Pakistan: The Frankenstein of the 2011 Petroleum Policy and Energy Security
Posted on 31. Oct, 2011 by Aemen Maluka in Energy
This observation of the author is in line with a word of caution to be thrown at the much-awaited Iran–Pakistan gas pipeline that will spell a change in our current regional security complex structures and our current interdependencies.
By Barrister Aemen Zulfikar Maluka
The year is 2011 and we are at the crossroads of driving yet another nail in the coffin of our already decadent hydrocarbon policy and infrastructure. Yet what we have in our hands is the proverbial Frankenstein, a creation of the literary genius, Mary Shelly. Frankenstein, despite being stitched together with the finest and most beautiful body parts, a scientist could gather, was an ugly abomination- a reminder that all things sweet and convincing cannot account for the sheer ugliness that arises from an entity created without a purpose and a foundation. Like most of the youngsters of my generation, the author of this article, grew up with the knowledge that energy security should be a focal target of a country’s foreign and investment policy. The Petroleum Exploration and Production Policy 2011, hence remains for the author as empty and incoherent as its predecessors.
When the 1991 Petroleum Policy was announced in the Land of the Green, our leaders and technocrats promised us the moon, the stars and Energy Security. Plans were drawn since then, the consecutive policies seemed promising and it seemed that even the daunting guns of the local warlords would not stop us from achieving the holy grail of energy security. Almost a decade later as we await the blessed moment when the government decides to breath life in the carcass of the Frankenstein of Pakistani Petroleum Policy 2011, one cannot but wonder with gloom-does it even matter?
At the point when we choose to delve into exploring the meaning and metaphor of Energy Security, I find it useful to refer to Andrew Bely’s classification of the international theories where the theorist has sought to base the framework of understanding Energy Security on a term which he borrows from modern political terminology and calls it the “New Economics of Energy” or the “New Political Economy of Energy”. In the context of Pakistan the latter approach spells out a clear caution. Given that the notion of “security” in its most raw context, it is a response mechanism for an obvious, concrete threat or a strategic discourse for the avoidance of potential danger or threat. In the context of energy, one view remains that it can be viewed as a series of reactions in line with an underlying policy objective regardless of current political conditions. If one were to follow this view then our reactions to the changing dynamics of the political energy landscape are anything but rational or logical. Our petroleum policy makers need to be mindful that Pakistan are a region where certain security concerns may be particularly concentrated to certain geographical boundaries particularly where matters of energy dependency are concerned.
From the point of view of international relations, the essentially anarchic nature of the modern world order manifests itself in the matters of interstate disputes of natural resources displaying the struggle to exploit the presence or the lack thereof of a particular strategic natural resource. This factum combined with the historical background of a particular region might be the reason for a long standing continuum of energy related geopolitical strategies despite the change of political regimes over a large period of time. This observation of the author is in line with a word of caution to be thrown at the much-awaited Iran–Pakistan gas pipeline that will spell a change in our current regional security complex structures and our current interdependencies. After all, the energy dynamics of oil and gas differ widely, in terms of their energy dependencies based on factors like the regional trade balances, domestic energy resources and available energy alternatives. Sadly neither the draft third party access regulations to the pipeline infrastructure nor this amazing “Frankenstein” reflect even the subtlest sensitivity to this evolving regional complex.
This of course brings us to back to the Frankenstein, which has been created by our technocrats in the name of incentivizing exploration and production at a point when foreign companies are shying away from investing in Pakistan. At a precursory glance the Petroleum Exploration and Production Policy 2011 strikes us in its preamble as yet another ambitious initiative with proposals aimed at allowing locally operating exploration and production companies to construct and operate pipelines for local requirements as well as for exports for their share of petroleum and allowing priority access based on a certain firm utilization plans. On a more profound reading however, this policy shows no promise, pertaining to the quick and effective expedition of ministerial approvals and removal of the frustrating red tape, which every foreign company faces at its very entry into the Pakistan jurisdiction. One can also discern promises of acceleration of exploration and production with a view of achieving self-sufficiency. But these can only be sugarcoated promises, as our infrastructure is lying idle for almost a year now. Little has been said about how our country intends to offer globally competitive incentives at a point where the local government can embezzle our foreign investors and have their assets expropriated at the whim of the locally elected dacoits and resident warlords.
Ironically enough after a decade of going blind to the so called ‘paradigm shift’ in the global energy scenario we see a sudden acknowledgement in the 2011 policy of our technocrats and democratically elected robbers that there is a need to look at the market conditions for energy investment in view of increasing international energy prices. Again we see promises of developing the local market through international competitive bidding. It seems that our technocrats have failed to realize that our infrastructure not only lacks proper management but also is riddled by corruption and red tape.
Despite the realization of our benevolent rulers that the world energy scenario has changed, the royalty rate remains at the same paltry 12.5%, and the income tax percentage has barely changed since 2001, hence reminding us that not only do we have a badly managed hydrocarbon infrastructure but also no understanding whatsoever of effective petroleum economics which currently dictate the world order at time when there is a relentless thirst for fuel.
