Without bidding: Kuwaiti firm likely to win more exploration rights

ISLAMABAD: 

The government has decided to offer at a stepped-up pace the hydrocarbon exploration blocks to foreign state-run companies on a strategic partnership basis without going through the hassle of inviting bids.

The decision comes in the wake of poor response from big international oil and gas companies to offers of investment in Pakistan’s petroleum sector.

According to sources, the government is planning to award another exploration block to a state-owned company of Kuwait based on strategic partnership, which will not only attract investment, but will also push other foreign companies to follow suit.

“Kuwaiti government is taking keen interest in the upstream petroleum sector of Pakistan and desires to pour more capital into exploration of oil and gas,” said an official of the Ministry of Petroleum and Natural Resources while talking to The Express Tribune.

“Earlier, the deputy prime minister of Kuwait during his visit to Pakistan had requested for the award of exploration blocks by engaging in strategic partnership.”

The Kuwaiti government through Kirthar BV, a subsidiary of state-run Kuwait Petroleum Corporation, has sought petroleum exploration rights in the Paharpur block in a state-to-state agreement without any bidding.

The Paharpur block is located in Khyber-Pakhtunkhwa and the government in the province has given its consent for the award of the block to the Kuwaiti firm in a strategic partnership arrangement.

As per normal practice, the exploration blocks identified by oil and gas companies are advertised in newspapers and offered through open competitive bidding. However, under the Petroleum Policy of 2012, the government can grant the status of strategic partner to the oil companies representing foreign governments without competitive bidding on mutually acceptable terms and conditions.

In this regard, the Ministry of Law has assessed the memorandum of understanding (MoU), which will be signed between the government of Pakistan and Kuwait Petroleum Corporation and its subsidiary Kirthar Pakistan BV.

Under the MoU, the company has committed to undertaking a minimum work programme valuing $9.5 million including drilling of two exploratory wells.

Pakistan has been grappling with the rapidly widening gap between demand and supply of energy for the past few years, primarily due to depletion of major gas fields and disproportionate new discoveries.

To bridge the gap, the government is undertaking serious steps to create an investment-friendly environment in the oil and gas exploration and production sector to woo foreign investors.

However, no major new exploration firm has expressed interest in the upstream petroleum sector because of a host of challenges including security threats.

To overcome the obstacles and encourage the investors, the government is weighing various options including the award of hydrocarbon blocks on a strategic partnership basis, which may open a new window for foreign countries to follow and invest in the search for oil and gas.

In the last few years, the government has awarded one block each to China ZhenHua Oil Company and Kirthar Pakistan BV based on strategic partnership. Now, it has planned to award another block to the Kuwaiti firm in an effort to attract investment and deepen bilateral relations with Kuwait.

TV Talk: Most anticipated season premieres

The shows that kept us glued to the screen throughout winter 2013 and spring this year are set to return with new twists, drama, action and exciting secrets unraveled. Rounding up the shows that are expected to make 2014 a record-setting year for sheer volume of quality TV, we give you this year’s most awaited TV shows, compiled by totalfilm.com

Boardwalk Empire

Inspired by the book, Boardwalk Empire the American period crime drama television series created by Emmy award winning writer and producer Terence Winter, is set to return this year for its fifth and final season. Ultimately, season 5 promises to live up to its Golden Globe award winning title, with a whole new twist for fans.

The Walking Dead

Frank Darabont’s tale of a post-apocalyptic world full of flesh eating zombies will return for a fifth season on television this October with Scott Gimple, the current show runner returning in it as well. The upcoming season will sure be a treat for thrill lovers. 

Game Of Thrones

The epic fantasy show that has broken rating records and become the most popular TV show in HBO networks history has recently returned with another anticipated and exciting season. Tensions rise in the new season as the kingdoms prepare to battle while the Lannister’s maintain a stronghold over the Iron Throne.

Gunmen attack Saudi prince's motorcade in Paris, rob 250,000 euros

PARIS: Kalashnikov-wielding robbers have attacked the motorcade of a Saudi prince in Paris, making off with 250,000 euros in cash and reportedly stealing “sensitive” documents, French police said Monday.

