Oil and gas exploration in Pakistan.

Oil contributes more than 42 per cent to the total energy supply. Discoveries of the new oil fields in different parts of the country have raised the local production to 63,000 barrels per day (bpd) thus meeting about 25 per cent of our total requirement of about 250,000 bpd. Production of oil is estimated to have increased from 9.525 million barrels in 1984-85 to 27.905 million barrels in 1991-92 as illustrated in the following table-I.

TABLE-I
Production of Crude Petroleum
Year         (000 bbls)
1985-86        14,366
1986-87        15,005
1987-88        16,310
1988-89        17,074
1989-90(*)     20,000
1990-91        23,976
1991-92        27,905
* IR Estimates.
Source: Federal Bureau of Statistics.

Pakistan oil and gas potential reserves have been estimated at about fifty billion barrels of oil and at twenty trillion cubic ft. (tcf) of gas as a result of study of hydrocarbon exploration strategy conducted by national and international agencies. The study shows that Pakistan is one of the few countries in the world where big areas of potential hydrocarbons are known to the world for more than a century. First oil well was drilled at Khattan in 1885 near Sui. Asia's largest gasfield (Balochistan) Khattan produced about 25,000 barrels of oil till 1892.

The area was then abandoned because of fire which some oil wells caught and could not be controlled. Earlier an oil well was drilled near Kundal (Punjab) in 1866, just six years after the first well drilled in the USA. The study shows that Rawalpindi, then a small cantonment but now a sprawling twin-city country's capital, was lit by gas street lamps in 1920 even before the London streets.

Later the British rulers showed lukewarm attitude to oil and gas exploration in this part of the continent. As such only 29 structures were drilled before the creation of Pakistan. It was mostly confined to the Potwar areas, ignoring major Indus and Balochistan basins. The study shows that these two basins, covering a big area of 828,000 kms, contained all the essential ingredients required for generation, accumulation, and entrapment of hydrocarbons, capable of generating gaseous to liquid hydrocarbons.

In 1949, Pakistan government framed rules for oil and gas exploration with emphasis on Indus and Balochistan basins since then 83 oil and gas fields have been discovered. At present Pakistan is producing about 63,000 barrels of oil per day and about 1,500 million cubic ft. of gas daily. Oil is presently contributing to 42 per cent of the total energy consumption in the country. Similarly 35 per cent energy requirement is met by gas. Out of 450 million barrels of Pakistan proven oil reserves a million barrels have already been consumed. Similarly out of about 26 trillion cubics ft. of proven gas reserves 5.9 trillion cubic ft. have also been used.

In pursuance of Prime Minister Mohammad Nawaz Sharif policy of self-reliance and self-sufficiency the government has come out with a coherent policy on oil and gas. The petroleum policy has renewed and reinforced all attempts at making the county move with full steam to attain self-sufficiency in oil and gas.

As a result of this policy there are now 36 joint ventures with seventeen foreign oil companies of international repute to ensure exploratory boom in Indus, Balochistan and other oil bearing basins of the country and make nations dream of self-sufficiency in petrol and petroleum products reality.

EXPORTS

Pakistan has been already exporting 15,000 barrels per day of Badin crude. The reason is that there is no refining capacity in the country for Badin type of crude which contains high wax. In Badin block just one oil company has discovered oil in 62 wells, whose total production comes to more than 18,000 barrels per day. But most of this oil is lying unutilized and dormant for the last three or four years. Recently the work on hydrocracker plant, to be set up at Karachi, has started and it is hoped that this plant will start functioning in 1994. This means that the discovered oil (which is about one lakh barrels per day) will remain un-utilised for a couple of years.

It is desirable that the government should increase the present export of 15,000 barrels per day to 25,000 per day as there is no sense in keeping the discovered oil unutilised for so long. This is a great national loss, indeed.

It is not mere ambition of false hope based on mere fantasy that Pakistan may become a member of OPEC within next eight or nine years.

IMPORTS

In 1992 Pakistan imported 3,234,000 tons of gas oil and paid a premium of 1.66 dollars above the mean Arabian Gulf price. Major suppliers of gas oil were British Petroleum, Marubeni, IPG, Morgan Strainley, Phibro, Hascombe, Vanol, Sinochem, J.A. RON, Mitsubishi Total International, Toyota, Stinnes, Mobile, Star and E.A. Maritime. Kuwait Petroleum Company (KPC) competed with others in a spot tender for supply of gas oil and managed to sell 30,000 tonnes in April-June 1992 at an average price of 1.64 dollars above A.G. mean.

