YEAR BOOK 2005-2006

GOVERNMENT OF PAKISTAN
MINISTRY OF PETROLEUM & NATURAL RESOURCES ISLAMABAD

Table of Contents Chapter 1: 1.1 1.2 1.3 1.4 1.5 1.6 Chapter 2: General Introduction Mission Statement Functions of the Ministry Organization of the Ministry Website of the Ministry Prime Ministers Directive Goals and Targets Activities, Achievements and Progress during Financial Year 2005-06 Development Wing - Ministry Mineral Wing - Ministry Policy Wing - Ministry 2.3.1 Directorate General of Petroleum Concession 2.3.2 Directorate General of Oil 2.3.3 Directorate General of Gas Contribution in October 8th Earthquake Achievements of Public Sector Departments /Organizations During Financial Year 2005-2006 and Targets for Financial year 2006-2007 Attached Department Geological Survey of Pakistan Autonomous Body Hydrocarbon Development Institute of Pakistan Companies Oil and Gas Development Company Limited. Sui Northern Gas Pipeline Limited. Sui Southern Gas Company Limited. Pakistan State Oil Company Limited. Pakistan Petroleum Limited. Pak Arab Refinery Company Limited. Saindak Metal Limited. Lakhra Coal Development Company. Government Holding (Pvt) Limited. Pakistan Mineral Development Corporation (Pvt) Limited. Inter State Gas Systems (Pvt) Limited. Annexure Organizational Chart of the Ministry Public Sector Organizations under the Ministry Sanctioned Strength of the Ministry Goals and Targets Financial Year 2006-07 Puclic Sector Development Program 2006-07

Pages

1 1 1 2 4 4

2.1 2.2 2.3

2.4 2.5

5 8 12 12 15 18 26

26

Chapter 3:

27

Chapter 4:

34

Chapter 5: 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11

38 49 54 61 68 78 84 88 92 98 104

I II III IV V

106 107 108 110 114

PREFACE
This report has been prepared in pursuance of Sub Rule (2) of Rule 25 of the Rules of Business 1973 which provides that at the beginning of each financial year, each Division shall, for the information of the Cabinet and information of general public prepare as a permanent record, a Book which shall contain: a. the detail of its activities, achievements and progress during the preceding financial year giving only the unclassified information which can be used for reference purposes; the programme of activities and targets set out for the Ministry for the preceding financial year and the extent to which they have been realized; and the relevant statistics properly tabulated.

b.

c.

The report shows the activities, achievements and progress of the Ministry of Petroleum and Natural Resources, its attached department and organizations/companies under its administrative control, during FY 2005-06. Goals and Targets approved for FY 2006-07 have also been included in the report.

I hope that this book will serve as a useful reference document.

Islamabad: 30th September 2006

(Ahmad Waqar) Secretary

CHAPTER 1 GENERAL
1.1 INTRODUCTION

Ministry of Petroleum and Natural Resources was created in April 1977. Prior to that, the subjects of Petroleum and Natural Resources were part of the Ministry of Fuel, Power and Natural Resources. 1.2 MISSION STATEMENT

To ensure availability and security of sustainable supply of oil and gas for economic development and strategic requirements of the country and to coordinate development of natural resources of energy and minerals, in order to cater for energy needs of the people of Pakistan.
1.2.1 STRATEGY TO ACHIEVE MISSION

i.

To adopt an integrated approach for promoting exploration and fast track development of oil, gas and mineral resources. To deregulate, liberalize and privatize oil, gas and mineral sectors through structural reforms. To attract private investment and to establish credible institutions for facilitating the development of petroleum and mineral sectors. To develop technical and professional human resource. To optimize existing energy delivery infrastructure (oil/gas pipelines). To substitute imported fuel oil with indigenous gas by optimally balancing the gas availability and supplies from local and imported sources.

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iii.

iv. v.

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1.3

FUNCTIONS OF THE MINISTRY

The Ministry is responsible for dealing with all matters relating to petroleum, gas and mineral. Its detailed functions as per the Rules of Business are as under: 1 i. ii. All matters relating to oil, gas and minerals at the national and international levels, including: policy, legislation, planning regarding exploration, development and production; Import, export, refining, distribution, marketing, transportation and pricing of all kinds of petroleum and petroleum products. (Pricing of all kinds of petroleum and petroleum products are determined by

iii. iv. 2. 3

i.

ii. iii. 4. i. ii.

5. i. ii. iii. i. ii. 1.4

6.

Oil and Gas Regulatory Authority w.e.f 01.04.2006). matters bearing on international aspects; Federal agencies and institutions for promotion of special studies and development programms. Geological Surveys. Administration of Regulation of Mines and oil fields and Mineral Development (Federal control) Act, 1948, and rules made there under, in so far as the same relate to exploration and production of petroleum, transmission, distribution of natural gas and liquefied petroleum gas, refining and marketing of oil; Petroleum concessions agreements for land, off-shore and deep sea areas; Import of Machinery, equipment, etc; for exploration and development of oil and natural gas. Administration of Marketing of Petroleum Products (Federal Control) Act 1974 and the rules made there-under; Matters relating to Federal investments and undertakings wholly or partly owned by the Government in the field of oil, gas and minerals, excepting those assigned to the Industries and Production Division. Administration of The Petroleum Products (Development Surcharges) Ordinance, 1961, and the rules made there-under; The Natural Gas (Developmetn Surcharges) Ordinance, 1967, and the rules made thereunder; and The ESSO Undertakings (Vesting) Ordinance, 1976. Coordination of energy policy, including measures for conservation of energy and energy statistics; Secretariat of National Energy Policy Committee.

ORGANIZATION OF THE MINISTRY

To perform its functions, the Ministry of Petroleum & Natural Resources has been organized into four wings i.e. Administration, Development, Mineral and Policy. The Ministry has one Attached Department, one Autonomous Body and 11 companies. The Secretary is assisted by an Additional Secretary, two Senior Joint Secretaries and five Director Generals. Organizational chart of the Ministry and its public sector organizations are placed at Annexure-I and II while the staff strength of the Ministry is at Annex-III.
1.4.1 ADMINISTRATION WING

Administration Wing consists of a Senior Joint Secretary, two Deputy Secretaries and seven Section Officers along with the support staff. The Wing is responsible for the following functions: i. Personnel and General Administration of the Ministry (Secretariat). All matters relating to Administration of the Policy Wing, Oil and Gas companies, Geological Survey of Pakistan (GSP), Pakistan Mineral

ii. iii. iv. v. vi. vii. viii.

Development Corporation and Hydrocarbon Development Institute of Pakistan. Corporate affairs of oil and gas companies. All matters relating to technical assistance, tours and training. Coordination work of the Ministry and its attached departments, organizations with other ministries. Processing of non-development budget of the Ministry and its attached department All matters relating to web site and networking of the Ministry. Coordination work related to P&NR committee on defence planning. All matters relating to the Parliament Bussiness.

1.4.2

DEVELOPMENT WING

This wing comprises of one Senior Joint Secretary, two Deputy Secretaries and four Section Officers along with the complementary staff. Development Wing is responsible for all matters other than admin and personnel management of Policy Wing, GSP, GHPL, OGDCL, SNGPL, SSGCL, ISGCL, HDIP, PARCO and PSO, Oil and Gas infrastructure processing/approval and monitoring of development schemes; foreign aid/loan and coordination with World Bank, ADB, CIDA, IDB, JICA; Joint Ministerial Commissions, ECO & bilateral relations; Preparation of Development Budget (PSDP), long term plans, Economic Survey & Budget speeches; All policy matters, ECNEC, ECC, CCOI, CCOP, Cabinet and implementation of decisions; and Foreign investment, privatization, import of natural gas projects.
1.4.3 MINERAL WING

This Wing has one Director General, two Directors and two Deputy Directors along with their complementary staff. The Wing is responsible for all development schemes of Geological Survey of Pakistan (GSP), Pakistan Mineral Development Corporation (PMDC), Saindak Metals Limited (SML) and Lakhra Coal Development Company (LCDC) and Thar Coal Development Project in co-ordination with Provincial Government concerned.

1.4.4

POLICY WING

The Policy Wing is comprised of (i) Directorate General of Petroleum Concessions (ii) Directorate General of Oil (iii) Directorate General of Gas and (iv) Directorate General of Admn /Special Projects. Each Directorate is headed by a Director General. The Policy Wing is responsible for developing policies for oil and gas sectors, forecasting future requirement and assessing the impact of existing policies, rules and regulations. 1.4.5
ATTACHED DEPARTMENT, AUTONOMOUS ORGANIZATION, CORPORATIONS AND COMPANIES OF THE MINISTRY

The Ministry has one attached department i.e. Geological Survey of Pakistan (GSP) and following organizations / companies under its administrative control: i ii iii iv v vi vii viii ix x xi xii 1.5 Hydrocarbon Development Institute of Pakistan (HDIP) Oil and Gas Development Company Limited (OGDCL) Sui Northern Gas Pipeline Limited (SNGPL) Sui Southern Gas Company Limited (SSGCL) Pakistan State Oil Company Limited (PSOCL) Pakistan Petroleum Limited (PPL) Pak Arab Refinery Company Limited (PARCO) Saindak Metal Limited (SML) Lakhra Coal Development Company (LCDC) Government Holding (Pvt) Limited (GHPL) Pakistan Mineral Development Corporation (Pvt) Limited (PMDC) Inter State Gas Systems (Pvt) Limited (ISGSL)

WEBSITE OF THE MINISTRY

The Ministry is regularly updating its website www.mpnr.gov.pk on the basis of feed back received from different stake holders. 1.6 PRIME MINISTERS DIRECTIVEGOALS AND TARGETS

In pursuance of the Prime Minsiters directive, the Ministry of Petroleum and Natural Resources has worked out Goals and rolling plans with quarterly targets since FY 2004-05, and it is producing quantifiable and tangible results in the Petroleum Energy Sector. During the year FY 2005-06 , 47 out of 64 preset targets have been achieved successfully. Besides on the rolling plan, the Ministrys working has been activated and energized for establishing a culture of good governance, transparency and accountability. The Prime Minsiters Secretariat monitors the progress regularly. 1.6.1 The goals and targets set for the FY 2006-2007 of are at Annexure IV.

CHAPTER 2 ACTIVITIES, ACHIEVEMENTS AND PROGRESS DURING THE YEAR 2005-06

2.1

DEVELOPMENT WING - MINISTRY 2.1.1

LIBERALIZATION OF OIL AND GAS SECTOR

The public sector oil and gas entities have been made independent. The Board of Directors of these companies have been given complete autonomy to operate on commercial lines without interference. As a result, the performance of the companies has improved significantly. Imports of fuel oil and HSD have been deregulated. Freight pool phased out and Furnace Oil has been removed from freight pool. Freight equalization of Petrol/HSD has been limited to 29 depots. Refinery Pricing Formula rationalized and linked with actual import cost, to provide incentives for up-gradation/expansion of existing refineries. The prices and allocation of LPG deregulated. With these incentives the production of LPG has risen to 1600 tons/ per day. Consumer prices of Furnace Oil and White Oil products linked to the international prices and adjusted on fortnightly basis. Consumer prices of gas are reviewed bi-annually on the basis of cost of supply. This will improve the confidence of foreign oil and gas producers and protect the gas utilities. Subsidy given to domestic sector gas consumers is being withdrawn gradually. However, it has been ensured that a fixed 40% subsidy (monthly consumption below 1900 cubic meter) will remain available to low income group who consume 50% of the total domestic sector gas. In this way, 40% of the 3.5 million consumers would not be affected by this change.

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iv

vi

vii

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2.1.2 EXPLORATION AND PRODUCTION (E&P) SECTOR REFORM

Onshore and offshore policies were announced in May, 2001 and an incentive package was given to attract foreign investment in the upstream sector. The seismic surveys in offshore areas indicate tremendous potential of oil and gas. As a result, many multi national companies have shown interest in exploration in these areas. OGDCL has for the first time in Pakistans history made an oil discovery in the NWFP Province. MOL, a Hungarian Exploration company, has also made a major discovery at Gurgry district Kohat N.W.F.P. Due to pragmatic policies of the present government, since issued in October, 1999 there have been investment commitments of around US $ 1 billion.

ii

iii

2.1.3

PRIVATIZATION OF PUBLIC SECTOR ENTITIES

NRL Privatised on 07-07-2005. GOP has decided in principle to privatize PSOCL, OGDCL, PPL, SNGPL and SSGCL. Government has also divested its minority shareholding in seven oil fields.

2.1.4 GAS DEVELOPMENT PLAN

i.

One BCFD additional gas from new fields (Miano, Zamzama, Sawan, Bhit, Sui Deep, Hasna, Badin II) has been brought on stream through the Gas Infrastructure Development projects undertaken by SNGPL and SSGCL. The thrust of governments policy is to replace furnace oil with gas in power generation with anticipated savings of US $ 600-700 million annually.

ii.

2.1.5 ENVIRONMENTAL REFORMS

Being a clean fuel Natural Gas share in energy mix is being increased to replace imported fuel. LPG supply as an alternate fuel is being encouraged to protect the environment and to conserve fuel wood resources. CNG is being encouraged in transport sector to improve urban ambient air quality and reduce carbon emissions. About 1000 CNG stations are in operation and over 1 Million vehicles have been converted to CNG making Pakistan third largest CNG

ii

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consumer in the world after Argentina and Italy. Efforts are also being made to replace diesel with CNG. iv Lead-free gasoline has been introduced w.e.f. 1-7-2001 to improve the air quality well in advance of the date set by environmental and donor agencies. Attock Refinery has started producing unleaded gasoline w.e.f. 1-7-2002.

2.1.6 REGULATORY REFORMS

Oil and Gas Regulatory Authority (OGRA) Ordinance has been promulgated. OGRA will regulate the entire oil and gas sector except for the award of petroleum concessions. Government Holdings Company Limited has been established to manage the Governments investments in the upstream sector.

ii

2.1.7 REGIONAL GAS PIPELINES

i.

Ministry of Petroleum and Natural Resources after assessing future demand/supply, concluded that indigenious gas reserves of the country will not be sufficient to meet the increasing demand beyond 2010. The Ministry therefore is exploring the possibility to import gas from the neighbouring countries that is Iran, Qatar, and Turkministran and is working on all of the possible options.

2.1.8 GAS IMPORT PROJECTS

The Ministry of Petroleum and Natural Resources has been pursuing the import of gas through pipeline and LNG projects from the neighbouring region that is Iran, Turkmenistan and Qatar. These projects are being actively discussed at different level Working Groups/Committees constituted from time to time. In the last one year two meetings of Pakistan-Iran Working Group and two meetings of Pakistan-India Joint Working Group have been held on Iran-Pakistan-India (IPI) gas pipeline project. Similarly, 8th Steering Committee meeting of TurkmenistanAfghanistan-Pakistan (TAP) Gas Pipeline Project was held in April, 2005 in Islamabad and 9th meeting is being scheduled in the 3rd/ 4th Quarter of October, 2005 in Ashgabat. 1st meeting of the Technical Working Committee of MPNR and Qatar Petroleum on GUSA gas pipeline project has been held in June, 2005 in Doha, Qatar and 2nd meeting of the committee is being scheduled during the last week of September, 2005 in Islamabad.

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iv

Ministry has successfully completed Comparative Evaluation of the Gas Import Projects by appointing a consultant through Asian Development Bank (ADB) to prioritize the available gas import options. In order to ensure safe and secure world class pipeline and LNG import projects, MPNR has already appointed a Financial Advisor for LNG import and for transborder pipeline project, a separate Financial Advisory Consortium is likely to be appointed, shortly. Public Sector Development Programmes/Projects Ministry of Petroleum and Natural Resoruces has been allocated a sum of Rs. 929.92 million in PSDP for the Financial year 200607. Detail of on-going/new projects are at Annexure -V

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2.1.9

2.2

MINERAL WING - MINISTRY

The geology of Pakistan is interesting and has all the environments for hosting world class metallic mineral deposits. Regulatory regime for solid mineral falls under provincial domain. However, generation of basic geological data remains the function of Federal Government. The countrys expanding economy demands development of indigenous resources. 2.2.1 i) ACHIEVEMENTS - SPECIAL INITIATIVES Feasibility Study on Gasification of Thar Coal, District Tharparkar, Sindh

To harness large Thar coal deposits as alternate source of energy, the Ministry endeavored to explore utilization options. One of such option is determining techno-economic viability of converting coal into pipeline quality gas and extraction of high unit value chemicals. For conducting the study under a development project an international consultant M/s Lurgi of South Africa has been selected. The contract has been signed with consultant and work on the project initiated. The study will be completed in around one year. Feasibility Study for development and exploration of Chechali iron ore and commissioning of Steel Mill at Kalabagh

ii)

The project is aiming to ascertain techno-economic viability of utilizing iron ore for setting up of Steel Mill at Kalabagh. The study has been awarded to a Chinese company M/s MCC. The contract agreement signed and company has initiated first phase of study i.e. economic viability on upgradation.

iii)

Strategy on Development and Exploitation of Gemstones

To tap full gemstone potential as a source of foreign exchange, and as a part of implementation of strategy on Mining, Cutting, Polishing and Marketing of Gemstones approved by the Cabinet, the Ministry has sponsored project valuing Rs.100 million for imparting training to locals of gem bearing areas of NWFP, AJK and Northern Areas in flawless mining. The projects are being implemented by the Governments of NWFP, AJK and Northern Areas. Under the project more than 250 locals of these areas have been trained in mechanized mining, grading, processing of gemstones. Work on the projects is in progress. iv) Basic Training in Gemstone Cutting and Polishing Centres in Gilgit and Muzaffarabad

As a follow up of the strategy for developing cutting and polishing skill in gem bearing area it was decided to establish two training centers at Muzaffarabad and Gilgit. Under the project codal formalities have been initiated to select a consultancy firm having developed expertise in gemstone cutting and polishing. v) Review of National Mineral Policy

The review of existing National Mineral Policy is aimed at improving in order to meet new challenges for investment in Mineral Sector. The consultants have completed work on the revision and submitted draft Mineral policy. The Ministry has sought views and comments from the provinces and other stakeholders. The comments from provinces/stakeholders will be incorporated to finalize the policy. 2.2.2 i. ii. iii. iv. v. Restructuring of the Federal Mineral Sector Organizations Restructuring of Geological Survey of Pakistan Restructuring of Pakistan Mineral Development Corporation (PMDC) Privatization of PMDC Projects Evaluation of Nokundi iron ore through Bolan Mining Enterprises The Ministry has secured international assistance (World Bank) for development of Mineral Sector in the following areas: a) Capacity building Institutional Strengthening b) Generation of basic geological data c) Development of Small Scale Mining (SSM) in gemstones/coal d) Development of exploration targets into investment opportunities. INTERNATIONAL MINERAL SECTOR INVESTMENT FACILITATED IN

2.2.3

As per policy of the present government and approved National Mineral Policy the role of public sector organization in the mineral sector has been curtailed. Ministry of Petroleum & Natural Resources is

facilitating private investment for the development of mineral sector. Following are the major projects initiated through facilitation by this Ministry:i. Expansion of Saindak Copper Gold Project Balochistan Keeping in view the better metal prices in international market the Chinese company M/s MCC signed an agreement with Saindak Metals Limited to expand the Saindak Project enhancing the present capacity by 30% with capital investment of US$ 22 million. ii. Development and exploitation of Dudder Lead Zinc Project (Balochistan) With the concerted efforts of the Ministry of Petroleum and NR an agreement has been signed between PMDC and MCC China for the development of Dudder Lead Zinc project. MCC would invest about US$ 72 million for mine development and commercial exploitation. According to agreement the project will produce 100,354 tones Zinc and 32,584 tones Lead concentrate during 14 years mine life. Work on the project has started. Mineral Wing is coordinating/facilitating Chinese Company in construction of project. iii. Facilitation in Development of Rokodik Copper-Gold Project Balochistan To develop Reko Diq Copper deposit in Balochistan, an Australian company M/s Tethyan Copper Company has finalized feasibility study of the starter project aiming to produce 40,000 tones of pure copper with an investment of $ 200 million. As a result of extensive drilling in the area about 167 million tones copper ore reserves have been proved. Filed studies to assess social and environmental impact of the project has also been completed. Due to large size of the deposit, world largest copper & gold producing companies; M/s Antogagasta & Barrick Gold have taken over 100% Australian shares of the TCC. The new management has decided to launch a mega project with an investment of over US$ one billion by 2010. The mega project would produce 2,50,000 tonnes of copper annually, thus bringing Pakistan for the first time on the major copper producing country on world map. iv. Development of Thar coal as alternate source of energy For commissioning of 1000 MW power plant on specific Block in Thar Coal fields a Mining feasibility study was

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prepared with the cooperation of Ministry of Petroleum & NR by international consultant M/s Rheinbraun of Germany. For commissioning of integrated coal mining and commissioning of 1000 MW power generation project an American firm AES has been assigned a coal block at Thar. The Feasibility Study prepared by German firm has also been given to M/s AES for evaluation and decision to take up the project. v. Commissioning of Integrated Coal Mining and establishment of coal fired power plants in coal field Sindh To increase share of coal in energy mix, Govt. of Sindh has leased out a coal block to M/s Fateh Group of Hyderabad for commissioning a coal based power plant of 250 MW at Lakhra. Govt. of Pakistan/Sindh has allowed a Chinese company M/s China National Chemical Engineering Group of Corporation (CNCEC) to conduct feasibility study on a coal block in Sonda Jherrick coalfields in Sindh province for integrated mining project of 1 million ton and commission 250 MW coal based power plant. For establishing integrated coal mining and commissioning of 200 MW power plant an other coal block has been assigned at Sonda Jherrick coalfield, to M/s Dadabhoy Hydrocarbon Ltd. by Govt. of Sindh. vi. Exploration of Copper-Gold in Balochistan An Australian mining company M/s Lake Resources remained engaged in conducting exploration for gold and other base metals in District Chagai, Balochistan. Keeping in view the better prospects of the project the company has decided to start exploratory drilling in the area.