The theft took place in northern Paris as the motorcade was making its way from the Saudi embassy to an airport in Le Bourget, said police, who confirmed there were no injuries.

The attack took place late on Sunday around Porte de la Chapelle in northern Paris, a police source said.

The car attacked was a supply vehicle that was stolen and later found burned, this source added.

No suspects have yet been apprehended.

According to the local daily Le Parisien, the men also stole documents said to be “sensitive”.

“It’s quite an unusual attack. They were obviously well-informed. It’s true that it’s quite a rare way of operating,” the police source told AFP.

Assange says will leave London embassy 'soon'

LONDON: WikiLeaks founder Julian Assange said Monday he would “soon” leave Ecuador’s embassy in London but his organisation played down the comment, saying he would not depart until there was an agreement with Britain’s government.

A pale and bearded Assange, who sought asylum at the embassy two years ago, told a press conference: “I can confirm I will be leaving the embassy soon.”

His comments came after British media reported, quoting a WikiLeaks source, that he was suffering from the potentially life-threatening heart condition arrhythmia and had a chronic lung complaint as well as dangerously high blood pressure.

Assange, 43, insisted he would not be leaving for the reasons “reported by the Murdoch press” and did not elaborate further on how or when any departure would happen.

But speaking after the press conference, WikiLeaks spokesman Kristinn Hrafnsson indicated that Assange would remain at the embassy until an agreement was brokered in his case.

“What Julian meant is that his plan is to leave as soon as the British government honours its commitment,” he said.

Asked about Assange’s health, Hrafnsson added: “He seemed pretty well to me.”

Assange sought asylum at the embassy in June 2012 to avoid extradition to Sweden, where he faces allegations of rape and sexual molestation which he strongly denies.

He fears extradition to Sweden could lead to him being transferred to the United States to face trial over WikiLeaks’ publication of classified US military and diplomatic documents.

Former US Army private Chelsea Manning — formerly Bradley Manning — was sentenced to 35 years in prison last year for passing 700,000 classified documents to WikiLeaks.

Britain’s Foreign Office indicated that its position on Assange’s case remained unchanged and that it remained “as committed as ever to reaching a diplomatic solution.”

“We are clear that our laws must be followed and Mr Assange should be extradited to Sweden. As ever we look to Ecuador to help bring this difficult, and costly, situation to an end,” a spokesman added.

Assange was accompanied at the press conference by Ecuador’s Foreign Minister Ricardo Patino, who did not mention a plan for Assange to leave the embassy but called for the governments involved in his case to take action.

“The situation must come to an end — two years is simply too long,” Patino said.

“We continue to offer him our protection… we continue to be ready to talk with the British government and the Swedish government to find a solution to this serious breach of Julian Assange’s human rights.”

Britain funds round-the-clock policing at Ecuador’s embassy in London’s upscale Knightsbridge district because of Assange’s presence.

In June, Scotland Yard said it had so far spent £6.4 million ($10.9 million, eight million euros) on guarding the building.

The embassy offers Assange no outdoor space or direct sunlight, making for uncomfortable living conditions.

The WikiLeaks founder spoke of his anger at being stuck in the embassy in an interview with this week’s Mail on Sunday, describing how he could not even “keep a pot plant alive for long in here”.

“My stubbornness is my best and my worst quality. I won’t give up,” he told the newspaper.

Country far from goals of Vision 2025

ISLAMABAD: Pakistan’s policy framework contains a number of exceptional goals and objectives, including improved quality of education, elimination of all types of disparities and imbalances and significantly improved enrolment rates. However, in the current structure, the country is far from achieving the Vision 2025.

The vision has positioned human resource development at the top of national agenda by capitalising on social capital, strengthening it and improving the human skill base to optimally contribute to and effectively benefit from economic growth. But unfortunately, an analysis of the current year’s federal budget reveals how the wellbeing of citizens has been ignored by allocating more than 18% of the budget to defence needs. Even in today’s world of knowledge-based societies, Pakistan’s allocation for health and education is the lowest in the region.

According to the budget 2014-15 document, the education and health sectors have once again not received their due share. An amount of Rs74.031 billion has been earmarked for both sectors, showing an increase of only 1.5% compared to the previous year, which is insignificant considering the population growth and inflation hovering around 9%.