With increased refining capacity coming on-stream, between July and December 31, 1992, KPC's supplies of gas oil shot up to 453,000 tons at a premium of 1.40 dollars per barrel. This quantity was only 14 per cent of the import of this item.

In the first quarter of this year KPC would be supplying 204,000 tonnes of 644,000 tonnes gas oil awarded at average 1.60 dollars above A.G. mean as against 1.83 dollars charged by other suppliers. This quantity is 31 per cent of total import of TABULAR DATA OMITTED gas oil between January-March 1993. This share during 1993 is expected to be at least 33 per cent or over one million tons. Other suppliers of gas and oil in January-March 1993 are Hascombe 238,000 tons at 2.04 dollars premium, Bakri and J. Aron 60,000 tons each at 1.57 dollars and 1.65 dollars premium, respectively. Vital 52,000 tons at 2.25 dollars premium and Bulk Oil 30,000 tons at 1.786 dollars premium.

Kerosene: In 1992 Pakistan imported 90,000 tons of Kerosene and paid 1.88 dollars average premium over A.G. Mean. Hascombe supplied 40,000 tons, Total International 10,000 tons, Phibro 30,000 tons and Sinochem 10,000 tons. The average premium over A.G. Mean was 1.88 dollars. During the second half of 1992 KPC supplied 10,020 tons at 1.40 dollars per bbl premium. Hascombe has won the award of another 50,000 tons of Kerosene between January and March 1993, at 2.21 dollars premium.

For January-June 1993 the premium agreed with KPC for Kerosene supplied by the Government is 62 cents less than the spot procurement. Most traders are not in a position or to commit supplies at this price.

Fuel Oil: In 1992 Pakistan imported 1,160,000 tonnes of 180 CST of Fuel Oil for delivery at Port Qasim. Its average premium over AG mean is 11.86 dollars. Hascombe (140,000 tons), Marc Rich (360,000), E.A. Maritime (360,000), Fal Oil, Stinnes and Sinochem 60,000 tons, each, were the main suppliers.

Fuel oil deliveries against spot tenders at Keamari totalled 360,000 tons of 125 CST and 380,000 tons of 180 CST at 16.25 dollars and 11.51 dollars average premium over A.G. mean respectively. As against this, KPC prices are under 1.40 dollar per ton premium for 125 CST, 10.40 dollars for 140 CST at Keamari and 10.90 for 180 CST at Port Qasim. This bid has created competition among the other oil suppliers and KPC is committed to supply 620,000 tons during, 1993.

KPC unlike other suppliers has an advantage. It can offer competitive prices because of their control over crude production, they have a sophisticated refining system and its own tanker fleet.

Until 1990 KPC was virtually the sole supplier of deficit oil products to Pakistan. Government of Kuwait had also pledged to plough back some of the profits it earned on these supplies into Pakistan. A number of development projects in Balochistan were financed by Kuwait in the eighties.

Oil import bill in 1991 stood at $ 1385 million. The imports of POL products in the last seven years were as follows:

Imports of Petroleum and Petroleum Products
          Qty. (000     Value
Year         tones)   ($ Mln.)
1985-86     5,676     1,039.4
1986-87     6,668       813.6
1987-88     7,586     1,047.7
1988-89     7,953       963.2
1989-90     8,373     1,162.8
1990-91     8,354     1,686.8
1991-92     9,282     1,384.9
Source: State Bank Annual Report 1991-92.

TABULAR DATA OMITTED

According to latest government statistics, about 15 per cent of Pakistan's foreign exchange earnings is spent on the import of crude refined oil and other petroleum products. While only ten per cent of the country's foreign exchange was spent on the import of oil in 1981 it had increased to over 22 per cent in 1990-91, however declined to 15 per cent in 1991-92. If we take the growth rates of energy demand and those of our foreign exchange earnings (9 per cent and 6.5 per cent respectively), in the next 5 years the country will be spending more than half of its foreign exchange earnings on importing oil alone-consequently reducing the foreign exchange necessary for other vital development and infrastructural needs. Despite such a huge import bill for oil and oil-related products the demand for energy far outstrips the per capita access to commercial energy in Pakistan, which remains abysmally low-a ninth of the world average, and half of that of other low income countries.