2.3

POLICY WING MINISTRY

2.3.1 DIRECTORATE GENERAL OF PETROLEUM CONCESSIONS

i.

Concession Activities a Exploration Licences

One hundred and forty-four applications for grant of Exploration Licences were processed during 2005-06 which included seventy applications received during the year. Nine bidding rounds were held in which thirty nine blocks were offered. As a result thirty three Exploration Licences covering an area of 66,344.10 sq. kms. were granted.

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Hundred Exploration Licences are active covering an area of 202,813.69 sq. kms on 30-06-2006. Around 11,824.45 sq. kms. area of three Exploration Licences remained under Force Majeure, while an area of 14,121.42 sq. kms. of three Exploration Licences was surrendered/relinquished by different operators. Twenty three E & P companies are operating in upstream Petroleum sector of Pakistan. In Sindh Province 65,774.83 Sq. Kms, Punjab 41,480.52 Sq. Kms, Balochistan 61,814.22 Sq. Kms , NWFP 11,395.66 Sq. kms and Indus Offshore 22,348.43 Sq. Kms areas were under exploration. b. Mining/Development & Production Leases

Four (4)Development and Production Leases were granted during 2005-06. Three applications for grant of D &P leases over Naimat Basal, Kausar Deep and Siraj South of OPII were pending at the end of fiscal year. A total of one hundred & twenty leases covering an area of 11,576.40 sq. kms. were valid at the end of the year. In Sindh Province 8,317 Sq. Kms, Punjab 1,997.83 Sq. Kms, Balochistan 1,176.57 Sq. Kms and NWFP 85 Sq. kms area remained under Mining/D &P Leases.

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Table-1 Exploration licences Granted during 2005-06

S.No. Block Location Operator Grant date Area (sq. kms) 703.23 2,495.33 2,412.23 2,438.85 2,499.13 331.47 2,497.35 2,497.05 2,459.39 2,495.29 535.33 7,389.95 2,104.69 1,265.33 1,246.03 2,229.51 26-01-2006 13-02-2006 13-02-2006 13-02-2006 27-02-2006 27-02-2006 27-02-2006 27-02-2006 06-03-2006 20-04-2006 31-05-2006 31-05-2006 31-05-2006 31-05-2006 15-06-2006 21-06-2006 21-06-2006 21-06-2006 1,622.67 2,404.73 270.60 2,488.59 2,450.64 2,473.47 2,499.77 1,838.09 2,435.40 588.09 302.32 2,179.26 2,280.91 2,150.06 1,390.02 2,482.67 886.65 66,344.10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

3371-11 (Dhok Sultan) 2565-1 (Samandar) 3271-2 (Dhermund) 2467-8 (Thatta) 2870-2 (Bagh-o-Bahar) 3370-12 (Latambar) 2870-3 (Khiranwala) 3072-3 (Bagh South) 2467-10 (Thatta East) 2870-4 (Pakhiwala) 2467-9 (Sari South) 2365-1 (Offshore Indus-E)* 2969-8 (Barkhan) 2468-5 (Badin-IV South) 2468-6 (Badin-IV North) 2770-3 (Islamgarh) 2769-15( Thal) 2567-11 (Thano Beg) 2769-14 (Tegani) 2470-3 (Mithi) 2470-2 (Rajar) 2569-2 (Thar) 2469-8 (Umarkot) 2567-10 (Daphro) 2768-9 (Sukkur) 3371-8 (Soghri) 3272-13 (Chakral) 3270-6 (Wali) 3271-3 (Mianwali) 2567-7 (Kirthar South) 2467-11 (Sujawal) 3067-3 (Harnai) 3066-4 (Hanna) Grand total

Punjab/NWFP Balochistan Punjab Sindh Punjab NWFP Punjab Punjab Sindh Punjab Sindh Offshore Balochistan Sindh Sindh Punjab Sindh Sindh Sindh Sindh Sindh Sindh Sindh Sindh Sindh Punjab/NWFP Punjab NWFP Punjab/NWFP Sindh/Balochistan Sindh Balochistan Balochistan

OGDCL OGDCL Saif Energy OGDCL OGDCL OGDCL OGDCL OGDCL OGDCL OGDCL Saif Energy GHPL/Shell PPL PEL PEL Techno Petroleum OGDCL OGDCL OGDCL Eni Pakistan Eni Pakistan Eni Pakistan Eni Pakistan Petronas PEL OGDCL OGDCL OGDCL OGDCL POL MGCL MGCL MGCL

06-07-2005 06-07-2005 15-07-2005 20-09-2005 20-09-2005 24-10-2005 24-10-2005 24-10-2005 24-10-2005 24-10-2005 25-10-2005 23-12-2005 29-12-2005 05-01-2006 05-01-2006

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Table-2 Development & Production Leases Granted during 2005-06

S.No. 1 2 3 4 Block Fateh Shah Noorai Jagir Kandra Rodho Grand total Province Sindh Sindh Sindh Punjab Operator BP OGDCL PEL Dewan Petroleum Grant date 26-07-2005 16-08-2005 05-01-2006 23-01-2006 Area (sq. kms) 26.40 2.43 286.08 34.63 349.54

ii.

Seismic Activities Seismic activities conducting during 2005-06 were as following; 1. 2. 3. 4. 5. 2D seismic acquisition (onshore) 6,567 L.kms 3D seismic acquisition (onshore) 1,812 Sq.Kms No. of Service companies 05 No. of active crews 12 Types of acquisitions Dynamite, Vibroseis

Company wise seismic acquisition details are as under; Table - 2.3

Eni 2D (L.Kms) 3D (Sq.Km s) MOL Nativus OM V OGDC L Paige Saif MGC L POL PPL Hycarb ex Tullo w TOTAL

336 235 695

93

302 536

4,745 245

32

204

168

258 101

118

311

6567 1812

iii.

Drilling Activities

In 2005-06 one hundred and one wells were planned including fifty three as exploratory and forty eight as appraisal/development wells. Against the target of one hundred and one, total sixty four wells were spuded i.e. thirty three exploratory and thirty one as appraisal/development wells. In the Public Sector, OGDCL spuded twenty three exploratory and seven appraisal/development wells, and in Private Sector thirty four wells were drilled which included ten exploratory and twenty four appraisal/ development wells. On an average 220 meters were drilled per day.

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iv.

Discoveries

During fiscal year 2005-06 there were eight oil and gas discoveries in the country namely Tando Allah Yar North-1, Kunar Deep-1, Ziarat-1, Dars Deep-1, Bukhari Deep-1, Nim-1, Bahu-1 and Chanda-2. v. Production Activities

In 2005-2006 average oil production in the country remained 65,577 BOPD and gas production was 3,836 MMCFD OGDCL was the highest oil producing company with a production of 11.501 million barrels at an average rate of 31,511 BOPD which was 48% of the yearly oil production of the country, followed by POL producing 4.773 million barrels at an average of 13,078 BOPD which is 20% of the total oil production. BP produced 4.626 million barrels, PPL 1.305 million barrels, BHP 0.656 million barrels, OPII 0.579 million barrels, Eni Pakistan 0.116 million barrels, MOL 0.305 million barrels, Petronas 0.038 million barrels and OMV 0.035 million barrels. OGDCL produced 309.103 BCF of gas, at an average rate of 847 MMCFD, this constitute around 22.1% of the total yearly gas production of the country. PPL was the second highest gas producing company with 307.303 BCF at an average of 842 MMCFD, which is around 21.9% of the total gas production. Mari Gas produced 171.045 BCF, OMV 199.856 BCF, Eni Pakistan 134.510 BCF, BHP 99.348 BCF, BP 87.8 BCF, OPII 31.414 BCF, POL 20.509 BCF, MOL 17.315 BCF, Petronas 11.286 BCF ,PEL 8.884 BCF and Tullow 1.655 BCF. During the fiscal year 2005-06 the LPG production was 1,495 metric tones per day. In companies JJVL was the major LPG producer with an average of 441 metric tons per day, and in refineries PARCO produced 405 metric tons per day LPG. The total remaining recoverable oil reserves at the end of the fiscal year 2005-06 has been estimated as 324.47 million US barrels and the remaining gas reserves (including non-pipeline quality gas) as 32.58 Trillion Cubic Feet. 2.3.2
DIRECTORATE GENERAL OF OIL

i.

Achievement

Marketing In order to create healthy competition, achieve efficiencies and attract investment in the downstream oil sector in pursuance of deregulation drive of the Government and under the Criteria for establishment of

15

new oil marketing companies in the country as approved by the E.C.C of the Cabinet, two new oil marketing companies were approved in the name of Askar Oil Services Private Limited and Baqri pvt. Ltd. In accordance with the requirements of the Criteria, these companies will have to make minimum investment of Rs. 500 million in the next three years of their operations. A target of Rs. 6.4 million tons valuing at US $ 2.1 billion for the import of diesel oil and furnace oil during 2005-06 was set. Actual import of these products during the year remained at 6.0 million tons valuing at US $ 2.8 billion. Similarly, a target of 65 million barrels valuing at US $ 2.9 billion for the import of crude oil during 2005-06 was set. Actual import of crude oil during the year remained at 63.5 million barrels valuing at US $ 3.7 billion. It was estimated that around 16 million tons of petroleum products will be consumed during the year while actual consumption remained at around 15.9 million tons almost near to the target. Refining Transfer of regulatory functions to OGRA In pursuance of the reforms policy of the Government to segregate policy functions from regulatory functions, a study was conducted through CIDA consultant for onwards transfer of regulatory functions to Oil and Gas Regulatory Authority (OGRA). In view of the finding, of the study, oil regulatory functions have been transferred to OGRA with effect from 1st April, 2006 Establishment Of New Oil Refinery Project Under the deregulation, privatization and liberalization policy of the Government, private sector investment in the down stream oil sector is being encouraged. The Government has therefore, approved additional incentives for setting up of a new gross root deep convergent Coastal Oil Refinery at Khalifa Point near Hub, Baluchistan. Blending Of Ethanol Into Motor Gasoline On the directive of Honorable Prime Minister, PSO has launched pilot project w.e.f. 16th August, 2006 in Islamabad with 10% blending of Ethanol into the Motor Gasoline, followed by similar project in Karachi and Lahore.

16

REFINING CAPACITIES OF EXISTING REFINERIES AS ON 1-7-2006

S.No.

NAME OF REFINERY Pak Arab refinery Limited National Refinery Limited Pakistan Refinery Limited Attock Refinery Limited Bosicor Refinery Limited Enar Petrotech Services Limited Dhodak Refinery Limited Total:Pricing

Million M.Tons/annum 4.50 2.71 2.1 1.82 1.50 0.13 0.12 12.88

Barrels per day 100,000 62,050 47,110 40,000 30,000 3000 2,500 284,660

1 2 3 4 5 6 7

The prices of petroleum products have increased tremendously in the International market during the past two years. The domestic sale prices of petroleum products, being linked with International Market product prices, were required to be increased accordingly. The Government decided to protect the consumers from the burden of high International prices and capped the domestic sale prices from time to time since May, 2004 till to date. Government absorbed in loss on account of her revenue resources to the tune of around Rs.74.5 billion by June 2006. In other words, the consumer had been benefited through this capping in particular and Government had been able to control the inflation in the country. As against the increase in International Market in the range of 81% to 120%, the domestic sale prices have been increased in the range of 47% to 59% during the period May, 2004 to June, 2006.

17

Refinery Wise imports of Crude oil during 2005-06

Name of Refinery National Refinery Ltd

Name of Crude Arab Light Iranian Light Iranian Heavy Murban Sub Total

Quantity M.Tons 2,393,069 325,844 65,048 519,682 910,574 696,348 2,330,393 771,617 1,498,569 4,600,579 8,600,570 Bbls 17,556,782 2,397,007 467,704 3,962,823 6,827,534 5,107,439 17,104,227 5,882,568 11,067,574 34,054,369 63,546,124 FOB

Value US$

C&F
1,042,431,558 145,143,431 23,486,389 244,863,112 413,492,932 304,371,832 1,025,181,939 369,573,769 647,755,826 2,042,511,534 3,802,807,856

1,022,884,597 141,743,728 22,944,155 240,513,510 405,201,393 299,691,922 1,006,191,881 363,412,821 635,571,578 2,005,176,280 3,732,954,192

Pakistan Refinery Ltd

Bosicar Pakistan Ltd

Qater Marine Arab Light

Pak Arab Refinery Ltd

Murban Upper Zukam Sub Total Grand Total

2.3.3

DIRECTORATE GENERAL OF GAS

The primary commercial energy supplies increased by 9.2% to 55.5 million tones of oil equivalent. Natural gas contributed around 50.4% of the total primary commercial energy supplies in the country. The present gas consumption in the country is 3352 MMCFD. Comparison of sectoral gas consumption during 2004-05 and 2005-06 is given below :-

18

i.

SECTORAL GAS CONSUMPTION. Unit: MMCFT. %age

Sectors

20042005 507363 190412 226139 13383 24416 27191 172103 1161007 3181

%age

2005-2006

Power Fertilizer G. Industries Cement CNG/Transport. Commercial Domestic Total Average per Day
ii.

43.7 16.4 19.5 1.2 2.1 2.3 14.8 100.0

491766 198049 278973 15335 38885 29268 171109 1223385 3352

40.2 16.2 22.8 1.2 3.2 2.4 14.0 100.0

Company-wise & Sector-wise new gas connections given are as under:-

New connections provided during 2004-05 and 2005-06 . SNGPL Sectors Industrial Commercial Domestic Total 2004-05 422 3474 174306 178202 Target for 2005-06 350 3845 198740 202935 Achievement in 2005-06 531 4013 206586 211130

SSGCL Sectors Industrial Commercial Domestic Total 2004-05 224 1489 76865 78578 Target for 2005-06 230 1066 71400 72696 Achievement in 2005-06 267 1661 79041 80969

19

iii.

Company-wise Transmission and Distribution Pipelines Network during 2004-05 and 2005-06 :, SNGPL

Pipeline Network Transmission Network Distribution Mains Services Total SSGCL Pipeline Network Transmission Network Distribution Mains Services Total
iv.

2004-05 345 3157 750 4252

Target for 2005-06 196 2950 795 3941

(FIGURES IN Km.) Achievement in 2005-06 209 3647 832 4688

2004-05 157 1158 251 1566

Target for 2005-06 52 1495 238 1785

Achievement in 2005-06 137 1475 276 1888

(a)

Targets Set For New connections for 2006-2007. SNGPL 495 4320 213000 217815 SSGCL 355 1680 87000 89035

Sectors Industrial Commercial Domestic Total

b) Targets Set For Transmission/Distribution Network for 2006-2007. (FIGURES IN Km.) SNGPL 225 3700 3925

Pipelines Transmission Lines Distribution Lines Total

v.

SSGCL 300 2000 2300

Natural Gas Allocation and Management Policy, 2006. a. b. The Federal Government will continue to make efforts to increase gas supplies from indigenous sources. Gas supply to consumers in Commercial Sector will be encouraged.

20

c.

d.

e. f. g.

h.

i.

Gas allocation for the Fertilizer Sector will be made by the Federal Government keeping in view the domestic needs and gas supply position. Gas supply to all consumers in Captive Power will be made after first meeting the requirements of Domestic, Fertilizer, Commercial and Power (both WAPDA/KESC and IPPs) Sectors on the following basis: i. Those dual fired power plants with a capacity of up to 50 MW, which employ combined cycle or cogeneration technology, shall be encouraged for allocation of gas. In order to ensure the optimal gas use for power generation, industrial units collectively setting up merchant power plants for self-consumption only will also be included in this category. ii. Gas supply for self-power generation would be on as and when available basis at different locations. iii. The pipeline extension, if required, would be at the cost of the sponsor of the industrial unit. iv. Supply of gas to Service Industry for Captive Power generation will be subject to following: a. The sponsor makes an investment of over Rs. 500 million; and b. The gas load does not exceed 1 MMCFD. Cement Sector will receive gas supply on as and when available basis. Gas supply to any special project of strategic nature will be given priority. Gas supply from Independent network will be made to Fertilizer Sector and Power sector as allocated by the Government or any special project of strategic nature with the approval of the Federal Government. For supply of gas to those economically backward areas, which do not meet cost of criteria determined by the Federal Government for supply of gas, the Federal and or Provincial Government (s) will make available the resources to the extent of the amount over and above criteria limit. All Khushhal Pakistan Schemes and other schemes of similar nature for upliftment of underdeveloped areas will be exempted form PC-I requirement as per existing arrangement.

vi.

LNG Policy - 2006

Augmenting import of gas supply through LNG import is an important element of Government s energy security strategy to encourage LNG import through active participation of private sector. The Government has announced first-ever LNG policy during 2005-06.

21

Salient Features An LNG Developer or LNG Buyer as the case may be, will be allowed to import LNG in accordance with applicable import laws, rules and regulations. While issuing license to an LNG Developer or RLNG buyer, the Oil and Gas Regulatory Authority (OGRA) will take into account Government policy guidelines. b) Zero present custom duty will be charged on imported LNG. LNG Buyer or LNG Developer importing LNG will also be exempted from withholding tax at import stage in respect of such import. CBR will issue necessary notification in this regard. c) Exemption from custom duty in excess of 5% with total exemption from sales tax in respect of plant, equipment and machinery, not locally manufactured, imported by LNG Developer or LNG TO/O, as the case may be, by expanding the scope of SRO 678(1)/2004, dated 07.08.2004. Import of such plant, machinery and equipment and parts will also be exempted from withholding tax at import stage as allowed under clause 56(ii) of part (vi) of the second schedule to the Income Tax Ordinance, 2001. d) Initial Allowance will be admissible at the rate of 50% of the cost of depreciable assets under section 23 of the Income Tax Ordinance, 2001. In addition, normal depreciation at the rate of 10% will also be allowed for plant and machinery. e) Exemption from withholding tax on interest payments to foreign lenders will be allowed as permissible under various provisions of the Income Tax Ordinance,2001. f) Sales Tax @ 15% and Federal excise duty @ Rs. 17.18 per hundred cubic meters will be charged on import and supply of LNG.
vii.

a)

CNG for Automotive Use.

Government of Pakistan is encouraging use of Compressed Natural Gas (CNG) as an alternate fuel for automotives in order to control environment degradation, save foreign exchange in import of liquid fuels and generate employment. Due to Government s encouragement, Pakistan has become third largest CNG user in the world. To ensure rapid development of the CNG industry and considering the proposals of this Ministry CBR exempted import duty and sales tax on import of CNG Euro-2 buses weather in CBU or CKD under SRO 576 (1)/2005 dated 06-06-2005 and Sales Tax Act exemption section 13(1) (schedule-6). Total CNG stations and vehicles converted to CNG upto end of financial years 2003-04 and 2004-05 are given as under: S. No 1. 2. 3. CNG Activity By the end of 2004-05 By the end of 2005-06. % Increase/ Decrease 37.0 29.3 90.3

Total operational CNG station till end of financial year (F.Y.) Vehicles converted to CNG Total No of provisional licenses issued till end of financial year

732 750,000 2100

1003 970,000 3997

22

viii.

