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PAGE: Tell me something about yourself, please:

ABBAS BILGRAMI: I am an energy professional and have been in this industry for well over 30 years. I am currently developing a number of energy-related projects in Africa ranging from a mini refinery to a renewable hybrid power project. My interest remained in research in the energy sector and I regularly provide energy policy and strategic advice to government organisations and the private sector.

PAGE: Your views on oil prices over the period of next one year:

ABBAS BILGRAMI: Oil prices are expected to remain between US$40-60 per barrel range for the next twelve to eighteen months. This pricing is, however, subject to a whole range of externalities including the political stability in the Middle East, ongoing unrest in Iraq, the civil war in Syria and Yemen and electoral results in the US. Iran and Iraq are two major producers who have not been able to fully optimise their production. If they do enter the market they potentially could bring in an additional 4 million barrels per day of additional capacity. This would obviously impact the pricing of crude globally as well result in marginal high cost operators in the US and elsewhere shutting down production.

Price instability is on the cards but we must remember that while conventional oil production has peaked there are still unconventional oil and gas reserves globally. So there is no likelihood of oil shortages. There is also a major factor to consider, and that is within the next decade transportation will see more and more battery-driven vehicles taking to the road. This would mean that a third of the demand internationally for hydrocarbons will come to an end. This would mean that hydrocarbons will really become more important for boutique uses such as manufacture of materials, petrochemicals and production of peak load power. Additional conservation, energy and efficiency programs will result in OECD countries consuming less and less hydrocarbons and less per capita energy.

PAGE: How would you comment on the energy mix in Pakistan?

ABBAS BILGRAMI: Pakistan's energy mix has over the past thirty years become heavily fossil fuel based. Despite the hydel and renewable potential, investment has not been forthcoming and this has meant that our dependence on imported fossil fuels remains.

At present imports of LNG are increasing and likely to increase further. This will result in a decline in consumption of other liquid hydrocarbons such as furnace oil specifically in the power sector. With more natural gas becoming available CNG consumption should see a rise as long as the pricing differential remains between competing liquid hydrocarbons. Coal consumption has been regularly increasing and it is expected that this will be a major game changer in the years to come as Pakistan produces more power from coal.

The current energy mix is unsustainable with a huge dependency on fossil fuels. Some major structural changes in the energy sector as proposed in the Planning Commission's Vision 2025 and the Integrated Energy Plan 2015-2025 as proposed by the Energy Expert Group need to be implemented. If these reforms and structural changes do not happen demand for hydrocarbon in 2025 will be twice what we consume today or close on to 120 Million Metric Tonne Oil Equivalent.

PAGE: What is your take on investment in energy sector of Pakistan?

ABBAS BILGRAMI: Investment in the energy sector from the public sector is robust in the solar and coal sectors. A number of hydel projects are underway and it is expected that in the coming two to three years the energy crisis will be brought under control.

We must not forget that Pakistan needs to double its installed capacity for electricity from 23,000mw to 50,000mw by 2025. This requires that there should be no let up.

Drilling for new wells on shore and offshore should be increased considerably. There is a huge untapped hydrocarbon potential. The policy structures for the exploration and production of petroleum products requires more support specially to bring in further investment in the shale, tight and offshore oil potential. There is also a huge renewable potential and the government needs to announce a realistic and sustained policy. Policy flip flops as in the case of the solar and the poor implementation of the wind power projects are indicators of either lack of capacity or of not 'walking the talk'. This sends out a negative message to those interested in investing in Pakistan's energy sector.

PAGE:What incentives should government offer for the betterment in the energy sector?

ABBAS BILGRAMI: The government needs to undertake full fledged studies undertaken by acknowledged experts on unconventional hydrocarbon potential. These should form the basis for a new round of hydrocarbon exploration.

The government needs to engage with the energy sector investors and work to develop renewable and conventional energy policies that are sustained well past the next government. There must be continuity and proper regulatory oversight.

The reforms within the power sector and denationalisation must be undertaken for the betterment of the economy and for cheaper and more efficient power generation that benefits consumers. A proper delineation of what is expected of the public and private sector must be articulated.
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Publication:Pakistan & Gulf Economist
Geographic Code:9PAKI
Date:Jun 12, 2016

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