GOVERNMENT OF PAKISTAN MINISTRY OF PETROLEUM

&

NATURAL RESOURCES

ISLAMABAD

YEAR BOOK

2010-2011

TABLE OF CONTENTS

GENERAL………………………………………………………………………………………….. 1-4

INTRODUCTION…………………………………………………………………………………… 1

MISSION STATEMENT…………………………………………………………………………… 1

STRATEGY TO ACHIEVE MISSION……………………………………………………………. 1

FUNCTIONS OF THE MINISTRY……………………………………………………………… 1

ORGANIZATION OF THE MINISTRY…………………………………………………………. 2

ADMINISTRATION WING………………………………………………………………………… 2

DEVELOPMENT WING…………………………………………………………………………… 3

MINERAL WING…………………………………………………………………………………… 3

POLICY WING……………………………………………………………………………………... 3

ATTACHED DEPARTMENT, AUTONOMOUS BODIES, CORPORATIONS AND COMPANIES OF THE MINISTRY………………………………………………………………

3

1.

WEBSITE OF THE MINISTRY……………………………………………………………………

4

ACTIVITIES, ACHIEVEMENTS AND PROGRESS…………………………………………… 5-13

DEVELOPMENT WING…………………………………………………………………………… 5

MINERAL WING…………………………………………………………………………………… 8

POLICY WING……………………………………………………………………………………... 12

(i) DIRECTORATE GENERAL OF OIL………………………………...……………………….. 12

(iI) DIRECTORATE GENERAL OF GAS…………………………….……………………….. 13

2.

(iII) DIRECTORATE GENERAL OF PC……………………………….……………………….. 19

GEOLOGICAL SURVEY OF PAKISTAN (GSP)………………………………………………. 20

INTRODUCTION……………………………………………………………………………………. 21

INSTITUTIONAL STRUCTURE…………………………………………………………………… 21

HUMAN RESOURCE DEVELOPMENT…………………………………………………………. 35

LATEST PUBLICATIONS…………………………………………………………………………. 39

3.

DEVELOPMENT PROJECTS EXECUTED BY GSP…………………………………………… 42

HYDROCARBON DEVELOPMENT INSTITUTE OF PAKISTAN (HDIP)………………….. 44 4.

ACTIVITIES, ACHIEVEMENTS AND PROGRESS DURING 2010-11……………………… 44

(i)

COMPANIES ……………………………………………………………………………….……

53-171

(i) OIL AND GAS DEVELOPMENT COMPANY…………........……………………………. 53

(ii) SUI NORTHERN GAS PIPELINES LIMITED …………………………………………… 58

(iii) SUI SOUTHERN GAS COMPANY LIMITED …………….…………………………….. 61

(iv) INTER STATE GAS SYSTEM…… ……………………...…………………………….. 69

(v) PAKISTAN STATE OIL COMPANY LIMITED….…………………………….…………. 74

(vi) PAKISTAN PETROLEUM LIMITED ……..………………………………………………. 86

(vii) PAK ARAB REFINERY LIMITED ………….……………………………………………. 106

(viii) SAINDAK METALS LIMITED ……..………...………………………………………….. 118

(ix) LAKHRA COAL DEVELOPMENT COMPANY …………………………………………. 124

(x) GOVERNMENT HOLDINGS PVT. LIMITED ……….…….………………………..…… 129

5.

(xi) PAKISTAN MINERAL DEVELOPMENT CORPORATION….…………………………. 139

(ii)

PREFACE This report has been prepared in pursuance of Sub Rule (2) of Rule 25 of the Rules of Business 1973 which provides that at the beginning of each financial year, each Division shall, for the information of the Cabinet and information of general public prepare as a permanent record, a Book which shall contain:

a. The detail of its activities, achievements and progress during the preceding financial year giving only the unclassified information which can be used for reference purposes;

b. The programme for activities and targets set out for the Ministry for the preceding financial

year and the extent to which they have been realized; and c. The relevant statistics properly tabulated.

The report gives an overview of the activities, achievements and progress of the Ministry of Petroleum and Natural Resources, its attached departments and organizations/companies under its administrative control, during FY 2010-11. However the reflection of activities of the achievements will provide a bird’s eye view on the broader parameter of policies and functions. For details on particular topics, the website of the Ministry may kindly be referred to which is updated on regular basis to incorporate the current issues and policies relating to the oil, gas and mineral sector. I hope that this year book will serve as a useful reference document.

Islamabad: 2011 Muhammad Ejaz Chaudhry

Secretary

(iii)

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CHAPTER 1

GENERAL

1.1. INTRODUCTION

Ministry of Petroleum and Natural Resources was created in April 1977. Prior to that, the subjects of Petroleum and Natural Resources were part of the Ministry of Fuel, Power and Natural Resources.