CNG in Public Transport:The following proposals have been approved by the Federal Cabinet:i) Provincial government should gradually face out diesel engine intercity urban public transport (which would include buses, mini buses and wagons) in Karachi, Hyderabad, Lahore, Fisalabad, Peshawar, Quetta and Islamabad/Rawalpindi by end 2007. To achieve this target the provincial government may also: a) b) encourage conversion of present diesel buses to CNG if economically feasible for the buss operators: set up and monitor the time bound goals for converting diesel buses to CNG.

ii)

iii) iv)

v)

vi)

vii)

viii)

All new busses/Mini buses/wagons to be inducted in the above-mentioned cities should be dedicated CNG vehicles and or Petrol-CNG duel-fuel with immediate effect. No. two- stroke rickshaws should be registered in the abovereferred cities after June 2006. To promote induction of CNG busses/mini buses/wagons during the diesel face out period, i.e. upto December 2007 the provincial government should provide incentive to CNG busses/Mini buses/wagons including: a) Lucrative routes, b) Exemption from rout tax excise tax and registration fees Setting up of large CNG refueling stations for busses/minibuses/wagons should be facilitate by the provincial government. Gas utility companies should provide gas to such station. OGRA should issues licenses to such CNG station within one month. The benefit of exemption from custom duty and sales tax on CNG equipment and busses which are currently available only upto 30-06-2006 may be extended for period of five years. Manufacturing of CNG equipment and buses in Pakistan may be given priority through attractive incentive for local manufacturer under phased plan. Local manufacturing of CNG equipment should be encouraged in the country and OGRA should expedite approval of locally manufactured CNG equipment. In order to facilitate of introduction of CNG busses, the Government should incentive wise the scheme through picking up (fully partially) interest on bank loans taken by prospective buyer of dedicated-CNG busses/mini buses/wagons. Rs. 5 billion provided in the MTDF for PublicPrivate Partnership in public transport can be utilized for this purpose.

23

ix)

x)

xi)

State Bank of Pakistan may encourage the commercial bank to establish lines of credit for procurement of CNG busses/mini buses/wagons and for establishing their manufacturing facility in Pakistan. CNG equipment manufacturer and their investor may be motivated to explore the possibility of technology transferred to joint venture with the foreign manufacturer of CNG compressor and CNG cylinders. The testing facility for CNG equipment according to the relevant standard quality standard should be fully developed at Hydro Carbon Development Institute of Pakistan make it fully capable of performing the testing functions.

ix.

LIQUEFIED PETROLEUM GAS (LPG).

Liquefied Petroleum Gas (LPG) is a clean, environmentally friendly, portable and economical domestic fuel. It is rapidly becoming fuel of choice in areas, where gas distribution network is not available. Currently out of 19.2 million house holds in Pakistan, 4.08 million are connected with natural gas network; approximately 1.8 million are using LPG, whereas the rest are relying on conventional domestic fuels like coal, firewood, kerosene, dung cake etc. The Government of Pakistan is making all out efforts to promote LPG as a domestic fuel to replace conventional fuels like Coal, Firewood, Kerosene, dung cake etc to ensure availability of clean fuel to all people especially those residing in far-flung and remote areas with a view to arrest deforestation and improve environment. By virtue of current Policy, the government intends to; a. b. c. d. e. f. g. Ensure supply of LPG to consumers at competitive rates. Enhance availability of indigenous LPG in the country. Ensure supply of LPG in far-flung and remote areas. Attract more investment in the LPG sector. Ensure safety of public life and property Discourage and eliminate unauthorized activities in the LPG business. Generate healthy competition and improve quality of consumer service.

The Government deregulated LPG prices and allocation w.e.f. 15th September 2000. All the producers of LPG are empowered to either market their LPG themselves or dispose it of through the licensed marketing companies or to the new parties. All marketing companies are free to develop their LPG market, as they wish, except for use in automotive. However in order to ensure LPG supply in remote hilly areas, with a view to protect our precious forests each company is obligated to market at least 7%, of its product in AJK, 7% in Northern Areas, 6% in FATA, and 10% of LPG uplifted from Pak-Arab Refinery Company Limited (PARCO) to Baluchistan. The regulatory work regarding LPG has been transferred to Oil and Gas Regulatory Authority (OGRA) w.e.f. 15th March 2003.However the policy formulation function of MPNR remains.
x.

24

xi.

LPG in auto sector.

The Government in past discouraged use of LPG in vehicles to ensure its availability to the domestic sector. However, to bring this sector under the safety net and to bring competition in alternate auto fuel, the Government has announced use of LPG in motor vehicles which is expected to be notified shortly.
xii.

LPG Production and Distribution Policy 2006.

In order to further increase LPG supplies, streamline its distribution at affordable prices, especially to LPG starved areas of the country and promote healthy competition for growth of LPG market as well as to ensure minimum safety standards across the LPG supply chain, the government has introduced LPG Production and Distribution Policy 2006. xiii. The salient features of the policy are as under: a) Public sector E & P companies will out source all LPG production to technically and financially sound private sector parties through a transparent and competitive process. b) To ensure safety throughout the LPG supply chain, LPG storage tanks, cylinders, bowzers, and distribution outlets of the licensees will meet the minimum safety standards as laid down in applicable Rules. c) Decanting of LPG from cylinder to cylinder is prohibited and OGRA shall cancel licenses of the defaulting companies.

d) OGRA will prescribe codes and standards for conversion of vehicles to LPG and the establishment of LPG re-fuelling stations for the auto sector by LPG marketing companies with an effective monitoring mechanism. e) OGRA will publish a list of authorized manufacturers for all LPG equipment including LPG refilling stations, conversion kits, fuel tanks, cylinders, storage tanks, and bowzers. To ensure that cartels are not formed for charging a high consumer price of LPG, OGRA will determine the reasonableness of price keeping in view the import parity price of LPG, producer price and audited accounts of LPG marketing companies for the last two years.

f)

g) All LPG marketing companies receiving LPG from sources in Punjab and NWFP will be obligated to supply at least 7% of their local LPG in Northern Areas, 7% in AJK and 6% in FATA. All LPG marketing companies receiving LPG from sources in Sindh and Balochistan will be obligated to supply at least 10% of their local LPG in Balochistan province. h) Any party can import LPG after paying applicable government dues. However, no party shall export LPG without the prior written approval of MPNR.

25

The Region-wise consumption of LPG and Import of LPG is as under: a) Region-wise Consumption of LPG. Region. 2004-05 AJK. Baluchistan Federal Area FATA NWFP Northern Area Punjab Sindh TOTAL : b) LPG Imports. Years : 2004-05 SECTOR LPG Imports. 2.4 40492 24779.2 44950 196171 74433 416,284 57308 286562 98225 578419 27.5 46.1 32.0 38.9 26614 9835 3900 15595 44786 (UNIT: M. TONS.) 2005-06. % increase / (Decrease) 31627 18.8 17890 81.9 4465 14.5 18513 63829 18.7 42.5

(UNIT : M. TONS) 2005-06

CONTRIBUTION IN OCTOBER 8, 2005 EARTHQUAKE

Ministry of Petroleum and Natural Resources and Petroleum Sector Companies have contributed more than one billion rupees both in kind of relief and rehabilitation of earthquake effectees. An amount of Rupees 542 million has been deposited in the Presidents Earthquake Relief Fund 2005. 2.5 ACHIEVEMENTS OF PUBLIC SECTOR DEPARTMENTS / ORGANIZATIONS DURING FINANCIAL YEAR 2005-2006 AND TARGETS FOR FINANCIAL YEAR 2006-2007 The achievements/targets may be seen in chapters 3,4 and 5.

26

Chapter 3 ATTACHED DEPARTMENT

http://www.gsp.gov.pk/

GEOLOGICAL SURVEY OF PAKISTAN (GSP)

27

3.1

INTRODUCTION

Geological Survey of Pakistan (GSP) is an attached department of the Federal Ministry of Petroleum and Natural Resources with its headquarters office located at Quetta and as per its charter the GSP is responsible for study of geology of the country in all pertinent details and to assess its geological resource potential. With a balanced, efficient and competitive structure, GSP is now fully capable to explore mineral resources and undertake geological, geophysical, geo-technical and geo-chemical investigations, and drilling. 3.2 INSTITUTIONAL STRUCTURE The GSP was established in 1947 with the creation of Pakistan. The department is headed by the Director General. The technical and other activities of the department are planned and controlled by the Management Advisory Committee (MAC) with all Deputy Director General and equivalent officer as its member under the Chairmanship of the Director General. 3.3 BUDGET AND FINACNCE

The GSP gets its annual budgetary allocation in the federal budget every year and some allocation is also made for the department in the federal PSDP for undertaking its Development Projects. The budget figures for the last five years are given below: GSPS BUDGET FOR LAST FIVE YEARS Year Current Budget Development Budget Total 2002-2003 135.675 136.824 2003-2004 127.005 200.920 2004-2005 145.605 133.271 2005-2006 172.783 134.330 2006-2007 189.045 246.966

272.499

327.925

278.876

307.113

436.011

ACTIVITIES ACCOMPLISHMENTS AND PROGRESS 2005-2006 Major accomplishments of the department during the fiscal year 2005-2006 are described below: 3.5 REGIONAL GEOLOGICAL MAPPING

Geological mapping of 15, 326 sq. km in different areas of the country was completed on 1:50,000 scale, which included 6400 sq. km in Balochistan, 3936 sq. km. in Sindh, 1280 sq. km. in NWFP, 1280 sq. km. in Punjab, 1790 sq. km. in Northern areas and 640 sq. km. in Azad Jamu & Kashmir. In addition digitization for updating of

28

geological maps of Hyderabad block, Sindh covering an area of 2500 sq. km has also been completed. 3.6 BASIC AND APPLIED RESEARCH

Alteration study of Gold mineralization in Hushe and Runthuk areas of District Khaplu Toposheet No;s 52 A/7 and 52 A/12 respectively Completed sample collection & sorting for alteration studies of gold mineralization in Hushe, Machulu and Ranthak areas of Khaplu (Toposheet Nos. 42 A/7, 8 & 12). Chemical analysis of the samples is in progress. 3.7 HYDROGEOLOGICAL STUDIES

Hydrogeological investigations of Mastung area, Pishin Lora Hydro Geological Basin, Balochistan. A thorough study of the drainage system of the southern and northern parts of Pishin Lora Basin has been carried out. This study includes the drainage system of Kalat, Mangochar, Mastung and Quetta. 3.8 REGIONAL GEOPHYSICAL MAPPING PROJECTS i. Detailed geophysical surveys over magnetic anomaly near Kasur, District Kasur, Punjab. Field work has been completed. In total 18 sq. km. area has been covered by 725 gravity and magnetic observation. Data processing completed and gravity and magnetic anomaly maps have been prepared. Interpretation, computer modeling and report writing are in progress. ii. Detailed geophysical surveys over magnetic anomaly near Kahna Town, District Lahore Punjab Data of previous geophysical surveys has been collected. Interpretation, computer modeling and report writing are in progress. iii. Kiar Sachcha Area

Covered 1 Sq. Km area by 300 magnetic and 280 SP observations. Data processing and maps completed. Interpretation and modeling completed. iv. Garhi Habibullah Area

Covered 5 Sq. Km area by 276 SP, 280 gravity and 580 magnetic observations. Anomaly map prepared. Interpretation and modeling completed.

29

v.

Masina Kalan Area

Covered 1/2 Sq. Km area by 155 SP, and 180 magnetic observations. Data processing and anomaly maps completed. Computer modeling of magnetic anomalies and interpretation completed. vi. Magnetic and self potential surveys in Bajour Agency area for manganese deposits. Covered 1 sq. km. area by 900 magnetic and 700 self potential observations. Data processing completed and anomaly maps prepared. Report completed and submitted for review. 3.9 ECONOMIC GEOLOGY i. Petrological studies of Eocene rocks of Meting area, Quadrangle 40 C/4, Thatta District, Sindh, Pakistan Carried out megascopic studies of 30 samples of dolomite /limestone. Report writing is in progress. ii. Petrographic and geochemistry of basalts to determine the tectonic environment, Rani Kot, Dadu District, Sindh Collected data on geochemistry of basalts and samples & studied literature. Analysis of samples in progress. iii. Petrological studies of dolomite along stratigraphic sections measured at Matyaro & Kathwari, Thano Bula Khan, Sindh Completed petrographic studies of 40 samples of dolomitized limestone. Report writing and other studies are in progress. iv. Studies for the preparation of isopach maps and lateral extension of Lakhra coalfield in further south, Dadu District, Sindh Prepared isopach maps regarding ash, sulphur, coal seams thickness and BTU based on available data. Third draft of map has been finalized. v. Chakwal District Resources Map

Field studies have been completed. Scanning and digitization of Chakwal district map is in progress. Improved version of mineral map of Chakwal has been prepared.

30

vi.

Geology and Mineral Resource Map of Lahore District, Punjab.

Carried out geological mapping of Model Town and Raiwind areas. Collected water samples and marked petrol pumps and brick kilns of rural areas. Completed analysis of 55 water samples. vii. Dolomite resources of Khewra, Jutana, Ara Basharat area District Jhelum. Carried out field work and measured stratigraphic sections in Jutana Bhaganwala area. Analysis of samples collected is in progress. viii. Evaluation of poly metallic mineralization in Khan Kalan area, District Muzaffarabad, AJK Sample collection, laboratory study and compilation of data were undertaken. Report writing is in progress. 3.10 ENVIRONMENTAL & ENGINEERING GEOLOGICAL STUDIES i. Geological studies and environmental concerns of the Shekhupura area, (toposheet No. 44 E/14) Field work and collection of data of environmental concerns have been completed. Report writing is in progress. ii. Environmental Geology, Mineral and Groundwater Investigations of Sialkot-Daska area (Toposheet No. 43 L/7) Geological mapping, ground water and environmental studies have been carried out and the compilation work is in progress. iii. Engineering geological investigation from Mansehra to Naran, Environmental & Urban geological studies of Gilgit and surrounding, Landslide risk assessment map of Hattian Bala and preparation of Inventory of landslide in Muzaffarabad, Neelum, Jhelum, and Kagan / Kunhar valleys. Engineering geological investigation from Mansehra to Naran have been carried out. Compiled road log from Mansehra to Naran. Studied in detail six landslide sites between Balakot to Naran. Field work completed for Environmental & Urban geological studies of Gilgit and surrounding areas.

31

Inventory of landslide in Muzaffarabad, Neelum, Jhelum, and Kagan / Kunhar valleys was prepared for the Potential hazards of Landslides and mitigation measures of earthquake hit areas of October 8th Earthquake. 3.11 SEMINARS/SYMPOSIA/LECTURES/ WORKSHOPS i. Intl Conference on Earthquake in Pakistan Its Implications & Hazard Mitigation The Geological Survey of Pakistan, Ministry of Petroleum & Natural Resources successfully organized an International Conference at Islamabad on January 18-19, 2006 on 8th October, 2005 Earthquake in Pakistan, Its Implications & Hazard Mitigation. The purpose of this conference was to bring the global community of geoscientists to discuss latest advancements in geosciences, earthquake engineering, seismic risks, active tectonic zones of the country and methodologies for hazard mitigation. Conference examined the reliability of the existing seismic and building codes of Pakistan for designing earthquake resistant structures and buildings. ii. Brief activities of Geological Survey of Pakistan associated with the 8th October, 2005 Earthquake The Geological Survey of Pakistan provided the following material for Revision/Updating of Building Code of Pakistan: Geological Map of Pakistan. Tectonic Map of Pakistan. Seismo-tectonic Map of Pakistan. Seismic Hazard Zone Maps of Pakistan.

The following maps were prepared for assessment of earthquakes and related hazards in the earthquake hit areas: Probabilistic Seismic Hazard Estimation for the Islamabad & Rawalpindi areas. Preparation of Landslide Risk Assessment Map of Earthquake affected areas. Landslide Risk assessment Map of Hattian Bala Lanslide. Potential Hazards of Landsliding and Mitigation Measures of Earthquake hit areas. International Conference on 8th October 2005 Earthquake in Pakistan, its implications & Hazard mitigation:

A presentation was given to the Honourable Prime Minister jointly by GSP & NESPAK regarding Building Code dated 31st January 2006

32

iii. A seminar on Seismic Risk of Karachi area and its mitigation Some new thoughts was arranged by GSP, Southern Zone at Karachi office. 3.12 DRILLING OPERATIONS

The Geological Survey of Pakistan undertakes drilling under various programmes for energy (coal) and mineral exploration. During this period GSP undertook extensive drilling operations under its different development projects, which included sinking of 18 bore holes for a cumulative depth of 3080 meters for coal and mineral exploration. A total of 13 bore holes were drilled in Khaskheli area Badin, Sindh, Hangu and Karak coal field, NWFP and Sore Range area Balochistan for exploration of coal. The mineral exploration programme of the GSP included drilling of 5 bore holes for a cumulative depth of 921 meters in Nooriabad, Dadu district, Sindh, Haji Goth, Uthal, Lasbela district and Nok Kundi, Chagai district, Balochistan for exploration of iron ore and massive sulphide copper mineralization. 3.13 PROGRAMME OF ACTIVITES AND TARGETS 2006-2007

The GSP will undertake mapping of about 20,000 sq. km. area in various parts of the country. Mineral exploration projects include investigations for copper-gold, iron & Lead-Zinc-Barite deposits in Balochistan and NWFP, studies for celestite, limestone and mineralization in Nagar Parker in Sindh. Coal exploration will be carried out in the Eastern Salt Range, D. G. Khan, Punjab in addition to four development projects for coal exploration. Land slide and other geo hazard studies will be carried out in earth quake hit areas in Northern Areas and Azad Kashmir. Geochemical exploration will be carried out various areas of Balochistan, Sindh, Punjab and NWFP. urban and hydrogeological studies will be carried out for Lahore and Islamabad cities. Research projects will also be undertaken in collaboration with Harvard, Howard and Michigan universities of U.S.A. Eight development projects (including 4 in energy sector and 4 in mineral ssector) will be executed.

33

Chapter - 4 AUTONOMOUS BODY

http://www.hdip.com.pk

HYDROCARBON DEVELOPMENT INSTITUTE OF PAKISTAN (HDIP)

34

4.1

INTRODUCTION

Hydrocarbon Development Institute of Pakistan (HDIP) is an autonomous body under the Ministry of Petroleum & Natural Resources. It carries out applied research and renders advice to the Government on scientific and technical matters in the oil, gas and energy sector including energy-environment, energy-planning and energy-policy issues. The HDIP also provides consultancy and laboratory services for the oil and gas industry in Pakistan in diverse fields of its expertise. 4.2 INSTITUTIONAL STRUCTURE

The HDIP was established in 1975 through a Resolution of the Government of Pakistan. HDIP has been re-established as an autonomous body through an Act of Parliament in January 2006. Board of Governors has been reconstituted by Prime Minister. Its Board of Governors is chaired by the Minister for Petroleum & Natural Resources, while its Chief Executive is designated as Director General.