Oil Reserves

Pakistan's oil reserves will last for seven years more and natural gas reserves for another 15 years only, according to the present rate of oil and gas production in the country. According to a survey conducted by a foreign agency, Pakistan will have to face serious challenge to its energy security, by the end of the late 1990s, unless additional oil and gas discoveries are made in the country. The survey says: "The self-sufficiency in oil will decline from the preset 40 per cent to only 10 per cent by the year 2000. Self-sufficiency in gas will decline from the present 10 per cent to 60 per cent by 2005.

Pakistan's limited reserves of oil are estimated at 145.69 million barrels as of March 1992. Although the country is endowed with large sedimentary basins, the discovery of a large oil field has so far eluded Pakistan. Recoverable gas reserves of non-associated and associated gases from the oil fields are estimated at 542 billion cubic meters. Pakistan currently produces 63,000 b/d of oil and 1.5 bcf of gas. There are about 43 oil-producing fields in the northern and southern part of the country, ranging in production from 200 b/d to 20,000 b/d. There are 20 gas producing fields, mostly in the southern part of the country.

OIL EXPLORATION AGREEMENTS

OXY -- POL Accord

A new dimension has been added to the exploration of oil and gas in the country through an agreement signed between the Government of Pakistan. Occidental of USA (Oxy) and Pakistan Oilfields (POL). The agreement aims at the recovery of residual oil from the old depleted Balkassar field in Potwar region some 90 kilometers southwest of Islamabad by the application of advanced technology.

The production from the field discovered in 1946 by Attock Oil Company would be increased to 10,000 barrels by an investment of 100 million dollars which had dropped to 400 barrels per day (BPD). The project the first of its kind in the country will be implemented by Occidental which is already a major producer of oil and gas in Pakistan.

Occidental, POL and its partners recently pounded two important wells in the Potwar basin to apprise the 1991 Pindori oil discovery and the 1989 Ratana gas discovery. The group is currently producing approximately 12,000 barrels of crude oil per day, 23 million cubic feet of gas and 100 tons per day of LPG from the Dhurnal and Bhangali fields in the Potwar basin.

Karak Petroleum of Pakistan

Yet another petroleum concession agreement was signed with Karak Petroleum of Pakistan, a subsidiary of Edward Callaw interests of USA and the Oil and Gas Development Corporation.

Joint venture companies would undertake petroleum exploration activity in Karak and Attock District over 774, sq.km. areas and would interpret the existing seismic data and drill one exploratory well at the cost of US dollars 5 million in the first phase of its activity, under this agreement.

Albion International Resources

The Government has also entered into a petroleum concession agreement with Albion International Resources, Inc., a consortium of oil companies from the USA, Canada and Europe. The licencees will undertake geological surface mapping, remote sensing analysis, seismic work and prospect development in Sibi and Loralai districts (Balochistan) over an area of 1370 kms.

OGDC - Union Texas Occidental Accord

The Oil and Gas Development Corporation of Pakistan (OGDC) signed an agreement with the Union Texas and Occidental of USA for oil exploration in the lower Sindh. Under the agreement in the very first year, Rs. 1456 million would be spent on this joint oil exploration venture.

OIL DISCOVERIES

Oil, Gas Found in Sindh

The oil and Gas Development Corporation (OGDC) has made discoveries of natural gas and condensate at two places in Sindh. According to OGDC the discoveries have been made at Buzdar Well near Hyderabad and at Nur Well about 52 km south-east of Thatta. Gas from both the sources is of good quality. The estimate of reserves will be made after drilling two or more wells at both the sites.

The structure for the Buzdar Well was set up after extensive seismic survey by the OGDC's experts. The main gas transmission line is at a distance of about 40 kms from the Buzdar Field. Buzdar is the eastern most discovery of the OGDC in top lower Goru Sand. The discovery of gas at Nur well is the western most discovery of hydrocarbons in Thatta and is at a distance of about 70 km from Nur fields.

Oil, Gas Reserves at Pindori

Oil has been discovered at Pindori, 32 miles southwest of Islamabad. The discovery is the biggest in the country as far as a single well output is concerned. The first exploratory well which was drilled to a depth of 13,900 feet has been tested to produce about 6,000 barrels of oil and 18 million cubic feet of gas per day. The new discovery was the result of joint efforts of the OGDC and Occidental Petroleum, a multinational. The state-owned OGDC holds 50 per cent working interest in the venture. The quality of oil is good and could easily be refined at the Attock Refinery. With new discoveries in the north, the refining capacity of the refinery would fall short of the requirement.