1.2 MISSION STATEMENT

To ensure availability and security of sustainable supply of oil and gas for economic development and strategic requirements of the country and to coordinate development of natural resources of energy and minerals, in order to cater for energy need of the people of Pakistan. 1.2.1 STRATEGY TO ACHIEVE MISSION

i. To adopt an integrated approach for promoting exploration and fast track

development of oil, gas and mineral resources. ii. To deregulate, liberalize and privatize oil, gas and mineral sectors through

structural reforms. iii. To attract private investment and to establish credible institutions for facilitating

the development of petroleum and mineral sectors. iv. To develop technical and professional human resources. v. To optimize existing energy delivery infrastructure (oil/gas pipelines) vi. To substitute imported fuel oil with indigenous gas by optimally balancing the gas

availability and supplies from local and imported sources.

1.3 FUNCTIONS OF THE MINISTRY

The Ministry is responsible for dealing with all matters relating to petroleum, gas and mineral. Its detailed functions as per the Rules of Business are as under:

1. All matters relating to oil, gas and minerals at the national and international levels, including:

i. Policy, legislation, planning regarding exploration, development and production; ii. Import, export, refining, distribution, marketing, transportation and pricing of all kinds

of petroleum and petroleum products. (Pricing of all kinds of petroleum and petroleum products. are determined by Oil and Gas Regulatory Authority w.e.f. 01-04-2006)

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iii. Matters bearing on international aspects; iv. Federal agencies and institutions for promotion of special studies and development

programs.

2. Geological Surveys

3. i. Administration of Regulation of Mines and oil fields and Mineral Development (Federal control) Act, 1948, and rules made there under, in so far as the same relate to exploration and production of petroleum, transmission, distribution of natural gas and liquefied petroleum gas, refining and marketing of oil;

ii. Petroleum concessions agreements for land, off-shore and deep sea areas; iii. Import of Machinery, equipment, etc; for exploration and development of oil and

natural gas. 4. i. Administration of Marketing of Petroleum Products (Federal Control) ACT 1974 and

the rules made there under; Matters relating to Federal investments and undertakings wholly or partly owned by the Government in the field of oil, gas and minerals excepting those assigned to the Industries and Production Division.

5. Administration of

i. The Petroleum Products (Development Surcharges) Ordinance, 1961, and the rules made there-under:

ii. The Natural Gas (Development Surcharges) Ordinance, 1967, and the rules made there under; and

iii. The ESSO Undertakings (Vesting) Ordinance, 1976. 6. i. Coordination of energy policy, including measures for conservation of energy

and energy statistics; ii. Secretariat of National Energy Policy Committee.

1.4 ORGANIZATION OF THE MINISTRY

To perform its functions, the Ministry of Petroleum & Natural Resources has been organized into four wings i.e. Administration, Development, Mineral and Policy. The Ministry has one Attached Department, one Autonomous Body and 11 companies. The Secretary is assisted by two Additional Secretaries, two Joint Secretaries, and five Directors General. Organizational chart of the Ministry and its public sector organizations are placed at Annexure-I and II while the staff strength of the Ministry is at Annex-III.

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1.4.1 ADMINISTRATION WING

Administration Wing consist of a Joint Secretary, two Deputy Secretaries and six Section Officers along with the supporting staff and one Network Administrator. The Wing is responsible for the following functions:

i. Personnel and General Administration of the Ministry (Secretariat). All matters relating to Administration of the Policy Wing, Oil and Gas companies, Geological Survey of Pakistan (GSP), Pakistan Mineral Development Corporation and Hydrocarbon Development Institute of Pakistan.

ii. Corporate affairs of oil and gas companies. iii. All matters relating to technical assistance, tours and training. iv. Coordination work of the Ministry and its attached department. v. All matters relating to web site and networking of the Ministry. vi. Coordination work related to P&NR committee on defense planning. vii. All matters relating to the Parliament Business.

1.4.2 DEVELOPMENT WING This wing comprises of one Joint Secretary, two Deputy Secretaries and four Section Officers alongwith the complementary staff. The Wing is mainly responsible for all coordination on policy matters, processing and seeking approval of Oil and Gas infrastructure, projects, monitoring of Development schemes. It also processes foreign aid/loan and coordination with World Bank, ADB, CIDA, IDB JICA; handles joint Ministerial Commissions, ECO & Bilateral relations, Prepare development Budget (PSDP), long term plans, Economic Survey & Budget speeches. Matters relating to ECNEC, ECC, CCOI, CCOP, Cabinet and implementation of decisions and Foreign Investment, Privatization, import of natural gas projects are also undertaken in this Wing. 1.4.3. MINERAL WING

Mineral Wing is a technical arm of the Ministry of Petroleum and Natural Resources and looks after following functions:

i. Frame and update National Mineral Policy and Federal and Provincial agencies. ii. Periodical review of available geological data basis and publication of its

annotated bibliography. iii. Provide support to provinces to improve their regulatory laws and institutions for

making them internationally competitive. iv. Facilitate interaction of the foreign private mining investors with various Federal

and provincial regulatory agencies. v. Provide inputs for formulating plans for mineral sector (5 year plan) in

consultation with the Provincial government.

vi. Scrutinizing and processing of mineral development schemes of Federal agencies for approval.