Board of Governers
1 2 3 4 5 6
7

Mr. Amanullah Khan Jadoon

Chairman Minister for Petroleum & Natural Resources

Mr. Ahmad Waqar

Secretary M/O Petroleum & Natural Resources

Mr. Hilal A.Raza

Director General/Chief Executive Hydrocarbon Development Institute of Pakistan

Mr. M. Naeem Malik

Director General (PC) Policy Wing, M/O Petroleum & Natural Resources

Mr. Jalal-ud-Din Qureshi

Financial Advisor M/O Petroleum & Natural Resources

Mr. Ghulam Haider

Chief Fuels Planning & Development Division, Islamabad

Dr. S. Mahmood Raza

Advisor (HRD) Higher Education Commission

Dr. M. Qasim Jan

Vice Chancellor Quad-e-Azam University, Islamabad

Dr. Muhammad Asif Khan

Director National Center of Excellence in Geology University of Peshawar

10

Prof. Ahmad Saeed Khan

Chairman Department of Petroleum & Gas Engineering University of Engineering & Technology, Lahore

35

4.3

ESTABLISHMENT

The Head Office of the Institute is at Islamabad while its main laboratories are located at Islamabad and Karachi. In addition, it maintains four Petroleum Testing Centers at Lahore, Peshawar, Quetta and Multan, four CNG Stations at Islamabad, Karachi, Lahore and Quetta and four Cylinder Testing Labs at Islamabad, Karachi, Lahore and Peshawar. The HDIP has 221 employees. Its annual budget for 2005-06 was Rs.96 million comprising Rs.45 million provided as grant by the Government and Rs.51 million generated from HDIP's own resources that included CNG activities, analytical services and consultancy studies. 4.4 OIL & GAS EXPLORATION

During the year 2005-06, HDIP's Geological & Geochemical Labs located at Islamabad, performed pre-exploration studies of Oil and Gas Basins for assessing regional prospectivity. The HDIP established with Canadian assistance, the Pakistan Petroleum Core House, a national repository of rock samples, cuttings and cores from wells drilled in Pakistan for further studies to promote exploration in the country. This state-of-the-art facility, inaugurated on 17.12.2003, now houses 390,600 approximately samples from 868 wells drilled all over the country for quick access, physical examination and scientific study. 4.5 SPECIAL ASSIGNMENT

HDIP carried out a feasibility study on blending of Ethanol in gasoline on Prime Ministers directive .The study was submitted to Prime Minister who was pleased to approve the establishment of pilot project to gain the knowledge of using 10% Ethanol blend in gasoline. 4.6 CNG DEVELOPMENT

A research Project of HDIP on using compressed natural gas (CNG) to replace liquid petroleum has grown into a country-wide industry. As a result, 984 CNG refueling stations were operational on 30.6.2006 (including 4 by HDIP), catering to the needs of more than one million CNG vehicles. 4.7 REGULATORY INSPECTIONS

The HDIP acted as the third party inspector, on behalf of the Oil & Gas Regulatory Authority (OGRA), to ensure compliance with technical and safety standards under CNG Rules 1992. About 1533 inspections of CNG stations were made during the year. A number of LPG installations were also inspected for their compliance with technical and safety standards under LPG Rules 2001 and reports have rendered to OGRA. 4.8 INFORMATION DISSEMINATION

The Institute played an important role in the development of domestic energy sector by maintaining a national energy database and publishing the official national

36

energy statistics: "Pakistan Energy Yearbook", which is the most sought after Pakistani publication among national and international energy professionals, investors and financers. The HDIP also publishes a standard research journal carrying articles relating to Pakistan in the fields of oil and gas exploration, production, processing, utilization, economics, policy and planning, named "Pakistan Journal of Hydrocarbon Research". 4.9 INTERNATIONAL COOPERATION

HDIP held the Central Secretariat of an international forum "South Asia Geological Congress (GEOSAS)", that provided a platform for promoting cooperation in research and development in the geological sciences in the South Asia region covering 10 countries, namely, Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka and Turkey. HDIP also worked as the Secretariat of Pakistan National Committee of the World Energy Council (WEC). Director General HDIP has been elected Chairman World Energy Council South Asia Region for 2004-07. He has also been elected as Chairman of the SAARC Working Group on Energy constituted on the directive of the 12th SAARC Summit held at Islamabad in January 2004. First SAARC Energy Ministers Meeting organized by Ministry of P&NR/HDIP was held in Islamabad in October 2005. SAARC Energy Ministers recommended the establishment of SAARC energy center, which was approved by 13th SAARC summit held at Dhaka. The SAARC Energy Center is operational in HDIP Islamabad since March 2006. MPNR/HDIP has organized the First Meeting of Pakistan-China Energy Forum which was attended by large number of Chinese energy corporations, financial institutions as well as their Pakistani counterparts. An MOU has been signed between the two countries for cooperation in energy sector. The Forum has identified about 30 specific projects for partnership between Chinese and Pakistani public and private enterprises. This will attract more Chinese investment in energy sector of Pakistan. 4.10 CONCLUSION

The HDIP thus worked as the scientific and technical arm of the Ministry of Petroleum & Natural Resources in the oil, gas and energy sector while at the same time facilitating private sector investment in the sector by providing professional guidance and advice. Although a public sector outfit, it performed to high professional standards and earned 53% of its budget from its own services. HDIP has achieved the Goal and Targets assigned to it for expansion of CNG industry in Pakistan.

37

Chapter - 5 COMPANIES

http://www.ogdcl.com

5.1 OIL AND GAS DEVELOPMENT COMPANY LIMITED (OGDCL)

38

5.1

HISTORICAL BACKGROUND:

OGDC was created in September 1961 under an Ordinance, in pursuance of an Agreement signed by GOP with USSR for financing equipments, and services of Soviet experts for exploration of oil and gas in Pakistan. During Seventies, the Corporation introduced Western technology for updating its equipment base, and undertook an aggressive work program in Exploration sector in Pakistan. This resulted in discovery of a number of oil and gas fields in the Eighties, thus giving the Corporation a measure of financial independence. Consequently, the Corporation was taken off from the national budget in 1989 to operate as a self-financing entity. In 1997, as a step towards restructuring, it was incorporated as a public limited un-listed company managed by an independent Board of Directors. The Company was provisionally listed and its shares floated in November 2003. 5.1.2 HISTORICAL PERFORMANCE:

Since inception to June 2006, OGDCL has drilled 221 exploratory wells and 252 development wells. Since its creation upto June 2006, OGDCL has produced about 166.84 million barrels of oil and about 4.31 trillion cubic feet of gas. 5.1.3 POSITION IN THE INDUSTRY: i. Concession Portfolio: The companys concession portfolio as on June 2006 comprises over 75,905.45 sq. km, which constitute approximately 37.4% of the total exploration area granted by the Government to the petroleum sector in the country. ii. Reserves: The company holds 106.770 million barrels of oil and 10.386 TCF of gas remaining recoverable reserves on 1st January 2006. These constitute 37% and 32% respectively of the total oil and gas reserves of the country. iii. Production: The average production of oil and gas for the period July 2005 to June 2006 from OGDCL operated fields was 31,511 barrels per day and 847 MMcfd respectively. OGDCLs average share of oil production from non-operated JVs was 8,559 barrels of oil per day and gas 226 MMcfd, which constitutes 61% and 28% each of the countrys total production of oil and gas.

39

5.1.4

HUMAN RESOURCES:

OGDCL has developed a highly qualified pool of professionals who can undertake and supervise all phases of oil and gas exploration, starting from preliminary geological surveys and culminating to the operation of oil and gas processing plants. OGDCL, by June 2006, had total manpower strength of 11,413 out of which 1,914 are officers and 9,499 are staff members. Company can proudly claim of having the largest professional/technical human resource base in the country.

BOARD OF DIRECTORS Mr. Arshad Nasar 1.

Chairman/MD & CEO Board of Directors

Mr. Aslam Khaliq 2.

Chairman Pakistan Tobbaco Company (PTC) Board

Mr. M. Naeem Malik 3. Director General (Petroleum Concession)

Ministry of Petroleum and Natural Resources

4.

Mr Khalid Rafi Chairman System Innovations (Pvt.) Ltd Mr. Jalal-ud-Din Quereshi Financial Advisor (P&NR) Mr. Skindar Hayat Jamali
Ex-Federal Secretary

5.

6. 7.

Mr. Azam Farooque

Director Cherat Cement Ltd.

8.
9. 10. 11.

Mr. Al- Sysed Abdul Qadir Jamaluddin Al-Gillani

MNA (NA-270, Awaran-cum-Lasballa)

Mr. Alman Aslam Director, PPIB Board, Islamabad Mr. Asad Umar President ENGRO Mr. Zahid Majeed

40

5.1.5

MAJOR PROJECTS: OGDCLs major ongoing projects are as follows: i. Dakhni Expansion Project: Dakhni Gas Processing started operation in 1989-1990 with a design capacity of 30 MMSCFD. Over the years the composition of H2S contents of raw gas has increased considerably resulting processing limitation on the existing plant. The scope of work of Dakhni Expansion Project involve modification alteration of existing facilities and installation of additional Sulphur Recovery Unit (SRU).Due to this change the existing plant is currently processing 22 MMSCFD feet gas. Expected incremental Production on completion will be as under: Sales Gas: 12 MMSCFD LPG: 12 M.tons per day day Oil: 700 bbls per day Sulphur: 80 M.tons per

ii. Qadirpur Compression Project(Phase-IV): In accordance with the consolidated revised development plan for Qadirpur gas field and reservoir Consultant PGS recommendations well head gas compression is required to be in operation by year 2008. In order to maintain production plateau of 650 MMscfd raw gas upto 2014 and maintain gas supply pressure upto 2017, the service of Engineering & Project Management Consultant has been hired to accomplish this goal. iii. Supply of gas to SNGPL Since commissioning of Qadirpur Capacity Enhancement Project Phase-II and III, Qadirpur plant is supplying 500 MMscfd per day processed gas to SNGPL.

41

iv. Supply of raw gas for LPL In addition to 500 MMscfd of processed gas being supplied to SNGPL, 50 MMScfd Raw Gas is being supplied to SNGPL for Liberty Power Limited. v. Qadirpur Capacity Enhancement Project The project envisages to increase the capacity upto 100 MMcfd. vi. Chanda Project: The Chanda Project located in District Kohat of NWFP, is a joint venture with M/s Zaver Petroleum and Government Holding (Pvt) Ltd. The field has been put on regular production since 17th July, 2004 and is presently producing of 2586 barrels per day Oil and 8.5 MMcfd of Gas. It is expected M.Tons Per day LPG that about 25-40 shall be produced upon shifting/installation/commissioning of Fimkassar LPG plant at Chanda field. vii. Dhodak Expansion Project: The Dhodak Condensate Field is situated in the rugged terrain of DG Khan District of Punjab province about 200 Km NorthWest of Multan City. The field is under production since 1994. The scope of work of the project includes enhancement of capacity of Gathering System, Transportation System (Trunk line), processing plant and its allied facilities to accommodate additional well fluids. The Compression facilities would be installed to cater the decline of reservoir pressure after 2010 at Dhodak Plant to increase the delivery pressure from 500 psig to 800 psig. The estimated cost of the project is US$ 50 million. On completion of the project the production will increase as under:a. b. c. viii. Gas: Condensate: LPG: From 43 to 64 MMSCFD From 2700 to 4000 BPD From 198 to 258 MTD

Tando Allah Yar Complex Project: The project is located at District Hyderabad, Sindh. The scope of work includes development wells, installation of gathering System, processing facilities and Sales Gas Line. Presently 7 wells have been drilled. Upon completion the Project

42

production will be 2500 BPD of oil, 28 MMcfd of gas and 85 Tons per day of LPG. The estimated cost of the project works out to US$ 54.1 million. ix. Uch II Project: The project is located at Dera Bugti Agency, District Nasirabad Balochistan. The scope of project includes drilling of 15 development wells, installation of allied production, surface facilities and gas processing plant for onward supply of processed gas to Power Generation Unit. After carrying out detail study of UCH gas field, it is envisaged that OGDCL is in a position to commit 200MMSCFD for 14 to 16 years to a new Power Generation project. Upon completion of the project, the sale gas from Uch will be enhanced from 250 MMSCFD to 450 MMSCFD. The estimated cost of the project is US$ 250 million. i) Sinjhoro Development Project: The project is located at District Sanghar, Sindh. The estimated cost of project would be US$ 89 million. Upon completion of the project the production will be 2940 BPD of oil, 25 MMscfd of gas and about 224 M. Tons per day of LPG. 5.1.6 NEW PROJECTS: OGDCL has envisaged following new projects for implementation:i. Sara West Development Project: Sara West field located in District Khairpur, Sindh Province was discovered in 1996. So far one well has been drilled at the field. It is a low BTU gas and can be used for power generation only. The field was previously operated by M/S Tullow Pakistan (Development) Ltd., an Irish Company ii. Jhal Magsi Project: Jhal Magsi field located in Dera Murad Jamali was discovered in 2003.It is a Joint Venture between OGDCL, Government Holding and POL. Two wells have been drilled at the field with second being dry.

43

5.1.7

PROGRESS TOWARDS PRIVATIZATION OF OGDCL In April/May 1999, Privatization Board of Pakistan approved privatization of OGDCL and appointment of Financial Advisor. Expressions of Interest (EOI) for Financial Advisory Services for OGDCL were invited by the Privatization Commission in June 1999. In November 2003, the GOP divested 5% of its shares in the company. Being listed on the Stock Exchange, OGDCL looks forward to a new corporate culture that will demand an increased degree of transparency, accountability and responsibility under the code of Corporate Governance. The company is listed on all three Stock Exchange in Pakistan with highest market capitalization. It has around 24% weightage on Karachi Stock Exchange. The companys share are now also traded on the future counter of Karachi Stock Exchange (Guarantee) Limited. The company pays regular dividends to its share holders. The company is now positioning itself for listing on the London Stock Exchange. Focal points have been designated and are working in close coordination with Messrs. Citigroup who have been appointed as Financial Advisor and a consortium of companies who are handling the transaction.

44

5.1.8

PHYSICAL ACHIEVEMENTS: OGDCLs Physical achievements during 2005-6 in comparison to its achievements in 2004-5 are given at Annex-1. Brief description is as follows:(a) Exploratory Wells OGDCL had drilled 24 exploratory/appraisal wells upto June 2006, in the previous year during the corresponding period 11 exploratory/appraisal wells were drilled. (b) Development Wells OGDCL had drilled 06 development wells up to June 2006. In the corresponding period last year, 07 development well were drilled. (c) Seismic Survey OGDCL had carried out 5,356 line Kms seismic survey during July, 2005 to June, 2006 as against 2,655 line Kms during the corresponding period last year.

5.1.9

PRODUCTION: (i) Oil OGDCLs average oil production during the period July, 2005 to June 2006 remained at 31,511 barrels per day as against 31,280 barrels per day during the corresponding period last year. Gas OGDCLs average production of gas during July, 2005 to June 2006 works out to 847 MMscfd per day as against 856 MMscfd per day during the last year corresponding period. LPG The average LPG production during the current financial year upto June 2006 was 285 Metric Ton per day as compared to 241 Metric Tons per day during the corresponding period last year. Sulphur Average sulphur production during period under report was 59 Metric Tons per day. During the corresponding period in the previous financial year, the sulphur production remained at an average of 56 Metric Tons per day.

(ii)

(ii)

(iii)

5.1.10

FINANCIAL PROGRESS: The gross sales during the period under review an amount Rs. 96,755 million as compared to Rs. 73,710 million during the corresponding period last

45

financial year. The all-round financial performance of the company is constantly improving not only due to increase in prices of petroleum products but also because of strict financial discipline and curtailment of wasteful expenditure. Details are as under: -

FISCAL YEARS 2004-2005 Upto June 2005 2005-2006 upto June 2006 Rs in million 96,755.38 65,911.33 45,967.72 121,314.71 10,872.44 52% % AGE CHANGE

Gross sale less Govt. levies Profit before tax Profit after tax Total Assets Royalty Return on average capital employed 5.1.11 FUTURE OUTLOOK:

73,710.10 49,020.2 32,967.9 114,578.9 8,109.6 41%

31 34 39 6 34 27

OGDCL has earmarked 41+9=50 exploratory and development wells (09 wells, in Balochistan subject to security clearance) for the year 2006-07. The drilling of appraisal and development wells hinges upon the number of discoveries achieved after drilling exploratory wells. Production of 56,570 barrels oil per day (45,000 barrels from OGDCLs own fields and 11,570 shares from JVs). 1,346 MMCFD of gas (1,093 MMcfd from own fields and 253 MMcfd share from JVs). OIL & GAS DISCOVERIES: By the grace of Almighty Allah OGDCL has been successful in making five oil and gas discoveries in 2005-06, namely Kunnar Deep-1, Nim-1, Dars Deep-1, Bahu-1 and Chanda-2 during the current year. 5.1.12 OFFSHORE ACTIVITIES:

Block-wise activities in the Indus offshore blocks w.e.f 1st July 2005 to 30th June, 2006 are given as per following details:i. Indus Delta-A (BLOCK # 2367-4): The Production Sharing Agreement (PSA) was signed on 23rd October 2004. The area of the block is 2499.01 sq. kms with grid area 31.72 and minimum work commitment in Phase-I is 215.32 work unit. With financial commitment of

46

Us $ 2.153 million. On completion of evaluation process it is expected that successful bidder will be awarded contract by 15th August, 2006 and will be asked to start 3 - D seismic data acquisition programme in November 2006. ii. Off Shore Block -R (BLOCK # 2267-1): The block was provisionally granted on 27th December 2005. The area of the block is 1492.23 sq. kms and grid area is18.92 with minimum work commitment in Phase-I is 113.52 work units. Collected the available data and studied rest of data in LMKR. Proposal for purchase of seismic data from LMKR has been prepared and will be submitted after signing the Production Sharing Agreement (PSA). iii. Off Shore Block-S (BLOCK # 2266-8): The block was provisionally granted on 27th December 2005. The area of the block is 2129.91 sq. kms and grid area is 26.06 with minimum work commitment in Phase-I is 156.36 work units. Collected the available data and studied rest of data in LMKR. Proposal for purchase of seismic data from LMKR has been prepared and will be submitted after signing the Production sharing Agreement (PSA). iv. Eastern Off Shore Indus-A (BLOCK # 2366-6): The block was provisionally granted on 10th September 2005. The area of the block is 2500.00 sq. kms and grid area is 31.92 of minimum work commitment in Phase-I is 271.52 work unit. The available data is under study to design the type of seismic survey and an international press tender for acquisition of seismic data has been prepared and will be submitted after signing the Production Sharing Agreement (PSA). v. Off Shore Indus-G (BLOCK # 2265-1): Offshore IndusG was granted to Government Holding Public Limited (GHPL) wherein the following Contracting Companies with Participating interest indicated hereunder entered into Production Sharing Agreement on 3rd July, 2003 as follows:Petronas Carigali (Pakistan) Limited OMV (Pakistan ) Exploration OGDCL Mari Gas Company Ltd 40% 15% 10% 05%

All the partners decided to surrender their participating interest in the block. However OGDCL through an Assignment agreement acquired the share of other contracting Companies till the expiry of the 5th Contract year. Presently OGDCL has applied for 6 months extension of the block. Discussion / negotiation is under way with M/s Petrobras of Brazil for form it into the block.

47

vi.

Indus Off Shore-E: (BLOCK # 2365-1) Indus offshore Block E is operated by M/s Shell. As per production sharing agreement of Joint Venture Partners & their share are as under:i. ii. iii. iv. v. Shell OGDCL PPL Premier KUPEC 25.0% 30.0% 20.0% 12.5% 12.5%

In the view of the slippage in the drilling schedule it is expected that the spudding of well AnneAX will be in June 2007 to avoid height of monsoon. Annex-I OGDCL COMPARATIVE/PHYSICAL PERFORMANCE STATEMENT CURRENT VS LAST YEAR Achievements in 2004-2005 Upto June 2005. 11 07 61,922 Achievements in 2005-2006 Upto June 2006 24 06 80,016 %age change

S.N o 1.

Name of activity i) Exploratory ii) Development iii) Drilling Meterage (Meter) Production i) Oil (US Barrels) ii) Gas (MMcft) iii) LPG (Tonnes) iv) Sulphur (Tonnes)

118 -14 29

2.