Of the amount of Rs74 billion, only 13.5% goes to the health sector. The development plan consists of ambitious schemes such as Metro bus services, Metro trains and a motorway from Karachi to Lahore.

In the Public Sector Development Programme (PSDP) for 2014-15, major investment is envisaged in the energy sector, followed by transport and communications. Of the programme’s size of Rs1,175 billion, only Rs12.5 billion has been set aside for achieving the Millennium Development Goals (MDGs).

On the other hand, under pillar one of the Vision 2025, the government promises that a larger share of the gross domestic product (GDP), at least 4% to education and at least 3% to health, would have to be allotted to these sectors. The aim is to achieve universal primary education with 100% net primary enrolment, expansion of higher education coverage from 7% to 12% and increase in the proportion of population with access to improved sanitation from 38% to 90%.

The resource allocation does not show any political will to prioritise human development. In its current shape, Pakistan is the embodiment of a security state where human development barely attracts attention.

No close to reality

The budget is far from being poor-friendly. The myth of macro-stabilisation and its consequent trickle-down effect has disappeared. Misplaced priorities coupled with the shotgun approach to allocations will worsen economic slowdown.

At this juncture, the government needs to stabilise the economy, rebuild the eroded credibility, bridge the fiscal gap, re-establish confidence in public institutions and improve the investment climate. In parallel with its macroeconomic stabilisation programme, the government also needs to develop a comprehensive plan of structural reforms.

Pakistan must respond to such challenges effectively. This calls for a change in the mindset to incorporate the quest for excellence.

Delay in gas pricing fuelling energy crisis

KARACHI: It would not be a stretch to call the current energy crisis Pakistan’s worst. It has impacted the country’s economy with most of the industries either facing closure or have already shut down. Production levels have taken a massive hit.

This environment has kept investors at bay. However, some continue to make efforts in the petroleum exploration and production sector, looking at new ways to overcome the energy crisis. This has also resulted in them discovering a number of new gas and oil reserves.

The power generation sector has been badly neglected by successive governments on account of various reasons including political ones. Every government has, however, announced launching projects but bore no fruit. On the other hand, no efforts were made to introduce alternate energy sources. The petroleum products’ import bill rose to an all-time high, consuming a major portion of the country’s foreign exchange reserves.

Alternate energy sources such as wind, solar among others could not be introduced despite being cost effective and achievable. It appears that officials responsible are focused only toward projects that yield them monetary benefits as well.

Rich in natural resource

Nature has blessed Pakistan with vast hydrocarbon and mineral resources, which remain largely untapped despite the success rate of Pakistan’s exploration activity being higher than countries like Canada and the US.

But like the short-term approach of every government that relies on importing petroleum products, the present one is following the same footsteps. This is not only hampering exploration activity but is consuming precious hard-earned foreign exchange reserves. Now, the government is reportedly bent upon importing LNG at very higher rates of $17 to 18 per million British thermal units (mmbtu) with a huge commission of $ 7-8. This is at a time when LNG in the international market has fallen to $10.575 mmbtu.

Import of LNG is another short-term arrangement to meet daily requirements of natural gas. The use of indigenous natural gas as fuel for transport on a commercial basis has already made the situation worse.

The use of natural gas as CNG was introduced on an experimental basis as a cheap and environment-friendly fuel for transport but its unwanted commercialisation at a rapid rate disturbed the demand and supply.

The shortage of natural gas, due to its commercial use in vehicles, not only hurt industrial activity but also affected domestic consumers. Now, the price difference between prices of petrol, diesel and CNG has reduced significantly. But the use of natural gas could not be curtailed.

In these circumstances, the newly-discovered hydrocarbon reserves are still not being utilised due to non-settlement of a long due pricing issue.

The new reserves cannot be linked to the main supply pipelines till a decision is taken regarding its price. It is high time to note that despite the available energy resources, the delay in settling the overdue gas pricing issue by the concerned departments is not understandable.