UTP Discovery of Oil and Gas Near Badin

The Union Texas Petroleum (UTP), a US petroleum exploration company has made two new oil and gas discoveries in Badin area, at Mahi No. 1 and Bari No. 2 exploration wells, which is about 160 kms South-East of Karachi. Mahi No. 1 exploration well has been tested at a daily rate of 17.3 million cubic feet of gas and 151 barrels of condensate on a 48/64 inch choke with 319 pounds-per-square inch flowing tunic pressure from a zone in the lower Goru formation between 4253 feet and 4263 feet. Bari No. 2 exploration well in the same area has been tested at a daily rate of 2122 barrels of oil with a gravity of 42.3 degree on a 48/64 inch choke with 181 pounds-per-square inch flowing tubing pressure from a zone in the lower Goru formation between 2165 feet and 2620 feet.

The exploration activity took place in this area after the signing of a memorandum of agreement on July 27, 1992, facilitating the UTP to drill exploration wells in the mining lease area, which is in line with the present governments first ever announced petroleum policy which extends maximum facilities and incentives to the private sector exploration companies. The UTP with 30 per cent interest operates a joint venture in the area. The other partners in the venture are Occidental (30 per cent) and Oil & Gas Development Corporation (40 per cent).

Two more gas fields were added in Badin Block. There were Nari and Bukhari gas fields. The Nari gas fields, is capable of production at daily rate of about 20 million cubic feet of gas and 100 barrels of condensate. While the Bukhari field is capable of producing at a daily rate of approximately 50 million cubic feet of gas and 1500 barrels of condensate. With the two new fields, Union Texas Pakistan now produces natural gas from five gas fields on the Badin Block. The Union Texas group commenced gas production in February 1989 at a rate of 30 million cubic feet a day.

The company estimates that gas production will average approximately 150 million cubic feet a day in 1992. The gas is transported via a pipeline operated by Sui Southern Gas Company and enters Sui Southern's main transmission gas line near Hyderabad, which serves industrial and utility customers. The Union Texas group's production accounts for approximately 10 per cent of Pakistan's total domestic gas output.

The Union Texas Pakistan joint venture also produces crude oil from its operations on the Badin-I block. The venture, which began producing oil in 1982, currently produces about 18,000 barrels of oil and condensate daily from 13 fields. The venture's oil production accounts for approximately 30 per cent of Pakistan's total domestic oil output. Since 1977, the venture has discovered a total of 29 separate oil and gas accumulations on the Badin-I block.

Deh Chobati Discovery

Oil was struck in large quantity at Deh Chobati, 20 kilometres from town Jati of district Thatta. Oil and Gas Development Corporation (OGDC) which is searching oil and drilling wells in the area is at present busy in excavating two more wells from where oil is also expected.

OIL EXPLORATION

During the year 1992 so far 15 wells have been drilled. The current production varies between 55,000 to 63,000 barrels per day. The future plans envisages production of 123,000 barrels per day by 1998. The government has signed agreements during the 1991-92 with 8 companies as follows:

1. British Gas (U.K.) 2. OMV (Australia) 3. Texaco (U.S.A.) 4. Tullow (Ireland) 5. Tuskar (Island) 6. Albion (U.S.A.) 7. Canadian Occidental (Canada) 8. Karak Petroleum.

During the 1991-92 four oil and gas discoveries were made three, i.e., Missa Kaswal, Pindori and Sadkal in the north and one in the South (Meyum Ismail near Thatta). The production level in north would start rising after the Missa Kaswal and Pindori wells are commissioned and pipeline is laid from Missa Kaswal to inject the associated gas of this well into Sui Northern's transmission system.

The proven reserves are 140 million barrels of oil and 23 TCF of gas. Since the gas reserves are larger and prospects of new discoveries brighter, more effort and resources are being dedicated to the exploration for gas and the development of discovered fields like Kadirpur and Kandanwari which would raise the supply from the present 1400 million cubic feet a day to 2100 over the next three years. Work on gigantic development and transmission schemes by the producers and gas distribution companies has already begun.