11,417,317 (31,280) 312,449 (856) 87,902 (241) 20,537 (56)

11,501,580 (31,511) 309,083 (847) 103,936 (285) 21,602 (59)

1 -1 18 5

48

http://www.sngpl.com.pk

5.2 SUI NORTHERN GAS PIPELINES LIMITED (SNGPL)

49

5.2.1

INTRODUCTION

Sui Northern Gas Pipelines Limited (SNGPL is the largest integrated gas company in the country, engaged in the business of transmission and distribution on natural gas beside construction of high pressure transmission and low pressure distribution systems. Transmission network in Punjab and Frontier Province (NWFP) comprises of over 6,195 Km of high-pressure pipeline ranging form 6 to 36 in diameter. The distribution activities covering 831 towns and villages in the Punjab and NWFP are managed through its Regional offices. An average of about 1566 Million Cubic Feat (MMCFD) gas was sold in 2005-06 to over 2.7 Million industrial, commercial and domestic consumers in the regions through distribution network of over 46,671 km.
BOARD OF DIRECTORS Mr. Altaf Saleem Chairman, Board of Director 1. (Former Minister for Privatization and Chairman Crescent Group) Mr. A Rashid Lone 2. Managing Director, SNGPL Mr. Munawar B. Ahmed 3. Managing Director, SSGCL Mr. Saeedullah Shah 4. Director General (Gas), MP&NR Mr. Jalal-ud-din Qureshi 5. Financial Advisor, PN&R Mr. Tariq Iqbal Khan Chairman/Managing Director, National 6. Investment Trust (NIT). Chairman Attock Refinery Ltd Mr. Abdul Bari Khan 7. (Managing Director , PIDC, Karachi) Mr. Amanullah Shaikh 8. Ex-Director, Sui Southern Gas Company Limited and Enar PetroTech Services. Mr. Arif Saeed 9. Chief Executive , Dar Es Salaam Textile Mills Ltd Mr. Syed Muhammad Asghar Dawood 10. Hercules Chemicals (Pvt) Ltd, Lahore Mr. Mian Raza Mansha 11. Nishat Group of Companies ( Pvt ), Lahore Mr. Qasim Rabbani 12. Executive Director, Invest Capital & Securities (Pvt) Limited, Karachi Mr. Hussain Dawood 13. Chairman, Dawood Group, Karachi Mr. Shahzada Dawood 14. Chief Executive, Dawood Hercules Chemicals Limited (Pvt) Lahore

50

5.2.2

DETAILS INFORMATION ON DIFFERENT ACTIVITIES OF SNGPL DURING 2005-2006

i. Province/Sector-wise gas sales analysis for 2005-2006 PUNJAB 189,660 45,327 6,976 24,969 151,670 18,740 96,889 534,231 NWFP 0 72 2,407 5,245 12,826 2,039 14,660 37,249 Figures in MMCF TOTAL 189,660 45,399 9,383 30,214 164,496 20,779 111,549 571,480

SECTOR Power Fertilizer Cement CNG/Transport General Industry Commercial Domestic TOTAL

ii. Sector Domestic Commercial Industrial Total

New Connections provided During 2005-06 New Connections provided 206,586 4,013 531 211,130 Targets 198,740 3,845 350 202,935 Figures in Nos. Achievement Vs Targets (%) 152 104 104 104

iii. Sector Domestic Commercial Industrial Total

No. of Customers as on 30.6.2006 PUNJAB 2,329,229 36,473 3,375 2,369,077 NWFP 312,044 7,446 398 319,888 Figures in Nos. TOTAL 2,641,273 43,919 3,773 2,688,965

iv. Description Mains Services Total

Distribution Lines laid During 2005-06 PUNJAB 3,291 699 3,990 NWFP 356 133 489 Figures in KMs TOTAL 3,647 832 4,479

v. Description Mains Services Total

Distribution Net Work as on 30.6.2006 PUNJAB 30,372 9,620 39,992 NWFP 5,063 1,616 6,679 Figures in KMs TOTAL 35,435 11,236 46,671

51

vi. Punjab NWFP Sindh Balochistan Total:

Transmission Net Work Laid during 2005-06 Figures in KMs 181.53 6.04 20.00 0.00 208.57

vii. Punjab NWFP Sindh Balochistan Total:

Transmission Net Work As on 30.06.2006 Figures in KMs 5,151.57 563.15 359.85 120.37 6,194.94

Province-wise Towns and Villages As on 30.06.2006 Figures in Nos. Province Cities/Towns Villages TOTAL Punjab 163 485 648 AJK/Federal Capital 2 3 5 NWFP 41 137 178 Total 19 88 831

viii.

ix.

Summary Showing Province-Wise Break-Up of Executives and Subordinates Working in the Company as on 30.09.2006 Executives Subordinates Total

Province

AJ KASHMIR BALUCHISTAN FANA FATA NWFP PUNJAB SINDH ( R ) SINDH ( U ) Total

5 9 0 3 109 640 7 12 785

64 51 3 97 1275 4749 7 33 6279

69 60 3 100 1384 5389 14 45 7064

52

x.

Tax Paid During 2005-2006 Rs. In mIllion

INCOME TAX G.S.T. TOTAL Financial Highlights 2006 SALES-GROSS VALUE (Million rupees) 107,879 PROFIT BEFORE TAX (Million rupees) 5,119 PROFIT AFTER TAX (Million rupees) 3,722 EARNING PER SHARE (rupees) 7.46 xi.

1,005 1,908.405 2,913.405

2005 84,710 4,261 2,734 5.48

2004 64,276 3,664 2,297 4.60

2003 45,649 3,207 2,014 4.03

2002 42,005 2,764 1,886 3.78

53

SSGCL
http://www.ssgcl.com.pk

5.3 SUI SOUTHERN GAS COMPANY LIMITED (SSGCL)

54

5.3.1

INTRODUCTION

Sui Southern Gas Company (SSGC) is Pakistans model gas utility and a blue chip company with a sound financial base, an annual turnover of Rs 68.5 billion, a 3,079km high-pressure transmission network and a 27,515km distribution network, extending across the two southern provinces of Sindh and Balochistan. SSGC is a public limited company incorporated in Pakistan under Companies Ordinance 1984 and is listed on all three stock exchanges. The present corporate status of the company emerged by merger of three companies viz. Karachi Gas, Indus Gas and Sui Gas Transmission Company, of which the oldest was formed in 1954. It is the first utility in Pakistan to receive ISO-14001 and OHSAS-18001 certification. i. Company Vision To be a model utility, providing quality service by maintaining a high level of ethical and professional standards and through the optimum use of resources. ii. Mission Statement To meet the energy requirements of customers through reliable, environment-friendly and sustainable supply of natural gas, while conducting company business professionally, efficiently, ethically and with responsibility to all our stakeholders, community and the nation.

55

BOARD OF DIRECTORS

1 2

Mr. Aitzaz Shahbaz Chairman, Board of Directors Mr. Munawar Baseer Ahmed Managing Director Sui Southern Gas Company Limited Mr. Saeedullah Shah Director General (Gas) M/o Petroleum & NR. Mr. Jalal-ud-din Qureshi Financial Advisor, PN&R Mr. Abdul Rashid Lone Managing Director, SNGPL Mr. Tariq Iqbal Khan Managing Director National Investment Trust Mr. Muhammad Javed Khan Executive Direct, State Life Insurance Corporation of Pakistan Mr. Khurshid K. Marker Karachi Mr. Qasim Rabani Official Executive Director, Investment Capital & Securities, Karachi Mr. Sajid Zahid Joint Senior Partner, Ordignam & Co. Karachi Mr, Saquib H. Shirazi Chief Executive Officer, Atlas Group of Companies, Karachi Mr. Zahid Majid, Lahore Mr. Asif Saeed 63/1, Phase-V DHA, Karachi Mr. Samiullah Baloch Managing Director, Balochistan Construction, Quetta

3 4 5 6

7 8 9 10 11 12 13 14

56

5.3.2 PROJECTS The five major projects completed during fiscal 2005-06 are as follows: i. ii. iii. iv. v. 24x64 Km Loopline Bajara-Karchat 16x15 Km Third Supply Main at Hyderabad 24 x 34 Km Loopline Shahdadpur Mir Karam Ali Jamali 24x6 Km Spur from SMS Pakland to FJFC Terminal 42x11 .5 Km Distribution Main at Bin Qasim area.

5.3.3

ACHIEVEMENTS GAS CONSUMPTION SECTORWISE Sindh Jul'05June'06 Power Cement CNG General Industries Fertilizer Commercial Domestic Net Effect of Accruals Total 128,145 5,952 8,622 118,594 19,355 7,974 52,504

i.

Balochistan Jul'05- June'06 9,967 49 226 515 7,056

In MMCF Total Jul'05June'06 138,112 5,952 8,671 118,820 19,355 8,489 59,560

341,146

17,813

358,959

ii.

TRANSMISSION NETWORK (KM) Addition Jul'05June'06

Cummulative as at June '06

Sindh Baluchistan Total

119 18 137

2,462 617 3,079

57

iii

DISTRIBUTION NETWORK (KM) Sindh Balochistan Total From July'05 to June'06

Sindh Balochistan Total Cummulative As at Jun'06

Mains Services Total

917 203 1120

558 73 631

1,475 276 1,751

17,239 5,026 22,265

4,204 1,046 5,250

21,443 6,072 27,515

iv

NO. OF GAS CUSTOMERS As at June '06 Sindh Karachi Industrial Commercial Domestic Total 2,621 14,793 1,293,046 1310460 Interior Sindh 318 3,505 390,046 393,869 Balochistan 39 1,640 154,403 156,082 Total 2,978 19,938 1,837,495 1,860,411

CITIES / TOWN / VILLAGES ON GAS (NO.) As at June 06 Sindh Cities/Districts Towns Villages Total 19 81 853 953 Balochistan 10 12 285 307 Total 29 93 1138 1,260

58

vi.

METER MANUFACTURING Meter Produced (in numbers) Sale of Meters ( in numbers) Own Consumption Karachi 75,606 763,492 839,098 Sindh & Balochistan Outside sales to SNGPL Others / Misc. Total Sale Sales Tax Paid (Rs. in 000)

PERIOD/ MONTH

TOTAL 2005-2006 TOTAL UP TO 30-06-2005 CUMMU. SINCE COMMENCEMENT 5.3.4

513,500 3,356,570 3,870,070

92,500 468,550 561,050

345,500 5,235,941 5,581,441

3,245 5,420 8,665

516,751 3,378,323 3,895,074

137,943 773,650 911,593

PAYMENTS TO NATIONAL EXCHEQUER DURING 2005-2006 Rs. Million 2006 2005 576 8,136 1,673 10,385 562 8,378 2,803 11,743

Year Ended 30th June Income Tax Sales Tax Gas Development Surcharges Total
1

2002 720 4,826 3,719 9,265

2003 601 5,409 1,327 7,337

2004 576 7,090 2,555 10,221

5.3.5

FINANCIAL HIGHLIGHTS FOR LAST FIVE YEARS Year Ended 30th June 2002 2003 2004 2005 2006

Sales Revenue (Rs. Million) Profit Before Tax (Rs. Million) Shareholder's Equity (Rs. Million)

32,235 2,154 10,173

36,163 2,049 10,512

47,355 1,572 10,354

54,376 1,589 10,366

68,487 1,720 10,341

Financial Ratios Debt / Equity Ratio Current Ratio (acid test) Debt Service Coverage Ratio Financial charges to Sales Revenue (%) 40 : 60 1.25 2.97 2.36 37 :63 1.36 1.91 2.41 31 : 69 1.37 1.42 1.47 41 : 59 1.1.231.23 1.87 1.03 45:55 1.11 2.17 2.032.032.03

59

Earning per Share - Basic / Diluted Dividend Per Share (Rs.) Dividend Yield (%) Return on Capital Employed (%) Fixed Assets Turnover Ratio (No. of times) * excluding depreciation

2.14 1.75 14.52% 8.29% 1.97

2.16 1.80 8.55% 8.28% 2.18

1.49 1.50 4.57% 5.85% 2.84

1.51 1.50 6.48% 5.67% 2.82

1.33 1.30 4.50% 4.50% 3.08

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http://www.psocl.com

5.4 PAKISTAN STATE OIL COMPANY (PSOCL)

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5.4.1

INTRODUCTION

Pakistan State Oil (PSO) is the oil market leader in Pakistan having around 78% share of Black Oil market and around 57%* share of White Oil market. It is engaged in import, storage, distribution and marketing of various petroleum products, including Mogas, HSD, Fuel Oil, Jet Fuel, LDO, SKO, petro-chemicals, LPG and CNG. This blue chip company, the winner of Karachi Stock Exchange Top Companies Award for a number of years and a member of World Economic Forum, has been a popular topic of case studies by Business schools in Pakistan and abroad based on its radical corporate transformation over the last few years. 5.4.2 VISION

To excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first. 5.4.3 MISSION STATEMENT

We are committed to leadership in energy market through competitive advantage in providing the highest quality petroleum products and services to our customers, based on: a) Professionally trained, high quality, motivated workforce, working as a team in an environment, which recognizes and rewards performance, innovation and creativity, and provides for personal growth and development

b) Lowest cost operations and assured access to long-term and cost-effective supply sources c) Sustained growth in earnings in real terms

d) Highly ethical, safe, environment friendly and socially responsible business practices Board of Management
1 2 3 4 5 6 7 8 9 10 Mr. Pervaiz Kausar Chairman, Board of Management, PSOCL Mr. Jalees Ahmed Siddiqi Managing Director & CEO, PSOCL Mr. Mahmood Akhter Joint Secretary (Budget), Ministry of Finance Mr. Shaukat Hayat Durrani Additional Secretary, Ministry of Petroleum & Natural Resources Mr. Tariq Kirmani Chairman & CEO, Pakistan International Airlines Corporation (PIAC) Mr. Tariq Iqbal Khan Chairman & Managing Director, National Investment Trust Limited Mr. Istaqbal Mehdi Managing Director, Pak Kuwait Investment Company Mr. Muhammad Yasin Malik Chairman, Hilton Pharma (Pvt.) Limited Mr. Kamran Mirza Managing Director, Abbott Laboratories Pakistan Limited Mr. Arshad Said Former Senior Executive, Shell Pakistan

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5.4.4

EXCELLENCE IN CUSTOMER SERVICE

PSO serves a wide range of customers throughout Pakistan, including retail, industrial, aviation, marine, and government/defence sectors. Professionals at PSO strive for providing unmatched and diverse services to the customers in line with best international practices. PSOs state-of-the-art New Vision retail outlets are equipped with the most modern facilities, including auto car wash, electronic dispensing units, convenience stores, business centers and internet facilities. PSO has a network of over 170 convenience stores and SHOP Stops throughout the country. Also as part of its Retail Automation Programme, PSO installed Pump Controllers at the New Vision Retail Outlets to automate flow of transaction data from fuel-dispensing unit to the Point of Sale terminal. PSO launched Green XL Plus Diesel and Premier XL Gasoline, to deliver high value to customers at no additional cost in terms of improved engine performance, fuel economy and reduced noise and air pollution. The Quick Oil Lube Vans introduced by PSO, provide the lube change facilities at customers doorsteps. Twenty-one ISO 9000 certified Mobile Quality Testing Units ensure top of the line quality of products and services. 5.4.5 TOTAL QUALITY CONTROL

PSO has been meeting the countrys fuel needs by merging sound business sense with national obligation. In order to satisfy the customers needs while ensuring the highest quality of products and services, PSO has introduced total quality management system in its operational activities. Consistent conformance to prescribed standards and specifications across the whole range of activities from receipt, storage, transportation and delivery of products is the cornerstone of PSOs quality management system. 5.4.6 HEALTH, SAFETY AND ENVIRONMENT

Ensuring the health and safety of PSO employees, contractors, customers and members of public likely to be affected by the Companys operations is one of the basic corporate objectives, and as a priority it ranks equally with market share and profit. Accordingly, it is the Companys policy to perform work in the safest practicable manner, consistent with best industrial practices while adhering completely to the requirements of health and safety codes and practices. The Companys Health, Safety & Environment (HSE) Steering Committee monitors HSE compliance on regular basis while HSE Site Committees ensure that HSE Requirements are met at all operating locations, including Depots, Terminals, Plants, Retail Outlets and Airports. PSO is the first OMC in Pakistan to install gas leak detectors at CNG Stations and obtain ISO 9001: 2000 certification of company operated retail outlets. 5.4.7 REFORM OF CORPORATE GOVERNANCE

This programme covers the revamping of the organizational architecture, rationalization of staff, employee empowerment and development, and efficiency and transparency in decision-making through Cross-Functional Teams. PSOs corporate structure has evolved into a matrix, which has divided the Companys major operations into independent activities supported by the financial, legal, information and other services. These activities operate in an autonomous and collegial manner in the form of

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Strategic Business Units based on the clear and transparent allocation of responsibility and accountability. This structural change has been reinforced and related checks and balances have been established by putting in place several corporate monitoring and control systems. One of the top priority areas of PSOs corporate reform is Human Resource Development. The company has undertaken several initiatives to ensure induction and training of professionals with the objective of ensuring high level of professionalism and productivity at all levels of its employees.

5.4.8

PROGRESS ON ANNUAL GOALS FOR FINANCIAL YEAR 2005-06 TARGET 2005-06 Product Market Share (%) ACTUALS 2005-06 Market Share (%)

White Oil MOGAS HSD SKO JP-1 Local JP-1 Export Sub-Total Black Oil LDO FO Sub-Total Lubes LPG CNG 71.3% 80.0% 79.7% 38.0% 6.8% 30.0% 51.8% 78.5% 77.8% 32.2% 4.5%* 18.6%* 45.0% 60.5% 70.0% 63.1% 45.5% 58.2% 45.3% 58.9% 63.5% 60.7% 29.4% 56.5%

Chemicals 43.0% 43.7%* Market Share represents PSO's share in OMCs-served market * Market Share based on PSOs share in total industry 5.4.9 SALES PERFORMANCE

PSO has ended FY06 as a market leader in all the major POL products, PSO sold approximately 9.7 million tons of POL products. Despite the increasingly stiff competitive market situation, PSO again emerged as leader with 65 percent share on overall basis.

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The motor gasoline sales volume of PSO declined by 9.2% against the industry decline of 10.5%. The market share in Mogas grew to 45.3% (up by 0.6% over preceding years market share). The HSD sales volume declined by 6.1% against the industry decline of 4.6% registering a market share of 58.9%. PSO displayed a growth of approximately 4.6% in JP-1 (domestic) sales as compared to the industry growth of 8.6% thus recorded a market share of 60.7%. Black Oil (Fuel Oil, Light Diesel Oil) showed a positive change in FY 06 and registered an industry growth of 10.4%, against which PSOs sales grew by 8.5%. FO volume of PSO increased by 10.1% against the industry growth of 11.4% thus recording a market share of 78.5%. Light Diesel Oil (LDO) showed a negative growth over last year due to the availability of substitute fuels. Since PSO has the largest market share, the impact of declining industry consumption has affected the most to PSO in terms of volume and market share. 5.4.10 NEW VISION PROGRAMME

New Vision Retail Outlets (NVROs) were expanded with the addition of 209 outlets making a grand total of 1,459 sites for FY 06. CNG facilities were also increased to 185 in FY 06. PSO has undertaken an ambitious and far-reaching programme for provision of state-of-the-art facilities along with the service of international standard to its customers through development of New Vision Retail Outlets. 5.4.11 INFORMARTION TECHNOLOGY

SAP became fully operational on July 1, 2005 and all systems are largely streamlined on real-time basis and information is now available expeditiously to help business decision-making. 5.4.12 FINANCIAL RESULTS

PSOs sound business practices and work efficiency translated into bottom-line financial performance. PSOs sales revenue during FY 06 stood at Rs 353 billion. The company earned highest-ever profit before tax of Rs 11.7 billion up by 27%, while the profit after tax reached the staggering figure of Rs 7.5 billion, up by 33% over FY 05. Based on this remarkable financial performance the company announced a final cash dividend of Rs 18 per share (180%) to its shareholders, resulting in total dividend of 340% for the whole year, as against 260% cash dividend declared during the preceding year. 5.4.13 AWARDS AND RECOGNITION

The year was marked by national and global recognition of PSO's corporate transformation and strategic development. In addition to World Economic Forum membership, PSO obtained a lead role at World Business Council for Sustainable Development (WBCSD) Geneva, Switzerland, becoming the first company in Muslim

65

world to have its CEO on Business Role Focus Area Core Team (Fact) as well as obtaining the top-most advisory position at WBCSD for one of its general managers. 5.4.14 CORPORATE SOCIAL RESPONSIBILITY

Due to the importance PSO places on Corporate Social Responsibility, the company participated in various activities and provided support and assistance in Health Education and social areas. In October 2005, earthquake relief operations, PSO refuelled 2,800 foreign relief flights very efficiently and made arrangements at Muzaffarabad for providing fuel to relief helicopters. The company also contributed Rs 30 million and its employees donated their three-day salary to the President Relief Fund. The PSO was the focal point for the LPG cylinders supply to the affected areas. PSO has undertaken a wide range of initiatives to support several social, healthcare, environment and educational programs. Such initiatives include instituting gold medals, cash awards and scholarships for top students of leading professional institutes, providing computer training to students and other residents of Badin district in rural Sindh province through a well facilitated training institute established for this purpose, providing moral and financial support in form of donation on compassionate basis to charitable institutions, installing direction signs and traffic signals at major streets and thoroughfares, supporting Citizen Police Liaison Committee and sponsoring road awareness programmes like Karavan Karachi for the children. 5.4.15 PAYMENT TO NATIONAL EXCHEQUER (Rs in million) Sales Tax Levies Income Tax Workers' Profit Participation Fund TOTAL FY 2005-06 44,540 9,970 3,826 486 58,822

