- New energy resources should be the ultimate growth strategy, says Majyd Aziz
- Pakistan’s shale oil reserves exceed 9 billion barrels, offering huge economic potential
- Rising oil imports push Pakistan’s energy bill to $18 billion, projected to hit $30 billion
Interview with Mr. Majyd Aziz — former president of (UN) Global Compact Network Pakistan
PAGE: Tell me something about yourself, please:
Majyd Aziz: I am an industrialist and businessman. I am Former President of (UN) Global Compact Network Pakistan, Employers Federation of Pakistan, South Asian Forum of Employers, and Karachi Chamber of Commerce and Industry, Former Chairman of SITE Association of Industry, and Former Member Board of Directors of Zarai Taraqiati Bank Ltd, KESC, and SITE Ltd. I was Chairman of Board of Directors of SME Bank Ltd. I am Senior Advisor for Pakistan for Transnational Strategy Group, Washington. I am also Honorary Secretary General of English Speaking Union of Pakistan, besides being Founding Chairman of Pakistan Sri Lanka Business Forum and Pakistan Indonesia Business Forum and was Founding Secretary General and Vice Chairman of Pakistan Japan Business Forum.
PAGE: It is being claimed that a substantial deposit of petroleum and natural gas has been discovered in Pakistan’s territorial waters, a cache so large its exploitation could change the country’s destiny. How would you comment?
Majyd Aziz: Last month, a private TV channel reported that a large oil and gas deposit has been discovered in Pakistan’s territorial waters and that this would be a game changer, transform the country’s trade deficit into a trade surplus, and unshackle the manacles that have restrained the nation from progressing as a strong economic force. There was initial euphoria on TV talk shows and social media but, surprisingly, within one week the feel good factor dissipated as if this news was of no importance. Saner elements and oil and gas sector experts, while acknowledging that this discovery would be humungous, cautioned that the cost of exploration as well as developing the distribution infrastructure could prove overwhelming for the Finance Ministry to allocate funds at this juncture. The whole process may take OGDC or any foreign exploration company a good number of years to achieve the target. Earmarking $5 to $6 billion is no apple pie because of various overarching financial constraints. Pakistan has just recently received a booster shot from IMF and cannot, on her own, provide the funds. Moreover, there is the question of discharging a huge debt payment, which could be around $24-25 this financial year. Another disconcerting point is that officialdom takes a long, long time to structure decision making. The case of Thar coal is a vivid example of this slow decision making process. The world is gradually moving out of coal and focusing on renewable energy while Pakistan has started utilizing Thar coal since last few years, and at same time is also trying to choke and discourage the widespread use of renewable energy. What it boils down to is that either the news of the three year-long study on this “discovery” is nothing to write home about or maybe the decision makers are averse to the idea of hyping up the news for whatever reason. Or maybe, just maybe, there are hidden motives that citizens are unaware of. Having said this, the hope and wish is that the news about the discovery is genuine and that one day, in the near future, oil and gas would be gushing out of these reserves.
PAGE: What is your standpoint about shale oil reserves in Pakistan?
Majyd Aziz: Again, another heartwarming news. The US Energy Information Administration released a report which ranks Pakistan as the country with the ninth largest shale oil reserves in the world. It states that technically feasible shale oil reserves in Pakistan are estimated as exceeding nine billion barrels. Compare this to the present proven oil reserves of less than 300 million barrels. Great news. Pakistan can boast of reserves in billions such as 183 billion tons of Thar coal and many billion tons of other minerals. So, what is Pakistan doing in this respect. The over dependence on foreign oil and LNG has tremendously affected the lives of citizens who have to bear the continuous escalation of electricity, gas, and petrol prices (discounting few Rupees decrease once in a while for petrol). The question that needs to be answered is whether Pakistan has the wherewithal and capability to extract shale oil. Who will help Pakistan do this is paramount. The large foreign companies have the experience and technology to do it, but their oligopolistic or monopolistic position allows them the leverage to dictate their own terms and conditions that more often than not are unpalatable for a sovereign nation. Nevertheless, the choice is limited. Shale oil is critical for the economy and to address the growing demand of energy and transportation. There could be light at the end of the tunnel. There are reports that highly capable Pakistani oil technologists, working in foreign lands, have the experience and skills in shale oil exploration. The question is whether they want to come home or whether the government has the critical mass to attract them with fabulous incentives, give them full independence, and acknowledge their contributions to the nation’s economy. The jury is out whether Islamabad is ready for them.
PAGE: What is your take on investment in exploration of oil in Pakistan?
Majyd Aziz: The answer is quite simple. It goes without saying that the lackadaisical and casual attitude of policymakers regarding full force exploration of oil and gas, plus the huge wastage of gas by supplying to the domestic sector and relegating industry to a lower priority, have resulted in the chickens coming home to roost. Today the industries have to face gas loadshedding as well as Sunday-off policy for industries. (No wonder Pakistan’s exports are stagnant). Even after more than seven decades as an independent nation, there is still a xenophobic mindset prevalent in the country, more so in the corridors of power. This mindset has often proved to be detrimental to the economic interests of Pakistan and has discouraged many foreign investors. There are a substantial number of domestic investors (including overseas Pakistanis) who are willing to enter this sector, but the policies, rules, and regulations deter them.
Moreover, security is now a major concern, and this is difficult to fathom for investors despite whatever incentives are offered. Oil and gas exploration must be immediately deregulated if formidable investment is the objective. The SIFC could play a prominent and positive role in this respect. What is also disturbing is the large scale smuggling of oil from Iran as this is hampering investment plans. In fact, there has been no new oil refinery in more than two decades. The only silver lining is the pledge by Saudi Arabia to establish a $10 billion oil refinery in Gwadar. Again, this is just a pledge, and one cannot be sure when this refinery will see the light of the day. Here too, SIFC can ensure fast track completion of this project if the Saudis are ready to translate this pledge into hard cash.
PAGE: What is your perspective about oil import bill in Pakistan?
Majyd Aziz: The oil bill is dependent upon global prices and not on oil buying countries. In today’s world, there are external factors impacting oil prices. The volatile situation in Middle East, the re-routing of ships due to the sensitive happenings in the Suez Canal, the Russian-Ukraine War, and the overall difficult global economy, are dominant factors affecting oil prices. The oil import figures for the fiscal year 2024-25 have surged by 23% due to the import of crude oil by 107% in value and 118% in volume, with 1.66 million tonnes imported compared to 762,252 tonnes during the same period last year. In the energy sector, liquefied natural gas imports increased by 11%, while liquefied petroleum gas imports escalated by 67%. The improvement in the economy and a flurry of activities in many sectors will further increase the demand for oil and LNG.
Pakistan’s energy import bill was over $18 billion last year, and projections are that it may increase to $30 billion in few years unless alternate fuel sources are harnessed. Time is not on Pakistan’s side since there is depletion of gas and oil reserves. Imports are not the solution. Indigenous sources are the factors that will lead to economic independence and deliverance for the 250 million citizens. Progressive economy should be the mantra.
American businessman Tom Steyer very stirringly warned that “we will pay a heavy price if we insist on navigating the 21st century with a 20th century mindset.”