Production of Gas
(MMCFT)
            February   March   April     May
Field           1992    1992    1992    1992
Sui            24505   25295   22139   23548
Mari            8506    7559    8655    9405
Meyal            511     515     501     523
Pirkoh          5082    5383    5665    5659
Toot              87      92      89      89
Dhurnal          863     891     803     799
Kandhkot        2149    2162    2157    2250
Bhungali          49      48      44      42
Sonaro           291     170      58      --
Golarchi         762     776     657     766
Turk            2081    1936    1888    1878
Loti            1392    1456    1348    1463
Mazari            65      69      57      58
S. Mazari         16      22      14      15
Matli            647    1216    1132    1011
Dakhni           476     486     504     538
Halipota          40      25      22      24
Adhi             527     533     517     510
Liari             22      31      21      25
Dhabi             41      43      44      44
Nari              --      --      --     386
TOTAL:         48112   48708   46315   49033
Source: Directorate General of Petroleum Concessions, M/O
Petroleum and Natural Resources Islamabad.

For the 8th Five Year Plan a target of 142 exploration wells has been fixed. It takes five years or longer before a discovery is fully developed and brought on stream. The exploration and development effort has to be viewed in that time frame. The record number of concession agreements signed in the tenure of the present government, given good luck and concerted effort, this would need some more time before yielding results. Incidentally, concessions for most discoveries made in the recent past were given out when the present Minister for Petroleum and Natural Resources, Chaudhry Nisar Ali Khan held charge of the same ministry from March, 1987 to November, 1988.

Production of Oil
(BBLS)
                    March      April       May      June
Field                1992      1992       1992      1992
Chak Naurang        39130      36735     37279     35764
Bhangali            25697      23812     24032     17276
Khaur                 122        141       163       177
Dhulian               632        537       616       554
Meyal               81194      77522     81000     73633
Balkassar           11915      12836     13357     13935
Toot                22556      21064     21181     19839
Tando Alam          68025      65320     67570     65375
Fimkassar          116303     112679    113412     82735
Laghari             94837      88009     81338     73400
Khaskeli             6336       5656      5850     18260
Dhurnal            369750     333032    334741    173032
Thora              120509     121165    121196    113807
Adhi                72454      68612     65702     30567
Dhabi               24143      23684     24144     22998
Mazari             148616     155854    174128    167508
Joyamair            17869      18541     18905     16626
South Mazari       137674     112764    122670    127154
Liari              135740     111152    145887    131846
Sono                97183      94175     99323     93566
Lashari Centre      63450      65335     66865     64595
Bobi                13889      12606     12433     11282
Golarchi             1979       1649      2135      2462
Turk                20164      21883     20991     15183
Pasaki             120160     140013    145001    141161
Malti                2629       2357      2094      3346
Dakhni              28617      29319     30004     28715
Halipota            12344      12340     12652     12039
Lashari (East)       2765       1880        --        --
Kunnar              37722      40150     45315     48719
Masakiswal          36833     101304     95584     80084
Allah Dino             --         90        --        --
Nari                   --         --      1751      3123
Bhal Syedan            --      36951     12145        --
Bukhari                --         --        --     12252
TOTAL:            1931237    1949167   1999464   1701013
Source: Directorate General of Petroleum Concessions, M/O
Petroleum and Natural Resources, Islamabad.

Petroleum exploration being a high risk and capital intensive venture, the major thrust of the policy announced in November last is to provide incentives to foreign companies to invest in exploration in new areas, deeper horizons and in technology for enhanced recovery from the depleted fields like Dhurnal (Potwar) and Khaskheli (Badin). At the same time, besides accelerated exploration activity by the Oil and Gas Development Corporation, special incentives have been prescribed for the local investors to join in the exploration effort in association with the foreign companies and OGDC.

OIL DEMAND

The total availability of oil in the country has increased from Rs. 42,639 thousand, barrels in 1985-86 to 58,283 thousand barrels in 1991-92 showing a cumulative rise of 13.23 per cent. Average annual growth rate worked out to 5.42 per cent.

Availability of Oil
(000 Barrels)
               Local Crude
            Crude
Year      Imports   Extraction    Total
1985-86    28,291       14,348   42,639
1986-87    27,666       14,999   42,665
1987-88    28,332       16,310   44,642
1988-89    25,659       19,710   45,366
1989-90    27,350       12,480   48,830
1990-91    27,400       23,976   51,326
1991-92    30,378       27,905   58,283

The demand for POL products is projected to increase at a growth rate of 10.03 per cent per annum during the 7th Plan period on the basis of which the demand is projected to increase to over 14.50 tonnes/annum by 1992-93 against the existing production capacity of about 7.5 million tonnes per annum. This leaves a supply gap of about 7 million tonnes. Over 1988-20032 period average annual growth has been estimated at 9.8 per cent. Yet another analysis estimated average annual growth at 10 per cent during the 90's.