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5.4.16

FINANCIAL HIGHLIGHTS FOR LAST FIVE YEARS

Year ended 30th June Rs. Million (unless noted) 2006 2005 253,777 3,219 9,191 5,656 1,506 17,545 172 5.4 2.2 32.2 12.0 10.9 11.2 39.9 5.4 31.7 33.0 386.0 11.6 26.0 25.9 1.24:1 1,870 38,823 4,459 1,230 2004 195,130 2,634 6,263 4,212 2,096 15,446 172 4.7 2.2 27.3 10.8 9.9 13.1 40.1 5.2 27.5 24.6 256.8 10.4 17.5 34.1 1.25:1 1,474 50,942 3,002 1,210 2003 206,376 2,465 6,209 4,030 1,643 14,264 172 4.3 2.0 28.3 13.8 12.5 19.7 35.4 6.3 34.8 23.5 228.4 9.7 16.0 23.6 1.25:1 1,403 53,699 2,744 1,290 2002 182,323 1,907 5,137 3,188 1,430 12,396 143 3.7 1.7 25.7 12.1 9.7 18.7 22.5 5.8 36.3 18.6 140.0 7.5 13.0 20 10.0 1.20:1 990 45,946 1,858 1,040

Sales Revenue Marketing & Administration Expenses Profit before tax Profit after tax Capital Expenditure Shareholders' Equity No. of shares Outstanding PROFITABILITY Gross Profit Ratio Net Profit Ratio Return on Shareholders' Equity Return on Capital Employed Return on total assets ASSET UTILIZATION Inventory turnover ratio Debtor turnover ratio Total asset turnover ratio Fixed asset turnover ratio INVESTMENT Earning per share Market value per share Price Earning per share Dividend per share Bonus shares LEVERAGE Interest Cover Ratio Current Ratio VALUE ADDITION Employees as remuneration Government as taxes Shareholders as dividends Retained within the business (x) (Rs.) (Rs.) (x) (Rs.) (%) (x) (x) (x) (x) (%) (%) (%) (%) (%) (in million)

352,515 3,428 11,654 7,525 717 20,813 172 4.9 2.1 36.2 12.3 10.7 11.5 37.8 5.8 44.4 43.9 309.0 7.0 34.0 13.0 1.24:1 1,857 58,822 5,831 1,900

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http://www.mpnr.gov.pk/ppl

5.5 PAKISTAN PETROLEUM LIMITED (PPL)

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5.5.1

INTRODUCTION

Incorporated on June 5, 1950 as a Public Limited company, PPL inherited all the assets and liabilities of the Burmah Oil Company (Pakistan Concessions) Limited, and started business on 01 July, 1952. Burmah Oil Company plc of UK (subsequently renamed as Burmah Castrol plc) was the parent company and majority shareholder of PPL. In 1997 Burmah made a strategic decision to disinvest from the exploration and production of oil and gas worldwide and sold its entire equity in PPL to the Government of Pakistan. In July 2004, the Government sold 15 percent of its holding in the Company through Initial Public Offer to General Public as part of its Privatization Programme, reducing its shareholding in PPL to 78.4%. International Finance Corporation (IFC) holds 5.2% of PPL's equity and the remaining 16.4% is held by private investors. PPL is a leading oil and gas exploration and production company, and is the operator of Pakistan's major gas fields. Gas production by PPL accounts for about 26% of the country's total gas production. It also produces Crude Oil/ Natural Gas Liquids (NGL) from Adhi field and Manzalai/ Makori discoveries in Tal Block. In addition Liquefied Petroleum Gas (LPG) is produced from its Adhi Field. PPL is the owner and the operator of Sui and Kandhkot Gas Fields. PPL's portfolio of developed and producing assets consist of four operated fields (Sui, Kandhkot, Adhi and Mazarani). The Company has working interest in five partner operated fields namely Qadirpur gas field operated by OGDCL, Miano and Sawan gas fields operated by OMV, Manzalai and Makori discoveries in Tal Block operated by MOL and Block-22 in which PEL is the operator. PPL's present exploration portfolio consists of 17 exploration blocks out of which nine (9) areas, including one (1) offshore block, are PPL operated and eight (8) areas including one (1) offshore block are partner operated. As of June 30, 2006, the remaining proven recoverable reserves of PPL consisted of 4.391 Tcf of gas (784 million barrels of oil equivalent) and around 21 million barrels of oil. The Company's current hydrocarbon production in terms of energy is equivalent to around 184,000 barrels of crude oil per day. The gas produced by the Company is sold to Sui Southern Gas Company Limited, Sui Northern Gas Pipelines Limited, and Water and Power Development Authority. A dedicated team of Pakistani professionals manages PPL operations. The Company continues to operate as an independent entity carrying on its business on a commercial basis. The Board consists of nine directors, eight of whom are Government nominated, and one is the nominee of IFC. Exploration & Development Prospects The main objective of the Company is to maintain its position as one of Pakistan's leading hydrocarbon producer. In order to achieve this objective, PPL has devised a dynamic exploration and development strategy with a close focus on enhancing its reserve replenishment ratio, improving drilling to discovery ratio and introducing production efficiencies through the use of modern production techniques. The Company's reserve replenishment plan includes review of attractive investment opportunities for acquisition of producing oil and gas assets in order to boost its hydrocarbon reserve profile and at the same time participate in securing the country's overall energy plan. Major capital projects planned for the next ten years include addition of high pressure casings for SUL compressor at SFGCS, installation of Acid Gas Disposal System at Sui, addition of well head compression facilities at Kandhkot for maintaining delivery pressure, installation of 1st and 2nd phase of compression facility at Qadirpur field and installation of Central Processing Facilities at Tal.

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Operational Performance PPL's exploration activities increased significantly after the initiation of first licensing round by the Government in 1989 which led to the discovery of Qadirpur in 1990 and Miano in 1993. Since 1998 Companys exploration activities accelerated and gathered unprecedented momentum. From the year 1998 to date, the Company acquired licences and working interest in 23 exploration blocks, acquired a cumulative 4,354 line km 2D seismic data and 6,082 sq. km. of 3D seismic data. The 23 exploratory wells drilled in both PPL operated and partner operated blocks, resulted in eight discoveries i.e. Sawan, Hamza, Hassan, Sadiq, Khanpur, Pab formation of Sui field and the recent Manzalai and Makori discoveries in Tal Block. Both the recent discoveries (Manzalai and Makori) are significant with high upside potential. PPL undertook appraisal/development of new fields on a fast-track basis to bring them on stream. This led to commencement of production from Miano, Sawan, Mazarani, Block-22 gas fields, Pab formation of Sui field and Sakesar formation of Adhi field including EWT (Extended Well Test) production from the recent Manzalai and Makori discoveries. Reservoir/ geological studies have confirmed potential for production enhancement at Adhi Field. Installation of LPG/NGL plant -Phase II is underway at Adhi and is expected to be commissioned by end August, 2006 which will double the production from the field. The Company has also started major capital projects i.e. SUL Gas Compression Project at Sui, Qadirpur Capacity Enhancement Project and Debottlenecking of Processing Plant at Sawan to enhance production and improve efficiencies. Present Organizational & Corporate Structure PPL's organizational structure comprises of seven functional areas -Exploration, Production, Corporate Services, Projects and Technical Services, Finance, Human Resources and Internal Audit. Managing Director/Chief Executive heads the operational activities of the Company and a General Manager leads each function. Internal Audit function is headed by Senior Manager Internal Audit. 5.5.2 VISION

Our vision is to maintain PPLs position as the premier producer of hydrocarbons in the country and at the same time make a strategic transition to become an international company, exploiting oil and gas resources beyond the borders of Pakistan, resulting in value addition to shareholders investment and to the nation as a whole. 5.5.3 MISSION STATEMENT

Our mission is to optimize hydrocarbon production and pursue an aggressive exploration programme in the most efficient manner on the local as well as international horizons through a team of professionals utilizing the latest developments in the exploration and production technology and maintaining the highest standards of health, safety and environment.

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Board of Directors
1 2 3 4 5 Mr. M.A.K.Alizai Chairman, Board of Directors Mr. S. Munsif Raza Chief Executive / Managing Director , PPL Mr. S.R. Poonegar Former Chief Secretary, Balochistan Mr. Sajid Zahid Barrister-at-law Mr. Shaukat Hayat Durrani Additional Secretary, MP&NR

6 Senator Roshan Khurshid Bharucha M. Jalal-ud-din Quershi 7 Financial Advisor(P&NR), Finance Division Mr. Pervaiz Kausar 8 Chairman, PSO Mr. Rashad R. Kaldany, IFC 9 or Mr. Michael G. Essex

5.5.4

COMPARISON OF THE PERFORMANCE DURING THE YEAR 200405 & 2005-06

Following is a comparison of current years production with the previous year from PPLs 100% owned fields and its share from all operated and non-operated joint ventures:

2005-06 Natural gas (Million cubic feet) Crude Oil / NGL (Thousand barrels) Condensate (Thousand barrels) LPG (Tonnes) 371,714 574 79 9,478

2004-05 349,580 512 90 9,088

The production during the period under review including share from joint ventures averaged at 1,018 MMscfd of gas, 1,573 bpd of Oil / NGL and 26 tonnes per day of LPG. A summary of production statistics for the Company is given in Annexure 1. 5.5.5 OWN PRODUCING FIELDS SUI GAS FIELD (100% PPL)

The Sui Gas Field has served the country for over half a century and still maintains its pivotal position in Pakistan's gas supply. At its discovery in 1952, it was ranked as one of the largest gas fields in the world. Even after five decades of faithful service it still supplies Pakistan with about one fifth of its continually rising gas demands. From inception to date, the cumulative gas production from Sui Gas Field has amounted

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to 8.9 Tcf (around 1.59 billion barrels in terms of oil equivalency), which has resulted in substantial foreign exchange savings to the country and played a role in the industrial development of the country. The operations of the Sui Gas Field continued satisfactorily throughout the year. The volume of gas sales during the year was 217,001 million cubic feet as against 212,481 million cubic feet in 2004-2005. In line with Companys commitment to protect the environment while carrying out its production operations, an acid gas recovery system will be installed in Sui Field. It will eliminate the harmful gaseous emissions into atmosphere from the gas purification plant. FEED work for the project has been initiated during the year and is expected to be completed by fourth quarter of 2006. 5.5.6 KANDHKOT GAS FIELD (100% PPL)

Gas from the Kandhkot Gas Field is supplied mainly to WAPDA's Guddu Thermal Power Station. From June, 2005, additional gas supply to SNGPL has commenced from the field. Beside a nominal quantity of gas is sold to SSGCL for Kandhkot Town. The volume of gas sales from Kandhkot field during the year was 48,525 million cubic feet as against 37,795 million cubic feet in 20042005. In February 2006, a new development well Kdt-25 commenced production at a rate of 8 MMscfd. Kdt-25 is a dual producer from Sui Main Limestone and Sui Upper Limestone formations. BHP and PLT survey aimed at updating field reserves and locating water producing zones respectively were successfully carried out in April 2006 5.5.7 OPERATED JOINT VENTURES PRODUCING FIELDS ADHI FIELD (PPLS SHARE 39%) PPL / OGDCL / POL JOINT VENTURE (OPERATOR PPL)

Following is a comparison of current years sale with the previous year from Adhi Field: 2005-06 Natural gas (Million cubic feet) 6,649 NGL (Thousand barrels) 660 Crude Oil (Thousand barrels) 607 LPG (Tonnes) 24,360 Drilling of Adhi well-17 was completed during the year as a producer from Sakesar limestone reservoir. The drilling of Adhi-18 commenced on 3 January, 2006 with the Tobra/Khewra sandstone reservoirs as the primary target, which is currently in progress. In order to evaluate the prospectivity of Adhi sub-thrust, reprocessing of 120 line km vintage 2D seismic data and its interpretation / mapping was completed. The study has been initiated to appraise the hydrocarbon potential of the sub-thrust. 23,259 694 569 2004-05 6,654

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The Project of Adhi LPG / NGL Plant-II is in commissioning phase and the Plant is expected to be commissioned during 1st quarter of 2006-07, which will double the production from Adhi Field. 5.5.8 MAZARANI GAS FIELD (PPL'S SHARE 87.5%) PPL / GHPL JOINT VENTURE (OPERATOR PPL) Mazarani Gas Field was developed and commissioned in June, 2003. The total volume of gas sold from Mazarani to SSGCL during the financial year was 4,344 million cubic feet as compared to 4,128 million cubic feet during 2004-05. 5.5.9 NON-OPERATED JOINT VENTURES PRODUCING FIELDS BLOCK22 (PPL'S SHARE 35.5263%) PPL / GHPL / PYRAMID / PEL JOINT VENTURE (OPERATOR PEL)

The total volume of gas sold from Block-22 for the year was 7,181 million cubic feet as compared to 6,204 million cubic feet in 2004-05. Block-22 is currently producing around 20 MMscfd from 4 wells. Hamza X-1 workover was completed in April 2006. The well test results are being reviewed to evaluate further economics for development of surface facilities. As per field development plan to maintain gas supplies to the buyers, FEED for field compression is being carried out which will be followed by installation of compression facility at the field. 5.5.10 SAWAN GAS FIELD (PPL'S SHARE 26.184%) PPL / ENI / MND / GHPL/ OMV JOINT VENTURE (OPERATOR OMV)

The total volume of gas sold from Sawan for the year was 124,613 million cubic feet as compared to 123,140 million cubic feet in 2004-05. Sawan field is selling around 340 MMscfd sales gas to northern and southern parts of the country with SNGPL taking around 270 MMscfd and SSGCL 70 MMscfd.

5.5.11

MIANO GAS FIELD (PPL'S SHARE 15.16%) PPL/ENI / OGDCL / OMV (OPERATOR OMV )

The Miano field gas is being jointly processed with Kadanwari field gas at Kadanwari Plant. The field is currently supplying gas to SSGCL from seven wells. During the year the total volume of gas sales from Miano field was 52,744 million cubic feet as compared to 51,682 million cubic feet in the previous year. Due to lower deliverability of Miano-8, the well was hydraulically fractured in 2005 and its production has doubled consequently. Miano-9 was completed as a producer in November 2005 and producing 30 MMscfd gas. Miano -10 was spud in January 2006 and was completed in March 2006. Based on well test results, the well is expected to produce around 20 MMscfd of gas from September 2006. 5.5.12 QADIRPUR GAS FIELD (PPL'S SHARE 7%) PKP / KUFPEC / PPL / OGDCL JOINT VENTURE (OPERATOR OGDCL)

The total volume of gas sales during the financial year was 180,886 million cubic feet (including 13,217 million cubic feet of dehydrated/ raw gas) as compared to 171,424 million cubic feet (including 12,559 million cubic feet of dehydrated/ raw gas) in 2004-05.

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Qadirpur Gas Field is one of the major gas fields of Pakistan with recoverable gas reserves of 4.2 Tcf. As part of field Development Program, additional wells are being drilled to sustain /enhance production rates. During the year two additional development wells 27 and 28 were successfully drilled and completed. Existing Membrane based Gas Processing Facilities have installed capacity of 500 MMscfd sales gas. Considering existing reservoir potential and demand for additional gas production from the field, gas processing capacity is planned to be enhanced from 500 to 600 MMscfd by end 2007. 3D Seismic data covering 314 sq.km was acquired during 2004-2005 to delineate the lateral intent of the deeper reservoirs at Goru Sands and Parh formation. Based on 2D & 3D seismic data interpretation, an exploratory deep well, Qadirpur Deep X-1 was spuded in May, 2006 and the drilling is in progress. 5.5.13 BLOCK 3370-3 (TAL) (PPL SHARE 27.763%) PPL / OGDCL / GHPL / POL / MOL JOINT VENTURE (OPERATOR MOL) Following is a comparison of current years sale with the previous year from Tal Field: 2005-06 Natural gas (Million cubic feet) 16,616 Condensate (Thousand barrels) 162 Crude Oil (Thousand barrels) 142 The extended well test of the first discovery well Manzalai-1 was successfully completed through the Gurguri Gas Plant (EPF). The appraisal well Manzalai-2 was successfully drilled in March 2006 which confirmed the presence of hydrocarbons in all the reservoirs previously tested in Manzalai-1. It also produced gas from Samanasuk formation, which was not tested in the discovery well. Following the second discovery within the Tal Block, an early production facility (EPF) was set up and production commenced already from Makori-1 well. The oil is currently being transported by tankers to Attock Refinery and the gas is sold to SNGPL. Well and reservoirs performance is under evaluation through an extended well test (EWT) programme, which will facilitate the formulation of development plan for the discovery. 5.5.14 EXPLORATION ACTIVITIES 13 52 2004-05 4,883

The demand for energy is on the rise with expansion in the economy and concerted exploration efforts are required to find new discoveries to boost the energy supply. The Companys exploration activities have gained unprecedented momentum to meet the growing energy demand within the country with the acquisition of new areas and working interests. The present exploration portfolio of the Company comprise of 9 PPL operated (including 1 offshore) and 8 partner operated (including 1 offshore) blocks. In addition, Farm-in process in OGDCLs Indus G Block is in progress. A Memorandum of Understanding has also been signed for acquisition of working interest in Enis four Eastern Sindh Blocks (Thar, Umarkot, Rajar and Mithi) and two offshore Indus Blocks (M&N) against swap of working interest in PPLs Nushki, Khuzdar, Kalat and Eastern Offshore Indus C Blocks. PPL is pursuing acquisition of working interest in IPRs Guddu Block with an option for operatorship. Application has also been submitted

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for Exploration licences over Baska Block (Ex Block 34), Sanghar East and Bhawalpur East blocks. The Company has employed modern technology including state of the art computer applications, remote sensing and communication techniques to further revamp its exploration efforts. Summary of PPL's seismic and drilling activities is given in Annexure 1.

5.5.15

FOREIGN EXCHANGE SAVINGS AND GOVERNMENT REVENUES

PPL contributes significantly to the national economy. The Companys share of production of natural gas from its operated and non-operated fields, and production of Oil, LPG and NGL from Adhi and Tal fields for the financial year 2005-06 in terms of energy, was equivalent to 184,000 barrels of crude oil per day, resulting in foreign exchange saving of around US$ 3.4 billion for the current year assuming an average crude oil price of US$ 50 per barrel. In addition, payments to the Government Exchequer by the Company was around Rs 24.9 billion during the year (Rs 18.1 billion during 2004-05) on account of taxes, royalties, excise duty, dividend, sales tax and gas development surcharge.