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vii. Initiate and process mineral sector proposals for inclusion in the programs of International agencies.

viii. Dealing with all operational issues (except personnel administration and general training circulated by EAD) raised by any Federal agency in mineral sector requiring approvals of MPNR or other ministries.

ix. Monitor Progress and implementation of public sector projects funded by PSDP in Mineral sector.

1.4.4 POLICY WING

The Policy Wing is comprised of (i) Directorate General of Petroleum Concessions (ii) Directorate General of Oil (iii) Directorate General of Gas and (iv) Directorate General of Admn/Special Projects. Each Directorate is headed by a Director General. The Policy Wing is responsible for developing policies for oil and gas sectors, forecasting future requirement and assessing the impact of existing policies, rules and regulations. 1.4.5 ATTACHED DEPARTMENT, AUTONOMOUS ORGANIZATIONS,

CORPORATIONS AND COMPANIES OF THE MINISTRY

The Ministry has one attached department, one autonomous body and the following organizations/companies under its administrative control:

i. Geological Survey of Pakistan (GSP) (Attached Department). ii. Hydrocarbon Development Institute of Pakistan (HDIP) (Autonomous Body). iii. Oil and Gas Development Company Limited (OGDCL). iv. Sui Northern Gas Pipeline Limited (SNGPL). v. Sui Southern Gas Company Limited (SSGCL). vi. Pakistan State Oil Company Limited (PSOCL). vii. Pakistan Petroleum Limited (PPL). viii. Pak Arab Refinery Company Limited (PARCO). ix. Saindak Metal Limited (SML). x. Lakhra Coal Development Company (LCDC). xi. Government Holdings (Pvt) Limited (GHPL). xii. Pakistan Mineral Development Corporation (Pvt) Limited (PMDC). xiii. Inter State Gas Systems (Pvt) Limited (ISGSL).

1.5 WEBSITE OF THE MINISTRY

The Ministry is regularly updating its website www.mpnr.gov.pk on the basis of feed back received from different stakeholders. The wsbsite provides updated information about the activities of the Ministry, Policies, Projects, and Press releases.

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CHAPTER 2

ACTIVITIES, ACHIEVEMENTS & PROGRESS

DURING 2010-11

2.1 DEVELOPMENT WING

There are eight on-going PSDP projects being executed under the administrative control of Ministry of Petroleum. The brief status/progress of the project is as under:

2.1.1 Strengthening and Capacity Building of Mineral Wing:

This scheme was approved by CDWP in its meeting held on 28-4-2008 with the total cost of Rs. 95.00 million

The major objectives of the scheme were to strengthen and capacity building of Mineral Wing through induction of Professional staff, training, logistic support, etc. The recruitment of staff has been completed under the local component. As to FEC component, the Finance Division did not release the same. Later on, it was merged in the scheme titled “Institutional Strengthening and Capacity Building of Ministry of Petroleum and Natural Resources” as per advice of Finance Division. The training of officers was partially met from funds of above mentioned scheme.

2.1.2 National Coal Policy of Pakistan

This scheme was approved by DDWP at an estimated cost of Rs. 25.00 million in its meeting held on 22-3-2009 with inter-alia the following objectives:

• Suggest methodology to enhance coal production from the existing proven coal reserves, setting up of coal wateriness and downstream coal mining industry and adoption/utilization of latest technologies;

• To make Pakistan competitively attractive for investment in coal mining and suggest viable fiscal package of income tax, royalty, custom duty rates etc;

• Development of policies, plans programme, projects and their implementation mechanism; and

• To design a viable layout including one window operation for coordination between Federal and provincial /Government /institutions keeping in view the requirements of 1973 Constitution of Islamic Republic of Pakistan.

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• Adhering to the criteria approved by the Planning Commission, a foreign consultant (M/s RMG, Germany) was selected for formulation of National Coal Policy as envisaged in the project. However, the Consultant later on declined to work because of variation in the currency exchange rate and security situation in Pakistan. In the changed scenario, the Canadian High Commission, Islamabad was approached and they have shown willingness to support the project through National Resource Canada (NRC), Government of Canada and further action on the proposal is underway.

