The Significance of Proper Management of Oil and Gas Resources in Pakistan

Pakistan’s energy needs are increasing day by day. At present more than 80% of its oil is being imported from abroad. Similarly since lately it is compelled to import large quantities of natural gas as LNG, which now has an important role in the energy mix of the country. Thus in a country like Pakistan where more than 50% of the import bill is spent on oil and gas the management of its indigenous oil and gas resources assumes great importance. If competent professionals are placed in the driving seats of the leading organizations like OGDCL, PPL and GHPL and then properly supported by the government and their boards, then there is no reason why they would not be able to take the country out of the current energy crises and the overreliance on imported energy which is the biggest drain on foreign reserves. However, unfortunately, in most of our national companies, including oil and gas, the governing boards mostly constitute of the senior bureaucrats of the concerned ministries, who have absolutely no experience of running commercial entities.

The results of this approach are already evident in the shape of PIA, PSM and many other such giants which instead of earning for the country have become drains on its economy. The results in oil and gas companies are also not too obscure if a competent assessment of the performance and missed opportunities is undertaken. In this sector the irony of regulator itself getting appointed on the boards of major commercial entities is not only a flagrant anomaly, which is literally killing the said institutions, but is also rendering the regulation virtually ineffective thereby causing a major loss to the national economy and the people of Pakistan. The institutions have over the period of time become fiefdoms of the senior bureaucrats of the concerned ministries and their cronies. In such an atmosphere one hardly finds any true professional heading any such institution and driving the system to success. If any such person finds his way into any such setup, then he ends up spending most of his energies on managing the internal politics of the board members and nepotism.

Pakistan Petroleum Limited the second largest oil and gas E&P Company of Pakistan is one such example. Till June, 2018 it was fortunate to have been led by an able professional by the name of Syed Wamiq Bokhari. Wamiq, having Master’s degree in Petroleum Engineering from Austin, USA had more than 30 years of international oil and gas experience of serving at leading corporate positions. While even cursorily looking at the meritorious record of Bokhari with PPL for a bit more than three years till June, 18 it is evident that he should have been offered to stay for another term of three years as the MD. However those running the show in the ministry then decided otherwise for reasons known to them only. As per some the reports and data available on the net PPL made record progress during his era despite of the low oil prices. While typically oil companies limit their investments and growth in such environment PPL undertook a wise aggressive strategy and increased the activities. Concurrent deployment of more than 10 drilling rigs and new technologies led to successful drilling of more than 40 wells annually during the tenure of Wamiq while simultaneously achieving major savings in drilling time and costs. The fast track development of discoveries and management of existing reserves paid off in the form of highest production; wherein from FY15 to FY17 the Company’s production increased by 10% - interestingly even from the mature areas like Sui, Kandkot and Adhi. More impressively, the company attained this growth with sustainability as it added more reserves than it produced.

PPL’s Reserve Replacement during FY16 and FY17 stood at 126% and 108% respectively; whereas the same during preceding year was -8%. Thus, a company which used to drill annually only one to two exploratory wells before Wamiq, has already made major oil and gas discoveries in the recent times in Sindh and Punjab, while more are expected soon in the projects started by Bukhari. Unfortunately, the company is fast losing steam after the change of leadership from Bokhari to the new MD. What any wise commercial organization would have done with a person like Bokhari? They would not have only rewarded him with appreciation, but would have tried their best to make him serve the organization and the country for an extended period.

However, on the other hand some forces conspired to ensure his exit from PPL to the utter loss of the company and the country. The decision makers not only exerted no effort in retaining him but also neither arranging a competent replacement. Thus they had no one to replace him when he left. It seems that it was done deliberately so that the current MD could be conveniently slipped into that position. And whom did they accommodate of all the people? Saeed Ullah Shah- who had absolutely no experience of running any business venture. He used to be a paper pusher in various directorates of oil and gas ministry and retired in 2016 serving as DGPC with the “unique honor” of being the only DGPC who failed to conduct even one bidding round of new oil and gas blocks. Even in his years in the ministry he had the reputation of avoiding decisions and pushing them on towards his seniors instead of taking them himself. He has been imposed on PPL while declaring that he is a temporary arrangement and would stay only till 30 th September, by which date the recruitment process for a professional of the required credentials would be completed.

However, it is heard that Saeed is a part of the process of selecting his replacement with the result that the process has reached nowhere yet. If he continues then surely after sometime we would be trying to find the causes of the downfall of PPL as we now see in various programs on TV about PIA, Steel Mills. In order to prove that he is the perfect choice for a position requiring extensive technical and management experience, Saeed is busy more in damaging the image of Bokhari than anything else. Having no knowledge of the complexities of the business, what else can he do? Their employees are heard to be running from pillar to post to save PPL from the hands of Saeed. It is expected that this article would prove to be an eye opener for the relevant authorities and they would intervene to complete the selection process of the MD at the earliest. In the meanwhile, Saeed needs to be immediately replaced with a competent professional from amongst the management of PPL till the selection of a permanent MD. The concerned authorities also need to review the structure and composition of the public sector organizations because the current model of the representatives of the GOP directly sitting in the boards along with a few private members having mostly irrelevant backgrounds seems to be the root cause of their current state of affairs.