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ANNEXURE-1 PAKISTAN PETROLEUM LIMITED EXPLORATION ACTIVITIES DURING THE YEAR 200506 Seismic Survey Acquried (A) / Purchased (P) 2D Line Km 3D Sq. Km. For the Year 2005-06 Process (P) / Gravity & Reprocess (R) Magnetic surveys 2D Line Km 3D Sq. Km. Stations

Activity

No. of Exploratory / Development Wells

PPL Operated Exploration Blocks Block 3372-12 (Kot Sarang) Block 2568-13 128 (A) (Hala) Block 2766-13 (Khuzdar) Block 2568-15 200 (P) (Tajpur) Block 2969-8 450 (P) (Barkhan) Subtotal Acquire / Process Subtotal Purchase / Reprocess 650 (P) 128 (A) -

225(P) 136 (R) 200 (R) 450 (R) 225(P) 786(R)

128 (P)* 1,214

1 exp.* -

128 (P)*

1,214

Partner Exploration Blocks Block 3370-3 (Tal) 510 (A) Block 2668-4 (Gambat) Block 2669-3 (Latif) Block 3370-10 236 (A) (Nashpa) Block 2668-5 (SW 302 (A) Miano-II) Block 2768-3 (Ex Block-22) Block 2667-7 284 (P) (Kirthar) Partner Producing Blocks Qadirpur D&PL Sawan D&PL Miano D&PL Subtotal Acquire / Process Subtotal Purchase / Reprocess Total Acquired / Processed Total Purchase / Reprocessed Total Wells Drilled- Expl / Dev. s = successful d = dry hole * In progress 1048 (A) 284 (P)

700 (A) 191 (A) 347 (A) 148 (A) 141 (A) 1527 (A) -

712 (P) 236 (P) 302 (P) 317 (R) 284 (R) 1250 (P) 284 (R) 1,475 (P) 1,070(R)

700 (P) 328 (P) 240 (R) 709 (P) 215 (P) 314 (P) 274 (R) 80 (P) 2346 (P) 831 (R)

1 exp.* 1 exp.* 1 exp. (d) 1exp* -

1048 (A) 934 (P)

1,655(A) -

2,474(P) 831 (R)

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PAYMENTS TO NATIONAL EXCHEQUER

FOR THE YEAR ENDED ON JUNE 30, 2006 RS MILLION Royalty Gas Development Surcharge Corporate Tax Dividend Excise Duty Sales tax 3,026 5,214 6,309 3,497 1,264 5,600 24,910

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http:/ /www.parco.com.pk

5.6 PAK ARAB REFINERY LIMITED (PARCO)

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5.6.1

INTRODUCTION

Incorporated in Pakistan in May 1974, as a Public Limited Company, Pak-Arab Refinery Limited (PARCO) is a 60:40 joint venture between the Governments of Pakistan (GOP) and Abu Dhabi, having paid-up capital of Rs.12 billion and total equity of Rs.36 billion. Since the commencement of commercial operations 25 years ago, the company has expanded a phenomenal 53 times, achieving an asset base approaching Rs. 100 billion or in excess of US$ 1.6 billion in current dollar terms. An enlightened investment decision in anyones books! It was the first company to be rated AAA by PACRA in the country and the only one that continues to command that credit worthiness for an unprecedented 9th year running. PARCOs Board is made up of six GOP Directors including the Chairman and the Managing Director and four Abu Dhabi Directors representing Abu Dhabi Petroleum Institute Company (ADPI). i. PARCO is truly an Energy Company

PARCO as an energy company is a key player in the countrys strategic oil supply and its logistics. With the synergy of a comprehensive and expanding oil pipeline network, integrated with a significant and modern refining capability, PARCO has emerged as the strategic fuel supplier to the country. PARCOs competitive advantages through the integration of pipeline operation, strategic storage, leading edge refining and a significant role in marketing of petroleum products, have enabled it to achieve a unique position in the energy supply chain. ii. PARCOs Mid-Country Refinery

PARCOs 100,000 BPD, state-of-the-art Mid-Country Refinery at Mahmood Kot, completed at a cost of US$ 886 million, represents more than 40% of the indigenous refining capacity of the country. It helps substitute imports of refined value added oil products to the tune of US$ 100 million per year. iii. Introduction of Unleaded Fuel

In Pakistan, PARCO pioneered the successful introduction of 87 octane unleaded motor gasoline in June 2001, whose quality has been enhanced to 90 octane since March 2003. PARCO was also able to successfully export unleaded 90 octane gasoline since it met all international standards. PARCO is therefore privileged to be able to contribute to a much healthier environment and improved quality of life for future generations. iv. Marketing Initiatives

"TOTAL PARCO PAKISTAN LTD (TPPL), a joint venture of PARCO and TOTAL S.A. of France, is marketing consumer petroleum products through a rapidly expanding national network of retail outlets. Already 121 stations have been commissioned in the first 4 years of its operations at an investment of US$10 million per annum. TPPL's ambitious investment programme adds 1000 new Pakistani jobs per year." Under a Technical Services and Support Agreement (TSSA), SHV of Holland is marketing 25% of PARCOs LPG production as PEARL Gas. In addition to marketing

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OMV Austrias lubricants under the brand name of PEARL Lubes, PARCO is also locally producing lubricants in three grades of engine oil PEARL Energy for Gasoline engines, PEARL Zabardast for Diesel engines and PEARL Speed for motorcycles strictly under its own formulation and supervision to ensure the highest standards. v. An Expanding Strategic Pipeline Network

PARCO operates a crude oil-cum-product pipeline. It transports mainly crude oil from Karachi to Mahmood Kot near Multan for its Mid Country Refinery, and refine products, like diesel and kerosene, to Faisalabad and to Machhike, near Lahore through its 1228-km long 16", 18" and 20" diameter pipeline. PARCOs Pipeline System includes a network of highly sophisticated telecommunication facilities and a comprehensive Supervisory Control And Data Acquisition (SCADA) System. PARCOs 864-km Karachi to Mahmood Kot pipeline, having the initial annual pumping capacity of 2.9 million tons, with technological upgradation of the system is now capable of pumping up to 6.0 million tons. In June 1997, PARCO completed its 360-km MFM (Mahmood Kot- Faisalabad Machhike) Pipeline Extension Project. The Project design allows for future spur lines from Faisalabad to Kharian and Sahiwal. vi. White Oil Pipeline (WOP)

At a cost of US$ 480 million, PARCO has completed another cross-country pipeline infrastructure of major strategic significance for Pakistan. The 817-km, 26 diameter White Oil Pipeline, completed in record 23 months and commissioned in March, 2005 is designed to carry up to 12 million tons per year of refined petroleum products from Karachi to Mahmood Kot, starting with initial throughput of 5 million tons per year. A joint venture company called Pak-Arab Pipeline Company Limited has been formed by PARCO in collaboration with countrys major Oil Marketing Companies (Shell, PSO & Caltex. vii. Korangi-Port Qasim Link Pipeline (KPLP)

The 22 kilometer long, 26 diameter pipeline linking PARCOs Korangi station with PAPCOs Port Qasim station has been commissioned in March 2006. The strategic link has connected both the Karachi ports (Keamari as well as Port Qasim) with PARCO and PAPCO pipeline systems, providing flexibility in pipeline operations to receive crude as well as product from either port.

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Board of Directors of PARCO 1. 2 3 4 5 6 7 8 9 10 Mr. Salim Abbas Jilani Chairman, PARCO Mr. Khadem Al Qubaisi Vice Chairman, IPIC, Abu Dhabi Mr. M. Rasheed Jung Managing Director, PARCO Mr. Sabar Hussain Director General (Oil) Mr. Mahmood Akhtar Joint Secretary (Budget), Finance Division Mr. Aijaz Ahmed Chaudhary MNA Mr. Shafeeq A. K. Hussain, Mr. Abdul Karim Thabet IPIC, Abu Dhabi Mr. Ahmed Ghaleb Al Mehairi IPIC, Abu Dhabi Dr. Hans-Heinz Horrak ADPIs/OMV IPIC Nomination

5.6.2

MISSION STATEMIENT

To consolidate financial and organizational gains, PARCO pursues the following Mission Objectives inherent in its name Professional and Progressive Corporate Outlook Aggressive Technical Thinking and Advanced Planning Reliability of Service Consistency in Performance Organized and Systematic Development

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5.6.3

ACHIEVEMENTS

During 2005-06 the company initiated, completed and successfully commissioned the following projects for the development of the energy infrastructure of the country. Completion and Commissioning of country's largest Mid-Country Refinery of 4.5 Million tons / year, to expand and enlarge country's refining capacity so that local and imported crude could be processed closer to the centers of consumption. 2005

Completion and commissioning of 817 km White Oil Pipeline Project (WOPP), designed to carry up to 12 million tons per year of refined petroleum products from Karachi to Mahmood Kot, starting with initial throughput of 5 million tons per year. Completion and commissioning of Korangi-Port Qasim link Pipeline (KPLP) linking PARCOs Korangi station with PAPCOs Port Qasim station. PARCO MCR achieved Integrated Management System (ISO 9001, ISO 14001, OHSAS 18001) Certifications simultaneously.

2005

2006

2006

5.6.4 i.

FUTURE PROJECTS Asphalt Production Plant at MCR

PARCO is implementing a project for adding an Asphalt Production Plant at its Mid Country Refinery. The project aims at producing superior grade of Asphalt from furnace oil produced at refinery. Limited market for furnace oil at certain time of the year, limits the refinery throughput. Therefore by making use of furnace oil refinery throughput will also be increased. This plant will also prove helpful in fulfilling an important need of hi-grade asphalt which is mainly used for paving roads, in roofing systems and for waterproofing due to its excellent weather properties. In addition to this it is used for manufacturing of Lubricating Oil for Open Gears System used in Sugar Mills, Cement Industries and Pakistan Railways. ii. Hydrodesulphurization Unit at MCR

PARCO is establishing Hydrodesulphurization unit at its Mid Country Refinery which will be instrumental in reducing sulphur content from diesel and meet the revised country specifications for sulphur contents for environmental reasons.

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5.6.5

PROGRESS ON ANNUAL GOALS / TARGETS FOR 2005-06

PARCO like any professional organization strive for self sufficiency, mitigation of risk and profitable operations. The salient features of the actual performance for the 2005-06 are as under. Record Sales During the year 2005-06 the company achieved sales of Rs. 119,822 billion. The production statistics of the refinery in the period July 2005 to June 2006 were as under:(Figures Tons) Liquid Petroleum Gas HOBC JP-I LDO MS (90 RON) Kerosene High Speed Diesel Furnace Oil Sulphur Total A summary of the results is given in the attached Annexure. 5.6.6 PAYMENTS TO NATIONAL EXCHEQUER in M.

145,633 9,225 472,831 36,007 597,433 106,099 1,253,677 988,891 21,228 3,631,024

PARCO has generated significant benefits for national economy against GOPs initial investment of Rs. 324 million. Upto June 2006 it has paid/ saved the following amounts to Government Exchequer. Custom Duties / Taxes Income Tax Dividend Freight Pool Total Earnings / Savings to GOP Rs. 3.1 billion Rs. 8.2 billion Rs. 10.2 billion Rs. 10.2 billion Rs. 20.2 billion Rs. 51.9 billion**

** This amount is around 160 times of GOPs investment in the project.

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5.7 SAINDAK METALS LIMITED

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5.7.1

INTRODUCTION

The Saindak Metals Limited (SML), formerly known as Resources Development Corporation of Pakistan (RDC), is a national company, which deals in exploration, exploitation and development of non-ferrous minerals and extraction of base metals like copper. The Saindak Copper-Gold Project (SCGP) was completed by Metallurgical Construction Corporation (MCC) is 1995 and handed over to SML in January 1996 after trial production of 1,500 tones of blister copper. The project remained closed between 1996-2003. in February 2000, it was decided to restart the project through leasing option by inviting international bids. Accordingly, GoP awarded the lease to MCC Resources Development Corporation of China for a period 10 years to operate the project as joining venture. MRDL (China) arranged finances including working capital for maintenance, preparation, and a rehabilitation and production activities amounting to US $ 25.915 million as per terms of contract. The project was handed over to MCC China and commercial production started in August, 2003. BOARD OF DIRECTORS 1 2 3 4 5 Mr. Ahmad Waqar Secretary, P&NR (Chairman) Mr. Rashid Hussain Malik Director General (Minerals), Managing Director, SML Mr. Athar Mahmood Khan Additional Finance Secretary (CF), M/o (Fiance) MD, PMDC Mirza Talib Hasan DG, GSP Capt. (R) Qayum Nazar Changezi Additional Chief Secretary Planning & Development Department, Government of Balochistan Mr. Naseer Ahmed Baloch Secretary, Mines & Mineral Department Government of Balochistan Dr. Naseeruddin Sheikh Mr. Mohammad Khalid Pervaiz Mining Advisor, Gharibwal Cement, Ltd.

7 8 9

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5.7.2.

ACHIEVEMENTS FOR THE PERIOD JULY 2005 TO JUNE 2006 Production

The SCGP remained in production during the period July 2005 to June 2006 and following quantities were produced: i. ii. iii. 5.7.3. Copper Ore Copper Concentrate Blister Copper 5,242,216.00 MT 80239.90 MT 18295.93 MT

SALES STATUS

MCC / MRDL exported following quantities of blister copper during the period from July 2005 June 2006. Blister Copper Value 5.7.4. 16468.44 MT US $ 100,676,076 (Rs. 6040.564 million)

PROFIT AFTER TAX FOR THE YEAR ENDED ON 31.12.2005 US $ 4.027 Million (50% share)

5.7.5

GOVERNMENT TAXES

The lessee paid Rs. 120.811 million as royalty @ 2% of on sale value to Government of Balochistan. Similarly, 1.25% presumptive tax amounting to Rs. 75.507 million and EPZ service charges @ 0.5% amounting to Rs. 30.203 million are paid to EPZ authorities. 5.7.6 PAYMENTS TO NATIONAL EXCHEQUER Rs. in Million 120.811 75.507 30.203 226.521

Particulars Royalty Development Surcharge Presumptive Tax TOTAL 5.7.7

FINANCIAL HIGHLIGHTS FOR LAST FIVE YEARS: 2001 2002 2003 586.23 8 2004 3604.39 2 142.645 2005 5801.50 3 485.013 2006 2792.9 08* **

Year Ended 31st December Sales Revenue (Rs. in million) Profit Before Tax (Rs. in million) Government Investment upto 1996

Project remained Stalled - do - do -

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* Figure upto 30th June 2006. ** Figure not available. Note: Government has made capital investment of Rs.13,995.053 million and all assets have been handed over to Lease Operator on a annual rent of US $ 0.5 million plus 50% share of surplus.

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web site: www.mpnr.gov.pk/lcdc.php

5.8 LAKHRA COAL DEVELOPMENT COMPANY LIMITED

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5.8.1

INTRODUCTION & INCORPORATION

Lakhra Coal Development Company Limited (LCDC), was incorporated as a Public Limited Company on 6th February, 1990 under Companies Ordinance, 1984. The Company is a Joint Venture of Pakistan Mineral Development Corporation (PMDC), Government of Sindh (GOS) and Water & Power Development Authority (WAPDA) with equity capital of Rs.50 million shared in the ratio of 50:25:25 respectively.

BOARD OF DIRECTORS Mr. Irfanullah Khan Marwat Minister for Mines & Mineral Development Department, Govt. of Sindh/ Chairman of the Board Mr. Abdul Majeed Zahid Managing Director/ Chief Executive Mr. Abdul Hamid Akhund Secretary, Mines & Mineral Development Department, Govt. of Sindh Managing Director, PMDC Mr. Athar Mehmood Khan Additional Finance Secretary (CF), Finance Division Mr. Masood-ur-Rehman General Manager (Finance), PMDC Mr. Haseeb Ahmed Khan Chief Engineer (Thermal), WAPDA Mr. Abu Adil Chief Executive WAPDA, Jamshoro Mr. Rasheed Hussain Malik Director General (Minerals), Ministry of Petroleum & Natural Resources LAKHRA COALFIELD

1 2 3 4 5 6 7 8 9

5.8.2

The Company project comprising operating coal mines, is situated in Lakhra Coalfield located about 70 km north-west of Hyderabad city and 200 km North-East of Karachi. The property lies between latitude 25-35 to 25-55 (north-south) and longitude 68-0 to 68-12 (east-west). 5.8.3 MINING CONCESSION

Presently an area of 7943 acres of Compact Block Coal lease is in possession of LCDC at Lakhra Coalfield for development of coal mines and supply of coal to WAPDA Thermal Power Station at Khanote, District Dadu, Sindh. The total proved reserves in the area are 42 million tonnes.

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5.8.4

COMPANYS OBJECTIVE

Prime objective of the Company is to develop Lakhra Coal Mines to supply Coal to 150 MW Thermal Plant of WAPDA at Khanote which was originally planned for 6x50 MW with annual coal consumption of 15,00,000 M.Tonnes. However, only 3x50 MW plant was set up which also operated much below its rated capacity reducing the coal requirement to even less than 50% and rendering the mechanized mining uneconomical. At later stage it was decided that remaining 3 units would be set up by private sector instead of WAPDA and accordingly an area of 8622 acres, out of 16,564.71 acres of Compact Block was withdrawn from LCDC leased area. 5.8.5 IMPLEMENTATION STATUS

LCDC engaged Chinese Company for Geotechnical studies and design and development of mechanized mines in the entire area of 16,564.71 acres. Geotechnical studies were completed and mine design prepared by the Company. LCDC was in the process of signing mine development contract with Chinese Company but it transpired that WAPDA had decided not to set up remaining 3 power units and the installed units operating at much lower capacity were expected to consume half of stipulated annual quantity of coal. Under these circumstances it also became difficult to arrange finances for the Company and thus it was decided to drop the idea of mechanized mines and was considered appropriate to develop coal mines with present semi mechanized system to meet the limited coal requirement of installed thermal plant. Heavy mechanization cost would have rendered the venture uneconomical if assured uninterrupted market for stipulated annual quantity of 750,000 tonnes was not available for operating coalmines. At present LCDC is operating coalmines through local manual mining system through investment by its Coal Raising Contractor.

5.8.6

STATUS OF MINE DEVELOPMENT

LCDC has 53 mines fully developed and capable of each producing 40 to 50 tonnes coal per day while 37 mines are under development. Coal excavation is carried out by applying shortfall retreating method after developing coal panels at 50 ft interval. When a panel is completely mined, it is sealed off and coal excavation is started from next panel. Ventilation circuit is maintained through main incline as intake and main shaft as return air way. In case mine workings are extended far away from main shaft, an additional shaft is provided to improve airflow through coalface. Shaft is also used for coal hauling and material lowering while incline is also used as traveling way for labor. 5.8.7 COAL SALES

Thermal Plant remained under trial during 1992-93 to 1994-95 and regular coal supplies could be started from the year 1995-96. Initially, coal supplies were made by LCDC partially from its own mines and partially from PMDC. After developing of Companys own mines, the Company is capable of meeting total coal requirement of Thermal plant. However, approximately 60% of coal supplies are made by LCDC and

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balance 40% supply from coalmines of PMDC through a internal arrangement between LCDC and PMDC. Due to under capacity operation and frequent shutdowns of WAPDA Thermal Plant, coal supplies to plant are much below the planned quantity of 7,50,000 tonnes. The plant is hardly using 250,000 to 300,000 tonnes coal, which is also jointly supplied by LCDC and PMDC. Therefore, LCDC has started selling surplus coal in open market so that the company does not run in losses.

PROFIT & DIVIDEND FOR LAST 4 YEARS Year Profit After Tax 16.129 million 2004-05 2005-06 12.871 million (un-audited)

Dividend 16% 16% (Expected)

5.8.8

PRESENT STATUS

The activities of the Company have been restricted by the Board of Directors to the extent of its existing coal mining operation in Lakhra as the Company is to be privatized along with LPGCLs (WAPDA) Thermal Power Station at Khanote as a package. Previously Federal Privatization Commission was processing the privatization proceedings but now this task has been assigned to Sindh Privatization Commission. The privatization is under active process of Sindh Privatization Commission. The selection of Financial Advisor is under consideration of the Commission.

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http://www.ghpl.com.pk

5.9 GOVERNMENT HOLDINGS (PRIVATE) LIMITED (GHPL)

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5.9.1

INTRODUCTION

Government Holdings (Private) Limited (GHPL) manages Government of Pakistans working interest in upstream petroleum Joint Ventures. GHPL participates in all Joint Ventures as non-operator. As such it does not have yearly drilling or survey targets like other oil & gas companies. The company monitors the activities of the Joint Ventures on behalf of the Government of Pakistan. GHPL has been assigned GOPs working interest in 50 joint ventures. Current portfolio consists of: i. Twenty (20) land concessions in exploration stage, 5 concessions in Offshore area under Production Sharing Agreement (PSA) and 25 Development and Production Leases (D&PLs). Total 26 properties are producing Oil and Gas among which 17 are in D&P Leases while 9 are producing under Extended Well Testing (EWT) in Exploration Licenses (E.L) Seven properties in D&P Leases are under development phase. Thirteen (13) more discoveries exist in E.Ls awaiting development for start of production.

ii.

iii. iv.

GHPL is non-operating partner with local and foreign oil and gas exploration and production companies functioning as operator. Major operating companies in partnership with GHPL are BP, Shell, BHP Billiton, OMV, Petronas Carigali, Tullow, Hycarbex, MOL, OPII, OGDCL, PPL, POL and PEL. Major oil & gas fields currently under development in which GHPL has working interest are Manzalai and Makori being operated by MOL. Board of Directors S.NO 1 OFFICIAL Mr. Ahmad Waqar Secretary Petroleum & NR Chairman Mr. Khurshid Anwar Managing Director/Chief Executive GHPL Mr. Iqbal Awan Joint Secretary , Ministry of Finance Mr. Bashir Ahmad Chauhan Joint Secretary (Admn) M/o Petroleum & NR Agha Sher Hamid Zaman Director (Technical) GHPL Mr. Muhammad Amjad Director (Finance) GHPL

5 6

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5.9.2 i.

STATUS OF MAJOR PROJECTS SAWAN (GHPL WORKING INTEREST 22.5%)

Gas production from the Sawan continued in the year 2005-2006 at a steady rate. Average gas production from the field during the year was 376.2 MMSCFD. ii. ZAMZAMA (GHPL WORKING INTEREST 25%)

Zamzama gas and condensate field produced gas and condensate on continuous basis. Average production from the field during the year was 270 MMSCF of gas and 1776 BBLS of condensate per day. Phase-II development work is in progress to produce additional 150 MMSCF of High Calorific Value (HCV) gas through Nitrogen removal. iii. HASAN, SADIQ & KHANPUR (GHPL WORKING INTEREST 22.5%)

Average production from the three fields (Hassan, Sadiq and Khanpur), operated by PEL, during the year was 20.52 MMSCF of gas per day. iv. CHANDA (GHPL WORKING INTEREST 17 %)

The Chanda field, the first oil and gas discovery in NWFP started producing from 24th July, 2004. A Development well Chanda # 2 discovered an additional reservoir of Kingriali Dolomite. Average production from the field during the year 2005-06 was 8.51 MMSCF of gas and 2631 BBLS of oil per day. LPG production is expected to start by the end of year 2006. v. MAZARANI (GHPL WORKING INTEREST 12 %)

Production from the field started in June, 2003. Average production from the field during the year 2005-06 was 11.74 MMSCF of gas and 69.2 BBLS of condensate per day. vi. PARIWALI (GHPL WORKING INTEREST 17 1/2%)

Pariwali was assigned to GHPL after it could not be privatized. Average production from the field was around 2173 BBLS of oil, 19.31 MMSCF of gas, 79 BBLS of gasoline and around 64 Metric Tons of LPG per day, during the year 2005-06. Drilling of an additional development well Pariwali # 6 is in progress. vii. MINWAL (GHPL WORKING INTEREST 17 1/2%)

The field has almost been depleted. Its average production during the year was about 61.87 bbls of oil per day.