2.1.3 Review /updating of National Mineral Policy

(Approved by DDWP with a cost of Rs. 4.500 million)

In order to ensure international competitiveness of regulator regime for the mineral sector Federal Government Launched a development scheme for review /updation of National Mineral Policy (NMP-I), formulated/announced in 1995 to attract private sector investment specially expatriate implementation of NMP- fetched substantial direct foreign investment for exploration and Development of mineral resources of Pakistan Duddar Lead- Zinc project, Reko Diq and Saindak Copper Gold projects and Thar Coal development, etc. The consultant was appointed adhering to criteria Laid down by the Planning Commission; the final draft report has been submitted by the consultant. The revised draft prepared by the Ministry with technical assistance of Commonwealth Secretariat UK has been circulated to the federating units and other stakeholders for views/comments. 2.1.4 Feasibility study of Gasification of Thar Coal:

This project was approved by CDWP with a cost of Rs126.649 million. The overall objective of the study is to ascertain techno economic viability of Thar Coal for gasification and extraction of chemicals. The study was to be conducted through a consultancy firm having proved and verifiable experience of commissioning commercial viable operating gasification project in two phases i.e (i) Conceptual Study and Industrial scale Gasification Test (ii) Bankable feasibility study. A South African consultant, M/S Lurgi was hired to conduct the study. The consultant has completed Phase-I and has proved that Thar coal is suitable for gasifiability and production of petrochemical and has also calculated a factored capital and operating cost of Syn-Gas facility, a substitute of natural gas. However, due to very high capital and operating cost for commissioning and operation of the facility and non-availability of bulk sample of Thar Coal for commercial scale test, the competent authority did not approve commencement of the Phase-II Bankable feasibility study costing more than Rs. 140 million. Therefore, the project was abandoned.

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2.1.5 Accelerated Geological Mapping & Geochemical Exploration of the outcrop area of

Pakistan.

The PC-II scheme was approved by CDWP with a total cost of Rs. 198.643 million for a period of 2 years in May 2005. The activities of the project commenced late in the last quarter of financial year 2005-06 when the funds were released in April 2006. The scheme has been initiated to accelerate the pace of geological mapping and mineral exploration by using modern techniques of remote sensing (satellite imageries), and geochemical prospecting of identified mineral prospective localities. The prime objective of the project is to (i) carry out geological mapping of the outcrop areas utilizing the remote sensing techniques and the satellite image digital data and (ii) to conduct geo-chemical exploration to find mineral potentials. The other component of the scheme is to train technical officials in the latest remote sensing techniques and their application to prepare the interpretative geological and geo-chemical maps on an appropriate scale of 1:50,000.

Following objectives have been achieved:

• Training of GSP geologists in remote sensing, GIS and image processing programme has been organized.

• On the job training to the new Geologists has also been provided.

• Field work has been carried out by GSP’s senior officers along with new geologists as foreign consultants could not be hired due to present Law & order situation.

• Regional geological mapping of 39800 sq km k area on 1:50,000 scale with the help of imageries and aerial photographs have been completed.

• Measured 25 Geological sections

• Collected 3000 Sample for laboratory studies.

• Compiled/digitized 30 geological maps.

• Geochemical Survey of about 21,000 sq.km potential mineral promising areas have been completed.

The project is also providing on job training to the GSP’s technical personnel, by highly qualified local and foreign experts, in use of modern technique for geological mapping and geochemical surveys. After completion of project the GSP personnel will get trained enough in the modern techniques to geologically map the country at their own at a much faster pace. 2.1.6 Up-gradation /Strengthening of Geosciences Advance Research Laboratories,

Geological Survey of Pakistan.

CDWP approved this project on 12-5-2005 with Cost of Rs. 249.87 million with the objective to enable GSP to satisfactorily meet the present day challenges of geo-scientific research and other private agencies involved in mining and mineral based industries will benefit for analytical support to their projects and enhance capacity building and human Resources development capacity of GSP .

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At present the following progress has been made.

• Construction of building for Human Resource Development centre and hostel is 97% complete.

• Purchase and installation of equipment by experts have been completed.

• Training of Global & GSP scientists on newly installed equipment and related subject have been arranged.

• Advanced Training Courses in various disciplines of Geology by National/International Experts were arranged

2.1.7 Capacity Building for Hydrocarbon Research and Development:

Approved by CDWP in its meeting held on 28-4-2006 with cost of Rs. 140.00 million. The objectives of the project are to establish centralized database, local area network (LAN) and linkages and strengthening of existing geological/facilities of HDIP.

The following progress has been achieved so far:

• Centralized database system based on Geographic Information System (GIS) has been established

• Local Area Network (LAN) and linkages have been established.

• Data processing facilities for acquiring data from various sources has been installed.

• Developed infra-structural facilities to provide technical backup support to the petroleum industry and the government.