The case in India

While according to June 13, 2014 issue of upstream, in India, the gas price increase for domestic producers is on the agenda of the newly-elected government. Reportedly, the increase in gas prices effective from July 1, 2014 is likely to be based on the gas pricing formula worked out by the Rangarajan Committee, which could see domestic gas prices almost double to more than $8 per mmbtu.

Indian private sector giant Reliance Industries, UK super-major BP and Canada’s Niko Resources, partners in the D6 block in Krishna Godavari basin, are likely to be the biggest beneficiaries of the price increase. Subject to higher gas prices, these companies have plans to invest $8 billion in the next few years.

In case of a delay, these companies are determined to pursue arbitration.

State-owned Oil & Natural Gas Corporation (ONGC) will also be among the beneficiaries. A committee, headed by Dr C Rangarajan, had proposed that all domestic gas should be priced at an average of liquid gas (LNG) imports into India, US and UK trading hub rates as well as LNG imports into Japan. This formula would have led to a doubling of domestic gas price to $8.4 per mmbtu.

The new government had on June 25 deferred implementation of the Rangarajan formula till the end of September to conduct a comprehensive review of the whole issue.

According to Rangarajan formula, gas prices were to be revised every quarter, and rates would have been $8.8 per mmbtu, leading to a hike in power cost by over INR2 per unit, urea production cost by INR 6,228 per ton, piped gas by INR8.50 per kilogramme (kg) and CNG by INR12 per kg.

Pakistan also needs to devise a gas-pricing formula at the earliest to boost petroleum exploration activity, facilitating the market players and reducing the import bill.

It is unfortunate that the domestic oil and gas producers are not getting due support, which is also keeping foreign companies away.

In order to deal with the prevailing shortage of energy resources, it is the need to add newly discovered gas reserves to the distribution system by finalising the price issue. International financial institutions have already made it clear to withdraw subsidies so it is up to the financial managers to resolve this issue keeping in view the consumers and the producers interests.

E-commerce: Online shopping making its way into rural areas

LAHORE: 

The trend of online shopping has witnessed rapid growth recently with several retail market portals springing up.

But, a recent increase in their penetration into far-flung areas has also boosted future prospects of the e-commerce market. What used to be limited to metropolitan cities has now spread to semi-urban and rural areas of the country. This is another potential market not only for shopping portals but also for fast moving consumer good (FMCG) companies, due to better availability of internet facilities throughout the country.

Online shopping portal, Daraz.pk, claims that online shopping websites have penetrated into the rural areas. In a recent survey, they revealed that around 48% of all orders placed in the first six months of 2014 were outside of Pakistan’s biggest cities – Karachi, Lahore and Islamabad.

“Half the world’s population will have internet access by 2017, showcasing the potential of e-commerce in the future,” said Daraz.pk co-founder Muneeb Idrees. “It is also expected that the number of mobile-connected devices will surpass the number of people. These statistics represent the expanding ecosphere of e-commerce.”

Established in August 2012, Daraz.pk is a project of Rocket Internet, the world’s largest incubator. The portal is currently offering over 400 brands in 200 cities across Pakistan. After the initial success, other venture capital firms took notice and starting initiating contact with local businessmen in the industry to fund entrepreneurs.

The website gets receives their highest number of orders (six per cent) from Ghotki, a semi-urban area in Sindh. The highest basket size across the country was from Lala Musa in Punjab, doubling the average order size of Lahore.

“In general, more than half our orders are from outside Karachi, Lahore and Islamabad,” said Idrees. “People in smaller towns have access to social media and television. They learn about new products, but don’t have malls in their cities to buy these products.”

The e-commerce market in Pakistan is estimated at around $25-30 million, in comparison to the total retail market of approximately $42 billion. Internet availability, along with introduction of branchless banking through cellular technology, has done wonders for the market.

According to estimates, branchless banking transactions have witnessed a growth of 327% during 2011-13. Daraz.pk is one of the few businesses utilising mobile commerce in Pakistan with great numbers. The management said that 20% of the transactions of the portal take place via mobile phones.

FMCG giant Unilever recently entered in an agreement with Daraz.pk to use its marketing reach all over Pakistan for its beauty and personal care products. The management thinks that this deal could be vital for the retail industry as previously no FMCG had seriously looked into the e-commerce sector.