriculture and we can enhance the capacity of tube-wells for irrigation purposes by using solar energy source. He said Ministry of Environment also encouraging concerned organisations to adopt and develop alternative energy technology to reduce their expenditures. The AEDB Arif Alauddin said that new technique must be adopted to meet the power deficiency. Copyright Business Recorder, 2010

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Turkmenistan plans to supply electricity to Pakistan

ASHGABAT (August 12 2010): Turkmenistan aims to attract foreign investors to build the first leg of a trans-Afghan power link to serve Pakistan with electricity generated from Central Asia's largest gas reserves, a government source told Reuters. The Turkmen stage of the project would involve the revamp of a gas-fired power station in the eastern city of Marv and the laying of new power lines to the border with Afghanistan, the source said on Wednesday, speaking on condition of anonymity. "President Kurbanguly Berdymukhamedov has instructed the Energy Ministry to attract foreign investment to realise a project for the export of Turkmen electricity to Pakistan via Afghanistan," the source said. The source did not specify the required amount of investment or the timetable for the project. Turkmenistan is offering gas to be drawn from the world's fourth-largest reserves to China, Iran and the West as it seeks to diversify supplies from its traditional market, Russia. By converting some of this gas into electricity, the former Soviet republic is also eyeing a bigger role in regional energy markets. Turkmenistan's power stations have capacity to generate 17 billion kilowatt hours (KWh) annually, 70 percent more than annual domestic consumption of around 10 billion KWh. The country plans to increase annual consumption to 20 billion KWh by 2020 and to boost exports to slightly more than 10 billion KWh. Copyright Reuters, 2010

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Two new power projects launched

ISLAMABAD (August 08 2010): Two projects--500 KV D G Khan Sub-Station, and 220 KV Dadu-Khuzdar Transmission System--have been launched at an estimated cost of Rs 6.4 million. According to documents made available to Business Recorder, 500 KV D G Khan Sub Station has been launched with estimated cost of Rs 4.467 million financed by Asian Development Bank. The implementation period of the project is 2010-12. A total of 143.318 acres land has been acquired for the construction of the gird station. Company, Barqaab has been appointed as consultants to the project. The bids for 500KV D.G Khan Sub-Station would be opened on August 13, 2010. 220 KV Dadu-Khuzdar Transmission System has been launched with an estimated cost of Rs 2.901 million being financed by JICA through loan. The completion date of this project is June, 2011. Copyright Business Recorder, 2010

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Fast-track power projects: government approves more incentives on PPIB proposal

ISLAMABAD (August 03 2010): The government has approved additional financial incentives for five fast-track projects, on the recommendation of the Private Power and Infrastructure Board (PPIB), officials sources told Business Recorder. They said that PPIB is processing 777 MW of projects under fast track regime, which were earlier approved by the ECC in 2006, with targeted completion by December 2010. Out of these projects, two projects, namely Radian Energy and Grange Holding Projects, are at very advanced stages of development and are expected to be commissioned by 2011 and 2012. The sponsors of these projects have spent significant time and resources in arranging financing, executing Equipment Procuring Contractor (EPC)/Operation and Maintenance (O&M) contracts and have approached Nepra for generation licence and tariff determination. For the Grange project, generation licence and tariff have been accorded, whereas for Radian Energy tariff hearing has been withheld by Nepra, which will be announced when the Commercial Operations Date (COD) for these projects is extended. The PPIB had suggested that, keeping in view the shortage of 5000 MW and the fact that these projects are expected to be commissioned in the year 2011-12, these projects be allowed to be processed under revised guidelines. Sources said that due to power shortage of 5000 MW by year 2014-15, the PPIB has initiated two projects based on international competitive bidding (ICB), including a 300 MW project based on furnace oil near Chiniot, Punjab, and another 300 MW coal based project at Jamshoro, Sindh. However, since the ICB process takes about 48 months, the projects under unsolicited mode may also be entertained/processed. The PPIB had submitted the following guidelines to the ECC: (i) Submission of proposal and registration with PPIB; (ii) evaluation of technical and financial strength by PPIB; (iii) approval by PPIB Board; (iv) issuance of Letter of Intent (LoI) upon submission of performance guarantee at $1000/MW; (v) tariff determination and issuance of generation licence by Nepra; (vi) issuance of Letter of Support by PPIB upon submission of performance guarantee at $5000/MW; (viii) financial close; and (ix) commercial operations. While discussing the option of announcing an upfront tariff for such projects, sources said that earlier this idea was adopted for projects under fast track regime, yet it failed to achieve the desired results as the investors did not accept the upfront tariff announced by Nepra at that time. Consequently, the investors had to seek tariff determination from Nepra independently. Accordingly, it was in principle agreed that the process of tariff determination by Nepra should be adopted for these projects, as proposed in the guidelines. Sources said that this decision would encourage the project sponsors to expedite work to achieve the deadline of 2012. Copyright Business Recorder, 2010

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Pakistan coal deposit richer than ME oil reserves

ISLAMABAD (APP) - Member Science and Technology of Planning Commission of Pakistan Dr Samar Mubarakmand said Friday that the magnitude of Pakistan’s coal deposit is several times more than total oil reserves of Saudi Arabia, UAE, Iran and Iraq. “We can generate 100 million barrels of diesel and 30,000 MW of electricity from our coal deposits for 500 years,” he said addressing the participants of 21st Convocation of National University of Computer and Emerging Sciences, (FAST- NU) here. “The country endowed with the second largest deposit of coal in the world at Tharparkar, confirmed deposit of copper and Gold at Reko-Diq valued at 1.2 trillion dollars and third biggest asset of the country is extremely intelligent and well trained human resource” he said. He said power to be generated from coal will cost 4 cents per unit, make industry produce cheap output for exports, cheap fertilizer and power for agriculture to make country’s oil bill zero. Power stations based on underground coal gas in Uzbekistan (Angren), Italy (Sardinia), Australia (Chinchilla) are generating electricity costing 3.5 to 5 cents. “We have been mining copper and gold in Saindak since 2001. The deposits at Reko Diq are 40 times larger.”, he added. Mubarakmand said the youthful human resource of the country needs to appreciate its role in the development of these extremely valuable resources of the country. “The govt has to harness the human resource and provide the funds to focus all attention on these projects,” he said. He said that the country has minimum strategic deterrence and has the most reliable and accurate delivery systems with warheads are available in the required quantities. In the Convocation, degrees were conferred upon 245 Bachelor, Master and PhD candidates of Computer Science, Business Administration & Telecom Engineering. Medals were also awarded to graduates for their excellent academic performances. A total number of 12 gold, silver and bronze medals were awarded. Director Dr. Aftab A. Maroof in his welcome address said that Islamabad Campus of NU-FAST started twelve years ago and in a short span of time it has become one of the most vibrant, effective, and rewarding seats of higher learning in the country. Dr. Amir, the Rector, said that the university has four campuses located in Islamabad, Karachi, Lahore and Peshawar. At present, it has around 300 full-time faculty members out of which 50 hold PhD degrees earned from reputable foreign universities. The quality of education imparted by this university is recognized locally as well as internationally. Secretary General FAST Rana Ghulam Shabbir, Dean Dr. Ayub Alvi and Registrar Dr. Latif Virk were also present at the occasion. Copyright The Nation, 2010

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