2.1.8 Construction of Petroleum House, Islamabad with a cost of Rs. 255.522 million.

The project aims to construct multistory building with all allied facilities to accommodate the Ministry of Petroleum & Natural Resources and its allied departments under one roof for better working environment and curtail huge expenditure on rent of buildings. Original PC-I of the project was approved by the CDWP in its meeting held on 20-05-2005 at a rationalized cost of Rs 225.522 million with completion period of 3 years. Later on, in 2007, the PC-I of the project was revised with a cost of Rs 452.44 million. After making changes in the design of the building the revised PC-I (2nd revision) for construction of ten storey building with two basements at a cost of Rs.911.121 million has been conditionally approved by CDWP to complete the project with in the approved cost of Rs.911.121 million.. 2.2 MINERAL WING – MINISTRY:

In order to encourage investment in the mineral sector, the government has assigned priority to this sector and has also given number of fiscal and regulatory incentives so that the sector can contribute its due share in the GDP, which is at present less than 1%, whereas international studies have reflected the contribution of about 3-4% in the national economy.

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The implementation of National Mineral Policy having internationally competitive fiscal and regulatory regimes attracted significant foreign and local investment as a result of which country has seen world class discovery of copper, gold, coal, gemstones and dimension stones. The federal government assisted the federating units in capacity building, acquaintances, deployment of latest mineral exploration technologies and to further improve the regulatory regime facilitating inflow of foreign direct investment. The significant projects/initiatives are described below:

2.2.1 ACHIEVEMENTS OF THE MINERAL WING:

A) Special Initiatives:

i) National Mineral Policy:

Implemented National Mineral Policy 1995 (NMP-1) and prepared draft NMP2 (2011) in consultation with the stakeholders with the following objectives: a) To enhance competitiveness of mineral sector of the country. b) Increase revenue receipts from the mineral sector. c) To promote development of mineral deposits on scientific lines. d) To attract foreign investment in development of indigenous mineral resources.

ii) NATIONAL COAL POLICY (NCP):

Under a Presidential Directive, National Coal Policy is being formulated under a PSDP project approved by the DDWP on 20.03.2009 in consultation with the federating units. The foreign consultant selected for preparation of policy later on showed inability to work in Pakistan because of negative fluctuation of currency exchange rate and security situation. On the request of the Ministry through Canadian High Commission in Pakistan, Government of Canada has shown willingness to assist in formulation of the National Coal Policy. It is expected that the policy shall be finalized in two years time.

B) INTERNATIONAL INVESTMENT FACILITATED IN MINERAL SECTOR:

As per policy of the present government and approved National Mineral Policy, the role of public sector organizations in the mineral sector has been curtailed. Ministry of Petroleum & Natural Resources is facilitating private investment for the development of mineral sector. Following are the major projects initiated through facilitation by this Ministry:

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i) Development and exploitation of Dudder Lead-Zinc Project. With the efforts of the Ministry of Petroleum and Natural Resources, an agreement was signed between PMDC and MCC China for the development of Dudder Lead-Zinc project (Balochistan). Under this joint venture of PMDC (12.5%), Government of Balochistan (12.5%), and Metallurgical Group Construction Company (MCC) China (75%), the latter has made investment of US$ 110 million to produce 100,000 tons Zinc and 32,000 tons of Lead annually. Production from the project has been started on trial basis and during the fiscal year 2010-11, the project produced about 24,602 tons of concentrate of lead-zinc metal, which was exported earning foreign exchange equivalent to US$14.78 million. To facilitate the project activities, Government of Balochistan with assistance of Federal Government has constructed 100 km road to link the project with RCD Highway. Construction of civil works like site office and residential camp for employees, warehouses, workshops and field laboratories and water purification plant has been completed by the company. Over 500 Pakistanis have been provided jobs at the project. Mineral Wing is coordinating/facilitating the project activities. Commercial production is expected to commence in near future. ii) Facilitation in Development of Reko Dik Copper-Gold Project:

Reko Diq copper-gold deposit (Balochistan) has been explored by M/s Tethyan Copper Company Pakistan Ltd. (TCCP), a joint venture of world’s largest copper & gold producing companies M/s Antofagasta (Chile) & Barrick Gold (Canada) and Government of Balochistan with large resource potential estimates. The Company now plans to launch a mega development project involving an investment of US$ 5-6 billion with the capacity to produce 600,000 tons of copper concentrate annually by the year 2014; thus, bringing Pakistan for the first time among major copper producing countries on the world map. The feasibility study has been completed and is under review by the provincial government. Out of total 213 staff, TCCP has employed 200 locals from Balochistan. On commencement of mining activities, employment opportunities for 6,500 skilled and unskilled persons are expected to be generated. For development and mining operations in Reko Diq area, M/o Petroleum & Natural Resources, Government of Balochistan and TCCP started working on a comprehensive mineral agreement to be signed between them. Several Constitutional petitions were filed in the Supreme Court of Pakistan challenging grant of mineral concessions to TCCP. The Mineral Wing, MPNR has been pursuing the matter on behalf of Federal Government. The Honourable Supreme Court of Pakistan decided the case on 25.5.2011 directing the GoB to decide the pending application of TCCP for conversion of exploration licence into mining lease as per rules.

