Oil & Gas exploration

Khyber Pukhtunkhwa Chief Minister Mahmood Khan has approved in principle an investment programme in oil and gas exploration projects. He has directed the energy department to move formal summary for its inclusion in the annual development programme. The provincial government intends to lease out 12 blocks in the tribal districts and 19 in the settled districts to oil and gas companies for oil and gas exploration. This really an appreciable and ambitious investment and employment generating programme if it does materialise.
Under the provisions of 18thConstitutional Amendment limited autonomy was given to provinces in some of the areas including oil and gas exploration. The oil and gas sector is capital intensive as it needs massive foreign investment in terms of technical assistance and cash flow. To avail this constitutional right, Khyber Pukhtunkhwa Province was the first federating unit to establish its own Oil and Gas Exploration Company under the nomenclature of Khyber Pukhtunkhwa Oil & Gas Company Limited (KPOGCL) in 2013. The objective was to undertake the oil and gas exploration by itself so that the provincial government can increase revenues for the benefit of its people. This was an excellent move on the part of the province. But the company could not be orgainised on scientific and technological lines. The first Chief Executive Officer (CEO) was an electrical engineer with no experience in the field of oil and gas exploration. The board of directors had one professional Petroleum Geologist who had vast experience in oil and gas exploration by virtue of his fairly long association with multinational companies. He later resigned from his post. The new CEO who took over the charge in September this year is a petroleum engineer with little field experience. The reaming members of board of directors are non-technical persons.
KPOGCL would not become fully functional to undertake oil and gas exploration work in 31 blocks in collaboration with multinational companies unless and until it is equipped with a pool of petroleum engineers, geologists and necessary machinery like hevy duty rigs and necessary implements. This will not be an easy task keeping in view the financial constraints of the province. The tax and non-tax revenue base of the province is very narrow and it can hardly generate Rs.70 billion from its own sources. The province is largely dependent for the transfer of financial resources from the federal divisible pool of tax revenue plus uncertain payments of net hydel profit to meet its requirement of development and current expenditures of Rs.349 billion under annual budgetary allocations. Moreover, sovereign financial guarantees of the federal government will have to be sought for bringing foreign investment in oil and gas sector. This dream can come true only when KPOGCL is reorganized, restructured and expanded on professional basis.