ISLAMABAD: Finance Minister Senator Mohammad Ishaq Dar Saturday directed Advisor to the Ministry of Petroleum and Natural Resources and Chairman OGDCL Zahid Muzaffar to adopt an aggressive marketing strategy to attract foreign investment in the light of new incentives given in the Finance Bill 2014-15.
During a meeting convened to discuss issues related to foreign direct investment in oil and gas sector, the finance minister said that a comprehensive strategy and vision was required to overcome the energy crisis and to increase the oil and gas production significantly in order to operate it on international standards.
The minister while reiterating his belief that the country was rich in treasures of oil and gas, said that the government had already announced special incentives for foreign direct investment in oil and gas exploration. It was high time that the foreign companies should be invited to invest in Pakistan, he added.
He told the Advisor that the corporate tax rate had been reduced from 33% to 20% if the investment project was set up by June 13, 2017 and at least 50% of the total project cost was in the form of equity through FDI. He said that to achieve the vision of an industrialized Pakistan in the future, this special package should be announced.
On the occasion, Zahid Muzaffar informed the Finance Minister that the total consumption of petroleum products in the country was 21.2 million Tonne of Oil Equivalent (TOE) and of which local crude oil production was 4.7 MTOE only.
He said that in 2014, maximum ever 41 block licenses had been issued and in the last one year over 30,000 barrels per day had been added to the system from 68,000 bp/d in July 2013 to over 100,000 bp/d as of today. He mentioned that in only one year, the production of local oil had increased by 30-40% and it was due to the commitment of the Federal Government that the situation was improving every day.
He informed the Finance Minister that during the last one year, 539mmcfd of natural gas had been added to the system. However in in the old gas fields, there had been a significant decline due to non-availability of modern equipment needed for gas exploration.
He disclosed that there was no equipment with OGDCL for shale gas exploration and efforts were being made to invite local and foreign private investors for joint ventures in this sector.
He further informed that Pakistan was an under explored country where only 44% area is explored whereas the success rate is much higher as compared to other regions including Middle East.
He said that in Pakistan exploration well success ratio is 1:3 whereas in Middle East it is 1:5 or more.
He said that the OGDCL plans to increase efficiencies in the seismic, drilling, production and processing by establishing partnership with latest technology partners. He informed that foreign exploration and production companies will be invited to participate as joint venture partners.
The advisor also discussed the plans for attracting FDI to accelerate domestic production in oil and gas sector. On LPG, he informed that in the last one year, the domestic production has been doubled from 1000 MT/day in July 2013 to over 2000 MT/day.
In line with directives of the Prime Minister, LPG will be provided to cities of Balochistan and far flung areas where there is no gas transmission line and distribution system, he added.
Rana Assad Amin, Advisor to the Finance Ministry, Shahid Mehmood, SA to FM and other senior officials of the Finance Ministry also attended the meeting.