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iii) Development of Thar coal as alternate source of energy:

Thar coalfield spreads over an area of about 9,000 sq. kms with coal resource estimates of 175 billion tons and is located in the southeastern part of Sindh province. For exploration of Thar coal, this Ministry sponsored various studies through sinking of hundreds of boreholes and carried out many technical hydrological tests since 1992. Studies have been undertaken through the Geological Survey of Pakistan, J.T. Boyde USA, RWE of Germany and Shenhua Group of China. Ministry of Petroleum & Natural Resources shared development of infrastructure in the coal-field, including construction of roads, bridges and water supply schemes. Besides Thar Coal & Energy Board (TCEB) established by Government of Sindh, the Ministry of Petroleum & Natural Resources has been endeavoring to harness the huge coal resources of Thar for utilization as a source of energy for power generation, gasification and manufacturing of coal briquettes etc. through international investment.

iv) Commissioning of Integrated Coal Mining and establishment of coal fired power

plant in Sonda Jerrick coal-fields.

To increase share of coal in energy mix, Government of Sindh has signed an agreement with Chinese company M/s China National Chemical Engineering Group Corporation (CNCEC) to conduct feasibility study on a coal block in Sonda Jerrick coalfields in Sindh province for integrated mining project of 1 million ton and commissioning of 250 MW coal based power plant. The company has completed feasibility study and is planning for commissioning of power plant.

-.-.-.-.-.-.-.-.-.-

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2.3 Policy Wing

2.3.1 Directorate General of Oil

ACTIVITIES/ACHIEVEMENTS OF DIRECTORATE GENERAL OIL, MINISTRY

OF PETROLEUM & NATURAL RESOURCES DURING THE FINANCIAL

YEAR 2010-11.

� Criteria for Issuance of Petroleum Products Marketing License have been revised, whereby the prospective company shall have investment capability of Rs.500 million or more over a period of 3 years with a minimum upfront equity of Rs.100 million. Earlier the investment requirements were at Rs. 6 billion with upfront equity of Rs. 3 billion. In this context, two Oil Marketing Companies (Zoom Petroleum Limited and Express Oil (Pvt.) Limited) have been licensed by the Oil and Gas Regulatory Authority (OGRA).

� A policy for Fuel Oil Blending in the country has been introduced with the approval of the ECC and OGRA is implementing this being the regulator. Under this policy, OMCs can be allowed to import High Viscous Fuel Oil for blending it to meet the local requirement of Low Viscous Fuel Oil. This would result in saving the foreign exchange of the country.

� PSO is undertaking a pipeline project in joint venture with Karachi Port Trust (KPT) for connecting Kemari port with port Qasim for transportation of petroleum products. By virtue of this project, access handling capacity at KPT can be utilized.

� Byco Oil Pakistan Limited (Byco) is relocating an Oil Refinery Project of capacity of 120,000 Barrel per Day (5 million tons/annum). The investment cost of Byco refinery is about US$ 400 million. The refinery’s main processing units are Vacuum Column, Distillate and Naphtha Hydro treaters, Platforming Unit, Gas treating, Sulphur Plant and other ancillary units. Byco is also installing Single Buoy Mooring (SBM) facilities for transportation of Crude Oil from ships to the storages tanks. The said oil refinery is planned to commission by end of 2011.

� TransAsia Refinery Limited (TRL) is relocating a 100,000 barrels per day (BPD) (4.5 M.Tons/annum) Oil Refinery with the objective of supplying petroleum products to the local market, and reducing deficit imports. To be located at Port Qasim, the Refinery’s Production, based on a 50:50 blend of Arabian Light/Iranian Light Crude mix, and a Topping Unit. The said refinery is planned to commission by 2013.

� In order to make the country self sufficient in production of Petroleum Products locally and attract investment in the downstream refinery sector, the Government has approved setting up of new State-of-the-Art Deep Conversion Grass Root Oil Refinery of capacity of 250,000 barrels per day at Khalifa Point, near Hub, Baluchistan. The proposed refinery project will be set up by a joint venture company comprising Government of Abu Dhabi owned International Petroleum Investment Company (74%) and PARCO (26%).

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� After necessary notification of Ethanol Blending Motor gasoline specification (10% Ethanol & 90% Motor gasoline) (E-10), PSO has started commercial marketing (E-10) of Motor Gasoline at various retail outlets at Sind province from January, 2010.