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viii.

JHABERI SOUTH, JUNATHI SOUTH, ALI ZAUR, SHAHDINO, FATEH SHAH NORTH AND FATEH SHAH (GHPL WORKING INTEREST 25%)

These small fields operated by BP in ex-Badin and ex-Mehran Blocks are on depletion. Junathi South has been fully depleted. The average total production from these fields during the year was 818.42 BBLs of Condensate and 13.28 MMSCF of gas per day. ix. MIRPUR KHAS/KHIPRO (GHPL WORKING INTEREST 25%)

GHPL has a share of 25% in the Mirpukhas/Khipro, discoveries. Eight discoveries of gas and condensate namely Naimat Basal, Siraj South, Bilal, Bilal North, Umar, Usman, Kausar and Ali altogether produced 76.11 MMSCF of gas, 925 barrels of condensate/oil and 36.7 Metric Tons of LPG per day during the year 2005-06. x. MANZALAI TAL EXPLORATION LICENSE (GHPL WORKING INTEREST 15%)

Manzalai is NWFPs second gas and condensate discovery and Operator MOLs first in the block. It was brought on Extended Well Test production on fast track basis. Average production during the year 2005-06 from one well was 46 MMCF of gas and 442 BBLS of condensate per day. Second Well on the structure has been drilled while the third well is under drilling. xi. MAKORI TAL EXPLORATION LICENSE (GHPL WORKING INTEREST 15%) Makori is the second continuous discovery by the Operator MOL in Tal Block. The well was put on extended well production in January 2006 and its average production during the year was 840 bbls of oil and 3.14 MMSCF of gas per day. xii. REHMAT- MUBARAK EXPLORATION LICENSE (GHPL WORKING INTEREST 15%) Development and Production Lease was granted over Rehmat Field w.e.f. 22nd March, 2004. Average production from the field was 30.6 MMSCF of gas and 103.6 BBLS of condensate per day during 2005-06. A development well is planned to be drilled in the first quarter of 2007. xiii. OFFSHORE INDUS M & N BLOCKS

Production Sharing Agreements were signed between GHPL and Eni Pakistan Ltd on 25th February, 2005. Operator has awarded the contract for 2D/3D Seismic Survey in both the blocks which is scheduled to start during last quarter of 2006. xiv. OFFSHORE INDUS E BLOCK

After obtaining good data of 3-D seismic, Shell (Operator) and its partners, KUFPEC, GHPL decided to drill a well. OGDCL and PPL have farmed-in by taking 30%

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and 20% working interest respectively. Production Sharing Agreement between GHPL and Contractors Consortium (Shell, OGDCL, PPL, Premier and KUFPEC) was signed on 23rd December, 2005. A well is expected to be drilled in 2007. xv. OFFSHORE INDUS DELTA-A

This is the first offshore block operated by OGDCL. Production Sharing Agreement was signed on 23rd October, 2004 between GHPL and OGDCL. OGDCL is planning to acquire 3D seismic data in the block. xvi. OFFSHORE INDUS J

Offshore block has been awarded to PEL. Production Sharing Agreement with GHPL has been finalized and awaiting approval of the GoP and formal signing. 5.9.3 DISCOVERIES MADE DURING FISCAL YEAR 2005-2006

OGDCL made following oil and gas discoveries from the blocks in which GHPL is also a JV partner.

Discovery Nim # 1 Dars Deep 5.9.4

Oil/Gas Gas/Condensate Gas/Condensate

Operator OGDCL OGDCL

Concession NIM Tando Allah Yar

PRODUCTION PROFILE

As of 30th June, 2006 GHPLs share of average daily production from all fields is as follows: Oil Condensate Gas LPG Total 5.9.5 1176 BBLS per day 827 BBLS per day 213.1 MMCF per day 20.4 Metric Tons per day 36997 Barrels of Oil Equivalent per day

INVESTMENTS, REVENUES, ROYALTY AND TAX

During 2005-06 GHPL invested Rs 2,356 million in the development of discovered oil and gas fields and generated revenue of Rs 12,000 million from sale proceeds of oil and gas. Out of the revenues Rs 1,578 million were paid to GoP as royalty beside payment of Rs 2,450 million as income tax. In addition, GHPL also returned Rs 1,584 million to the GoP received as budgetary allocation through DG (PC) for investments in the joint venture during fiscal year 2001-02.

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5.9.6

GOALS AND TARGETS OF GHPL DURING JULY 2006 TO JUNE 2007AND EXPECTED ACHIEVEMENTS

During the Financial Year 2006-2007, GHPL will invest about Rs 3,800 million in development and production operations of oil and gas and expects to generate revenue to the tune of Rs. 10,200 million from oil and gas sales proceeds. Following is the quarterly break up of GoPs Investments and Revenues from oil and gas sale proceeds during that period. INVESTMENT (Rs. Million) JULY-SEPT 2006 950 REVENUE 2,500 2,500 2,600 2,600 10,200 OCT-DEC 2006 900 Jan-Mar 2007 1,050 Apr-Jun 2007 900 TOTAL 3,800

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http://www.pmdc.gov.pk

5.10 PAKISTAN MINERAL DEVELOPMENT CORPORATION (PVT) LIMITED (PMDC)

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5.10.1

PERFORMANCE OF PMDC DURING FY 2005-06

PMDC is coming up as a progressive organization and its physical and financial achievements are improving year by year. During the financial year 2005-06, PMDC achieved significant production and sale of rock salt and coal. It also earned remarkable profit. All this has been made possible because of the policies of the present Government, better management and concerted efforts of the employees of the Corporation. Board of Directors OFFICIAL Mr. Ahmad Waqar Chairman PMDC Board / Secretary P&NR Managing Director, PMDC Mr. Athar Mahmood Khan Joint Secretary (Corporate Finance), Finance Division Mr. Rashid Hussain Malik Director General (Mineral) P&NR Mirza Talib Hasan Director General GSP. Engr. Prof. A.G. Pathan Mehran University of Engineering & Technology, Jamshoro Sardar Farooq Hayat Chief Executive, Wah Stone Industries, Hasan Abdal, Distt. Attock.. Eng. Syed Abdullah Frontier Mine Owners Association, Peshawar.

1 2 3

5 6

Performance and achievements of PMDC during the FY 2005-06 are summarized in the following paragraphs. 5.10.2 i. PHYSICAL PERFORMANCE Production & Sale of Salt

During the FY 2005-06, production of salt was 993,677 tons which was 118% of the budgeted target of 840,000 tons and 119% of salt production of 835,431 tons during 2004-05. The sale of salt during the FY 2005-06 was 979,749 tons which was 117% of the budgeted target of 840,000 tons and 117% of 839,019 tons salt sold during the corresponding period of last year. During FY 2005-06, PMDC exported 17,324 tons salt to India and 746 tons to Afghanistan. The production, sale and export of salt during 200506 was ever highest in the history of PMDC. Project wise production and sale figures are given below in table-I

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PROJECT WISE PRODUCTION & SALE OF ROCK SALT (Tons) Table-I PROJECTS Targets 2005-06 Production Khewra Salt Mines Warcha Salt Mines Kalabagh Salt Mines Jatta / B.Khel Salt Quarries TOTAL 370,000 352,000 54,000 64,000 840,000 Sale 370,000 352,000 54,000 64,000 840,000 Achievements 2005-06 Production 439,182 411,894 61,995 80,606 993,677 Sale 438,816 398,332 61,995 80,606 979,749

ii.

Production & Sale of Coal:

Production of coal from PMDC coal mines during the financial year 2005-06 was 479,629 tons which was 96% of the budgeted target of 500,000 tons but was 107% of production of 447,143 tons achieved during the last financial year. Sale of coal during the FY 2005-06 was 479,556 tons which was also 96% of the budgeted target of 500,000 tons and also 107% of the sale of 447,002 tons coal during the same period last year. The production and sale of coal was a bit less than annual target mainly due to October, 2005 earthquake, as the coal cutting labour of Swat working in the coal mines of Sindh and Balochistan had to move back to their home town for the rescue of their families. Project wise production and sale figures are given in table II. PROJECT WISE PRODUCTION & SALE OF COAL (Tons) PROJECTS Degari Sor-Range Sharigh Lakhra TOTAL 5.10.3 Targets 2005-06 Production 20,000 66,000 145,000 269,000 500,000 FINANCIAL PERFORMANCE Sale 20,000 66,000 145,000 269,000 500,000 Table II

Achievements 2005-06 Production Sale 7,454 51,262 171,310 249,603 479,629 7,414 51,671 170,863 249,608 479,556

On overall basis PMDC earned a record profit of Rs.195.424 million during the FY 2005-06 as compared to the budgeted profit of Rs.185.350 million and a profit of Rs.188.000 million earned during the last financial year as summarized below:

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i.

CONSOLIDATED PROFIT/(LOSS) ACCOUNT 2005-06 (Budgeted) INCOME Sales Cost of Sales Gross Profit OPERATING EXPENSES Administrative expenses Selling expenses Operating profit Financial charges Other income Net profit before WPPF and Taxation 5% WPFF Net profit before Taxation 925.144 649.062 276.082 2005-06 (Provisional) 965.420 672.917 292.503

(Million Rs.) 2004-05 (Actual) 785.396 516.216 269.180

72.313 44.206 116.519 159.563 0.459 159.104 26.246 185.350 185.350

68.525 47.890 116.415 176.088 0.685 175.403 30.307 205.710 10.286 195.424

69.996 40.058 110.054 159.126 0.489 158.637 39.258 197.895 9.895 188.000

ii.

CONTRIBUTION TO NATIONAL EXCHEQUER DURING Year Ended 30th June Sales Revenue Profit Before Tax Shareholders Equity 2004-05 785.396 188.000 10.000 2005-06 973.708 195.424 10.000

5.10.4

GOAL /TARGETS FOR FINANCIAL YEAR 2006-07 Physical Goals/Targets for FY 2006-07 Production (Tons) 10,20,000 511,000 Sales (Tons) 10,20,000 511,000

Projects Rock Salt Coal 5.10.5

OTHER ACHIEVEMENTS i) ii) iii) The share of PMDC in Rock Salt production/sale in the country has been increased from 52% to 56% approx. Ever-highest export of 17,324 tons rock salt has been made to India. PMDC has increased its coal market share from 13% to 16% of production/sale in the country.

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iv) v)

4,79,629 tons production and 4,79, 556 tons sale of coal is the ever highest figures in the history of PMDC. It may be mentioned that GOP equity in PMDC is Rs. 10 million only and its worth is now over Rs. 300 million. Another plus point of PMDC is that its liquidity position is very sound. There is no loan liability and bank borrowing. PMDC has paid divided of Rs. 15 million in 2005-06 on the basis of audited accounts as on 30th June, 2005 and intend to declare another 15 million as dividend on the basis of profit earning in 2005-06.

5.10.6

FUTURE OUT LOOK 1) All efforts are being made to further increase the export of rock salt to India & Afghanistan and the value added products to other countries. 2) PMDC is determined to increase the profitability of the corporation by enhancing its share of coal & salt in the domestic market. 3) Duddar Lead- Zinc project, a joint venture of PMDC and MCC China is in the construction stage and expected to come in production during 2007-08. It would be the 1st Lead-Zinc mechanized mine of its kind in Pakistan.

102

5.11 INTER STATE GAS SYSTEMS (PVT) LIMITED (ISGSL)

103

5.11.1

INTRODUCTION

Inter State Gas Systems (Pvt.) Limited (ISGSL) was incorporated on August 4, 1996 as a private limited company, wholly owned by the two main gas transmission and distribution companies of Pakistan i.e. Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited. The Company was reactivated in the year 2000 to serve as an interface between the Government of Pakistan and other external agencies for the import of natural gas. Natural gas is seen as playing an important part in supplying new power plants, plus as a means of diversifying away from expensive oil imports. As a result, natural gas usage has increased rapidly, providing more than 50% of Pakistans energy supplies. However, as several supply-demand studies indicate, the countrys domestic gas reserves, after reaching their peak in 2009, will rapidly start depleting after 2012-13 and by the year 2015 the country is expected to face a gas shortfall in the range of 2200-2900 mmcfd at GDP growth rates between 6.5-7.5 percent. In order to meet the energy deficit the Government of Pakistan is seeking to import natural gas from across its borders from Turkmenistan, Qatar and Iran. ISGSL is actively pursuing all three options with the governments of respective countries. Project team at ISGSL comprises of qualified professionals from the fields of engineering, law, economics and finance. Current organization structure and a list of its Board of Directors are given below. Board of Directors S.No. 1 2 3 OFFICIAL Mr. Aitzaz Shahbaz Chairman Mr. Munawar B. Ahmad Managing Director, SSGC Mr. Syed Hassan Nawab Chief Executive / Managing Director, ISGSL (Senior General Manager, SSGCL) Mr. Abdul Rashid Lone Director Mr. Shaukat Hayat Durrani Additional Secretary, M/o P&NR Mr. Saeedullah Shah DG (Gas), M/o P&NR Mr. Javed Hussain Mr. Athar Mehmood Khan Additional Finance Secretary (CF), Finance Division, Islamabad Vacant

4 5 6 7 8

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5.11.2

TOTAL STRENGTH OF THE MANAGEMENT/EXECUTIVE/NONEXECUTIVE/STAFF S.No Name of Post No. 1 Executives 12 2 Regular/Non-Executive Staff (BPS 1-16) 1 3 Contractual Non-Executive (BPS 1-16) 2 15 Sub-Total TOTAL PROFESSIONALS EMPLOYED Professional Engineering Finance Economist Accounts Commercial Accounts Law Total No. 4 1 1 1 1 1 9

5.11.4 S.No. 1 2 3 4 5 6

105

Annexure I

ORGANIZATIONAL CHART OF THE MINISTRY

106

Annexure II

PUBLIC SECTOR ORGANIZATIONS UNDER THE MINISTRY

107

Annexure - III SANCTIONED STRENGTH OF MINISTRY OF PETROLEUM AND NATURAL RESOURCES (Main Ministry and Mineral Wing)
S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Name of Posts Secretary Additional Secretary Joint Secretary / Sr. Joint Secretary Director General Deputy Secretary Director Deputy Director Section Officer/OSD Network Administrator OSD Private Secretary Assistant Accounts Officer Superintendent Assistant Incharge Stenographer Stenotypist Assistant Upper Division Clerk DMO Telex Operator Dispatch Rider Lower Division Clerk Staff Car Driver Daftari Qasid Naib Qasid Farash Total BPS 22 21 20/21 20 19 19 18 17/18 18 18 17/18 16 16 15 15/16 12 11/15 7 7 7 7 7/5 7/4 2 2 1 1 No. of Posts 1 1 2 1 4 2 2 10 1 1 5 1 1 1 14 12 16 4 1 1 1 9 6 1 3 33 1 135

108

Annexure - III SANCTIONED STRENGTH OF MINISTRY OF PETROLEUM AND NATURAL RESOURCES (Policy Wing)
S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Name of Posts Director General Director Deputy Director Assistant Director Accounts Officer Research Officer Deputy. Asstt. Director Superintendent Accountant Stenographer Stenotypist Assistant Accounts Assistant Draftsman UDC LDC Ferro Printer DMO Driver Dispatch Rider Daftary Naib Qasid Chowkidar Farash Sweeper Total Grand Total BPS 20 19 18 17 17 17 16 16 16 15 12 11 11 11 7 5 4 4 4 4 2 1 1 1 1 No. of Posts 4 11 20 16 2 4 2 1 3 10 27 16 1 1 6 11 1 2 4 1 1 40 3 2 3 192 327

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Annexure -IV Ministry of Petroleum and Natural Resources Goals / Targets for Financial Year 2006 2007 S.No. Goals / Targets
Q1 06-07 Q2 06-07 Q3 0607 Q4 Com 06-07 p Statu s Review

G: 1 T: 1: T: 2: G: 2 T: 1: T: 2: T: 3:

T: 4: G: 3 T: 1: T: 2: T: 3: T: 4: G: 4 T: 1:

Gas Imports from Iran / Qatar / Turkmenistan. Finalization of Gas pricing mechanism. Development of Draft Agreements. Installation of Coastal Refinery. Facilitation of preparation of Blue Book. Publication of Expression of Interest for setting up of Coastal Refinery at Khalifa. Processing of EOI by BOI for proposed refinery project and evaluation of EOI if received any. Finalization/approval of award of project. Feasibility study on Gasification of Thar Coal, District Tharparker, Sindh. Selection of consultancy firm for conducting feasibility study. Laboratory scale study by consultancy firm. Pre-feasibility study of Thar coal gasification. Bankable feasibility study based on commercial scale test. Drilling of Exploratory and Development wells for oil and Gas Drilling of 22 Exploratory/ Development wells. OGDC 12 Others 10

110

T: 2:

T:3:

T:4:

G: 5 T: 1: T: 2: G: 6 T: 1: T: 2: T: 3: T: 4: G: 7 T: 1: T: 2: T: 3: T: 4: G: 8 T: 1:

Drilling of 24 Exploratory / Development wells. OGDC 12 Others 12 Drilling of 28 Exploratory / Development wells. OGDC 13 Others 15 Drilling of 28 Exploratory / Development wells. OGDC 13 Others 15 Revision of Petroleum Policy. Preparation and finalization of draft Petroleum Policy Approval of the Policy by the Government Review of National Mineral Policy. Finalization of draft in consultation with provinces Final approval of the Government/IPCC in case of delay or disagreement by provinces. Facilitation for institutional strengthening the provinces. Implementation of recommendation of revised National Mineral Policy. Basin Study on country basis. Start of Basin Study No.2. Completion of draft Basin Study No.1 Completion of interim report of Basin Study No. 1. Progress Review of the Basin Study report. Formulation of Coal Policy in consultation with Provinces. Preparation of initial draft Policy

111

T: 2: G: 9 T: 1: T: 2:

T: 3: T: 4: T: 5 G: 10 T: 1:

T: 2:

T:3:

T:4:

G:11 T: 1:

T: 2:

T: 3:

Consultation with the Provinces and other stakeholders. Import of LNG Appointment of Consultant Submission of draft report on requirement/timing of the LNG import project. Submission of Final Report. Review and Finalization of Report Approval of Report. Enhancing indigenous oil production Production of Oil (Barrels per Day): 84570 OGDC 56570 Others 28000 Production of Oil (Barrels per Day): 86570 OGDC 56570 Others 30000 Production of Oil (Barrels per Day): 88570 OGDC 56570 Others 32000 Production of Oil (Barrels per Day): 88570 OGDC 56570 Others 32000 Enhancing indigenous Gas production Production of Gas (MMCFD): 3802 OGDC 1346 Others 2456 Production of Gas (MMCFD): 3846 OGDC 1346 Others 2500 Production of Gas (MMCFD): 3846 OGDC 1346 Others 2500

Achieved in (2005-06) Achieved in (2005-06)

112

T: 4:

G: 12 T: 1: T: 2: T: 3: G: 13 T: 1:

T: 2: G: 14 T: 1: T: 2: T: 3:

Production of Gas (MMCFD): 3846 OGDC 1346 Others 2500 Auctioning of public sector LPG in a transparent manner. Invitation of EOI by OGDCL for extraction plants on BOO basis. Evaluations of Requests. Formal approval & conclusion of Agreements. Un bundling of Mining and Power Generation in principle. by M/o Petroleum after seeking Professional advice. Development of concept paper in consultation with Ministry of Water & Power, PPIB and other stakeholders. Submission of report & action plan. Streamlining the working of CNG industry Finalization of the Policy Approval of the CNG Policy Issuance of policy guidelines to OGRA

113

Annexure-V Petroleum and Natural Resources Division (PSDP 2006-07)

114

Petroleum and Natural Resources Division (PSDP 2006-07)

115