TABULAR DATA OMITTED

Oil Refining

Oil refining capacity has stagnated around 140,000 barrels/day for quite long because of the ill conceived policy of the government. Expansion and modernisation of the refining sector is imperative to meet the current demand of 250,000 barrels/day growing at 7 to 8 per cent annually. The new Petroleum Policy has introduced a number of measures in de-regulating the upstream and downstream activities of the oil and gas sector. At present two organisation, can be considered as having taken up basic ground work for setting up fully balanced refineries i.e. having primary and secondary facilities.

Presently the three refineries in the country meet only 50 per cent of petroleum product demand. Out of this capacity, 50 per cent is more than 25 years old and shall need to be gradually replaced, modified and modernized. Although crude oil supply is rightly regarded as a key element in our calculations, the establishment of economically viable refining capacity in the country is extremely necessary. The world refining industry has gone through a tough period during the 80's and the recovery has been slow and painful, but the refining business is now healthy again. Future prospects of refining sector in Pakistan, are therefore, very bright. This is mainly due the large and increasing consumer population and the geographical location.

UP-COMING REFINERIES

Pak-Arab Refinery - Multan: This refinery with a capacity of 84,000 barrels per day is being set up with cooperation of Abu Dhabi. Feasibility study for this refinery has already been completed. Annual capacity of this refinery will be 4.00 million tons. The World Bank has also indicated its willingness to extend financial assistance to Pakistan in this regard.

Schon Group Refinery: Work on the construction of 35,000 barrels per day (BPD) refinery by Schon Group at Port Bin Qasim would start soon. It is a second-hand refinery procured by the sponsors from an American firm and would be installed by Messrs. Hobbs - Bannerman under a turnkey contract which provide for refinery to get into operation by January 1994. The refinery would be geared to refine the waxy crude of Badin oil-field being operated by Union Texas which is currently exporting it to India and China.

Badin Refinery: The government received 16 bids for setting up refinery at Badin but all the bidders wanted to set up the refinery at Karachi. At present Pakistan has no facility to refine Sindh's waxy crude. According to refinery experts Jamshoro is the ideal location for setting up such a refinery due to the presence of WAPDA power units in the area which are utilising about 337,000 tonnes of furnace oil annually. If set up at Badin, the refinery will have to supply furnace oil through tankers to Jamshoro about 50 miles away from Badin. This means that the buyers will have to bear the transportation cost also. According to a statement of Petroleum Minister Chaudhry Nisar Ali Khan the government is prepared to give greater incentives to the sponsors if they agreed to set up a refinery at Badin.

At present Sindh is producing about 34,000 bpd of waxy crude out of the country's total production of about 64,000 bpd. Both the National Refinery and Pakistan Refinery in Karachi are refining waxy crude after mixing it with Arabian crude. The National Refinery is refining about 15,000 bpd of Sindh crude while Pakistan Refinery does about 12,500 bpd. TABULAR DATA OMITTED The remaining portion of about 6,000 bpd is being exported. The crude oil was exported. The crude oil was exported to India and China and fetched $ 46.58 million in 1992. About 2.92 million barrels of crude would be available for export in 1993.

Pak-Iran Refinery: Pakistan and Iran have agreed to set up an oil refinery with a capacity of 80,000 barrels per day at Port Qasim. There was also an agreement in principle of setting up an oil pipeline between the two countries, besides expanding of Mashad-Kermanshah railway link which would enable direct link between Pakistan and Europe by rail. Iraq-Iran war and the experience of the Gulf crisis has taught us that Pakistan-Iran cooperation in oil export and refining will always be the keynote of economic prosperity of the region. This would free both the countries of future conflicts around the Persian Gulf and the choke point of the Strait of Hormuz.

The Pak-Iran refinery project is being set up on the basis of equal partnership of Iran and Pakistan. The refinery would be the largest complex in Pakistan processing 120,000 bbls/day of heavy Iranian crude oil. The project has been estimated to cost around US $ 850 million and expected to be completed in 1996. With the completion of this project the country's needs for petroleum refined products would be substantially met and its dependence on import would be considerably reduced.