� The Government has already released Rs. 10.8 billion against the outstanding shortfall / PDC claims of Oil Industry during the fiscal year 2010-11.

� The actual Petroleum Levy collection amounts to Rs. 68.219 billion for the current FY

2010-11. In order to cope with the increasing price trend and to provide relief / benefit to the consumer, the subsidy has been provided through adjustment in Petroleum Levy. The PL rates as on 30th June, 2011 are as under:

MS(Petrol) HOBC Kerosene HSD LDO 3.16 6.13 0.00 0.44 0.00

� The OMCs Margin and Dealer Commission on MS, HOBC, SKO, LDO were fixed in absolute terms with effect from 1st December, 2010 and the rates are as under:

MS(Petrol) HOBC Kerosene HSD LDO

OMCs >>> 1.50 1.72 1.58 1.35 1.61 Dealers >>> 1.87 2.15 - 1.50 - Total …….. 3.37 3.87 1.58 2.85 1.61

� Rs. 2,335 million on Mogas and Rs. 1,900 million on HSFO Natural Gas load management programme (GLMP) were released in terms of PDC claims to OMCs.

2.3.2. DIRECTORATE GENERAL OF GAS

Natural Gas is a clean, efficient, economical and environment friendly fuel. It contributes about 48% of the total primary energy mix in the country. Government of Pakistan is pursuing its policies of enhancing gas production to meet the increasing demand of energy in the country through aggressive exploration activities. Natural Gas consumption during 2010-11 remained 3,428 MMCFD.

1. SECTORAL GAS CONSUMPTION

The sector-wise gas consumption in million cubic feet per day (MMCFD) along-with percentage during 2010-11 is appended below;

Unit: MMCFD

Sectors 2010-11 Percentage

Power 949 27.7%

Fertilizer 609 17.8%

General Industries 809 23.6%

Cement 4 0.1%

Transport (CNG) 310 9.0%

Commercial 100 2.9%

Domestic 647 18.9%

Total 3,428 100%

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2. NEW CONNECTIONS

With the intention to benefit maximum households, gas utility companies have set their objective to enhance consumer base. The company-wise and category-wise new gas connections provided during Fiscal Year (FY) 2009-10, 2010-11 and its accumulative status as on 30.06.2011 is given below;

i. SNGPL

Sectors FY 2009-10 FY 2010-11 Present Status as on

30.06.2011

Industrial 422 220 6,606

Commercial 2,389 2,472 55,877

Domestic 252,748 254,957 3,867,359

Total 255,559 257,649 3,929,842

ii. SSGCL

Sectors FY 2009-10 FY 2010-11

Present Status as on 30.06.2011

Industrial 278 234 4,042

Commercial 1,968 1,965 25,000

Domestic 110,486 110,549 2,339,297

Total 112,732 112,748 2,368,339

3. COMPANY-WISE TRANSMISSION AND DISTRIBUTION PIPELINES NETWORK

(TARGETS AND ACHIEVEMENTS)

The gas utility companies are focused on extending their infrastructure by laying additional transmission & distribution pipelines. The company-wise details of gas network extended during Fiscal Year 2009-10, 2010-11 and its accumulative status as on 30.06.2011 is given below:

i. SNGPL

(Figures in Km)

Gas Pipeline Network FY 2009-10 FY 2010-11

Present Status as on 30.06.2011

Transmission Network 238 151.6 7,613.3

Distribution Mains 6,843 5,226 76,889

Services 1,361 1,146 16,830

Total 8,442 6,523.6 101,332.3

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ii. SSGCL

(Figures in Km)

Gas Pipeline Network FY 2009-10 FY 2010-11

Present Status as on 30.06.2011

Transmission Network - 17 3,337

Distribution Mains 2079.5 2076.6 31,251

Services 423.9 391.3 8002

Total 2,503.4 2484.9 42,590

4. NATURAL GAS ALLOCATION AND MANAGEMENT POLICY, 2006

During 2005-06 the Government announced natural gas allocation and management policy to set out priorities for use of natural gas in an optimal manner and also to manage demand during short supplies in an economically efficient manner. Different sectors are prioritized as under:

CATEGORY OF CONSUMERS PRIORITY ORDER

Domestic and Commercial Sectors First

I. Fertilizer Sector; and II. Industrial Sector (to the extent of process gas)

Second

Independent Power Plants as well as WAPDA and KESC’s Power Plants with firm gas supply commitments under GSAs

Third

I. General Industrial Sector II. CNG Sector

III. Captive Power (for export-oriented textile units) Fourth

I. WAPDA and KESC’s Power Plants (other than those included in Third Priority order)

II. Captive Power Sector (other than that for export-oriented textile units) Fifth

Cement Sector Sixth

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5. LNG POLICY 2006

Augmenting import of gas supply through LNG import is an important element of Government‘s energy security strategy. The Government announced first-ever LNG Policy during 2005-06 to encourage LNG import through active participation of private sector.

