Boston, MA -- (SBWIRE) -- 12/12/2012 -- BMI View: While Pakistan's short-term gas production outlook is relatively good, the country will find it impossible to maintain gas self-sufficiency over the longer term. Domestic consumption continues to rise rapidly, boosted by the start-up of additional gas-fired power stations. As import volumes rise, LNG is set to become part of the energy mix. Pakistan will also again attempt to privatise more of its various statecontrolled energy companies and stimulate investment in domestic oil and gas production.

The main trends and developments we highlight for Pakistan's Oil & Gas sector are:

- The long-delayed Iran-Pakistan (IP) pipeline has been dealt another blow by ICBC's withdrawal as a leading financier for Pakistan. The withdrawal has been prompted by the threat of US financial sanctions against firms participating in the IP pipeline, with the measures aimed at putting pressure on Iran to halt its nuclear development programme. This has forced Pakistan to look to other alternatives to raise US$1.2bn for its part of the pipeline.
- The provincial government of Khyber Pakhtunkhwa in Pakistan has agreed to allocate 1.62 square kilometres (sq km) of land to a refinery proposed by Pakistan State Oil. A suitable location for the 40,000 barrels per day (b/d) facility will be finalised by the government, according to a senior state official. The refinery will process provincial crude oil and provide economical petrol and diesel by reducing inland freight equalisation margins. An official added that the refinery will reduce reliance upon oil imports and local refineries.
- The Pakistan government has a deal with Eni to cooperate on oil and gas development projects. The Italian company will provide expertise and technology exclusively to its Pakistani state partners in return for access to fields that have been under national control. Eni said the agreement would help it double its production in Pakistan over the next five to six years.
- Oil demand for 2012 is estimated at 363,300b/d, with imports put at almost 301,000b/d. We expect oil consumption to reach almost 394,000b/d by 2016, with oil imports reaching 342,000b/d, rising further to 403,000b/d by 2021. The upturn in exploration and development activity may be sufficient to boost near-term production to 65,300b/d in 2013.
- Pakistan aims to raise its gas output by 23mn cubic metres per day (Mcm/d) in 2012, according to a government report. This increase of 8.4bn cubic metres (bcm) per annum has been attributed to the 38 oil and gas reserves that were discovered following the drilling of 102 wells and the awarding of 47 exploration licences during 2007 and 2011, according to sources from the Ministry of Petroleum & Natural Resources.

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