Of course the final stitch in the body of this Frankenstein is a suggestion for marine research and coastal area development within the policy confirming that the same is, in fact, yet another wastefully hasted drafted piece of document. This is evident from the fact that in the past even international oil and gas giants like Petro bras have abandoned the idea of developing our offshore reserves based on our failure to respond to its immense legal potential. We are a country whose strategic hydrocarbon and geological data is already in unsafe foreign hands due to the sheer greed of our technocrats and politicians. Now that we have sold this data for peanuts, the 2011 policy is a far cry from achieving anything better for our treasury, but perhaps more peanuts.
Thus to conclude, the monster we have created from the remains of our previous series of ineffective agendas, namely the Petroleum Exploration and Production Policy 2011, stitched together with some of the most sound promises of energy security, is unlikely to survive the next five years. One can only wishfully hope that Hydrocarbon sector investment will pick up in the next 11 months but knowing our history of mismanagement, it is likely that our leadership and bureaucracy will sell our oil and our integrity for peanuts once again. The foreign investors do not really need a promise for a bonanza discovery but they need to know if our country will still exist politically in the next 5 years and whether our next elected band of thieves will be wiser to the needs of the petroleum industry. At a time when Pakistan needs to re-evaluate its friendships and alliances based on the changing needs of the new regional strategic geopolitical location landscape, our Policy makers seem to be lacking the acumen to make the best out of the current scenario for our already standstill economy.
Yet as starry eyed pupils of justice and legal policy, it is people like the author themselves, who continue to hope that one day, in this Land of the Pure, the Green and the Minerals, we will realize our actual potential for self-sufficiency and not sell our last shards of integrity and the hope for energy security to fuel the ever hungry needs of the foreign states. Remembering Daniel Yergin’s famous utterance about the modern warfare being a quest for “the prize” it is better for us to realize how we can secure our blessings of hydrocarbon reserves before like our ill-fated Iraqi friends, our prized hydrocarbon blessings are stolen and then sold on the back street for peanuts.
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10 Responses to “Pakistan: The Frankenstein of the 2011 Petroleum Policy and Energy Security”
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Barrister Aemen Zulfiqar Maluka
Raja Mujtaba
31. Oct, 2011
A very techinical and a dry subject that has been explained with a simplicity for anyone to understand with a clear picture and grasp of the subject.
Aemen Maluka
31. Oct, 2011
Thank you Mr Mujtaba for your kind comments.The need of the hour is for Pakistan to realize that you can only go so far with a blatant blindness to our changing geo-strategic realities.Our regulations and policies have done too little to reflect an awareness of such small sensitivities.
Overseas Pakistani
31. Oct, 2011
Nicely written!!
Sylvia V
31. Oct, 2011
Much have been said about Pakistanis lack of inclination, foresight , and many other things that pertains to business and so called Economic progress , that even the slightest misfortune befalling the country has often been traced back with a feeling of reproach to that unwholesome term "Pakistani Incapacity". But without in any way discrediting the opinion of those who believe in the incapacity of Pakistani people or favoring those who are entertaining ideas otherwise,I believe that in a most critical time such as this , when every possible effort is being mustered by those who are not in sympathy with the popular movement , there seems to my mind no better way of combating the influx of adverse circumstances detrimental to the best interests of the Country than to educate the youth , the citizen of the Land of the Pure in the great necessity of adopting sound economic policies , and only this could be achieve through honest governance.
The defense program of any country should not be wholly military ,it is fallacious in the long run ,misleading . Rather her military preparations should go hand in hand , and be coordinated with her economic development.After all military might is merely a super structure ,economic self-sufficiency forms the ultimate basis of security and greatness.Pakistan economic plan should be accelerated .
This article is a wake up call for economic-mindedness.This is a vital national problem inviting public thought for its ultimate solution.
Welcome on board Madame Aemen Maluka !
Aemen Maluka
31. Oct, 2011
Thank you all, for your kind comments.
Antonio Lico
01. Nov, 2011
Fine article about a difficult matter. Very well explained.
Farhat Perveen
01. Nov, 2011
A very good work Aemen! Keep informing us on these issues. God bless you
Usama
14. Nov, 2011
A ridiculously written article in which the author clearly wants to demonstrate her English writing skills more than any proper understanding of petroleum fiscal issues. After a few sentences, I couldn't follow what she was trying to say, facts got lost in emotion. What a waste of time, sorry. The author clearly has minimum or no knowledge of oil fiscals and economics.
Fawad
11. Jan, 2012
To me , the article delved into too many topics, often irrelevant to technical discussion. E&P Policy 2011 is aimed at increasing investment in the sector , increase indigenous production. Energy security is a bigger issue and cannot be addressed in 60-70 page document meant for small sector.
Shoaib Elahi
13. Apr, 2012
@Barrister Aeman,
I appreciate your efforts.
@Usama,
sitting and criticising efforts is quite thrilling,but self presentation is not everyone"s cup of tea.will you please enlighten us with your informative approach about knowledge of oil fiscals and economics?
I am despretly waiting for your article.
.
.
Regards,
Shoaib Elahi