The said policy provides freedom to the investors to participate in any segment of LNG value chain. Accordingly, LNG import projects are being pursued under public as well as private sectors.

LNG Projects by Private Companies

Following private parties are pursuing LNG Projects at their own risk and without any government guarantees;

i. Pakistan GasPort Limited. ii. Engro Vopak Terminal Limited.

iii. Global Energy Infrastructure.

OGRA have issued conditional license for construction of LNG Terminals to above three companies and Port Qasim Authority have allocated sites for terminal. These projects are at different stages of development.

6. CNG FOR AUTOMOTIVE USE

Government of Pakistan initially encouraged use of Compressed Natural Gas (CNG) as an alternate fuel for automotives in order to control environmental degradation, reduce foreign exchange expenditure on import of liquid fuel and generate employment. Pursuant to government’s investor friendly initiatives, Pakistan has become top CNG user country in the world. However, keeping in view the mushroom growth of CNG stations in the country vis-à-vis depletion of natural gas reserves, Government has imposed a ban on establishment of new CNG stations in the country w.e.f. 07.02.2008 except for province of Balochistan. However, provisional license holders who had completed all the requisite formalities and had made investment were allowed to establish CNG Stations. The total CNG stations and vehicles converted to CNG during the Financial Years 2009-10 and 2010-11 are given as under;

Sr. # CNG Activity By the end of

2009-10

By the end of 2010-11

Percent Increase/Decrease

1.

Total operational CNG Stations 3,171 3,331 5.0%

2. Vehicles converted to CNG (Million) 2.2 2.3 4.5%

3. Total No. of provisional licenses issued 6,145 6,154 0.1%

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7. LPG IN AUTO SECTOR:

In order to bring LPG auto sector under the safety net and to bring competition among the alternate auto fuels, the Government has allowed use of LPG in motor vehicles. Oil & Gas Regulatory Authority (OGRA), has formulated requisite regulatory framework for the sector. Currently there are two Autogas Stations in the country while number of provisional licenses for construction of Autogas stations has been issued by OGRA. LPG Production & Distribution Policy 2006

In order to further increase LPG supplies, streamline its distribution at affordable prices, especially to LPG starved areas of the country and promote healthy competition for growth of LPG market as well as ensure minimum safety standards across the LPG supply chain.

The salient features of the policy are as under:

• To ensure safety throughout the LPG supply chain, LPG storage tanks, cylinders, bowzers, and distribution outlets of the licensees will meet the minimum safety standards as laid down in applicable Rules.

• Decanting of LPG from cylinder to cylinder is prohibited and OGRA shall cancel licenses of the defaulting companies.

• OGRA will prescribe codes and standards for conversion of vehicles to LPG and the establishment of LPG re-fueling stations for the auto sector by LPG marketing companies with an effective monitoring mechanism.

• OGRA will publish a list of authorized manufacturers for all LPG equipment including LPG refilling stations, conversion kits, fuel tanks, cylinders, storage tanks, and bowzers.

• To ensure that cartels are not formed for charging a high consumer price of LPG, OGRA will determine the reasonableness of price keeping in view the import parity price of LPG, producer price and audited accounts of LPG marketing companies for the last two years.

• All LPG marketing companies receiving LPG from sources in Punjab and NWFP will be obligated to supply at least 7% of their local LPG in Northern Areas, 7% in AJK and 6% in FATA. All LPG marketing companies receiving LPG from sources in Sindh and Balochistan will be obligated to supply at least 10% of their local LPG in Balochistan province.

• Any party can import LPG after paying applicable government dues. However, no party shall export LPG without the prior written approval of MPNR.

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A. REGION-WISE CONSUMPTION OF LPG (UNIT: M. TONS)

Region 2009-10 2010-11 Percent Increase/Decrease

AJK 24,923 21,996 -12%

Balochistan 18,704 16,047 -14%

Federal Area 8,016 6,395 -20%

FATA 15,758 16,073 2%

KPK 68,529 49,691 -27%

Northern Area 43,591 40,887 -6%

Punjab 278,874 256,094 -8%

Sindh 74,585 57,990 -22%

Total 532,980 465,173 -12.7%

B. LPG IMPORTS. (UNIT: M. TONS)

Year 2009-10 2010-11

Percent

Increase/Decrease

Qty (M. Ton) 67,721.41 60,144.46 -11%

C. LPG Air Mix

• The details of LPG Air Mix plants commissioned by SSGCL and number of consumers/households/population benefiting from them are as under:

Plant Name Total Project Cost

(Million)

No. of

connections

(Existing)

No. of House Holds

Population

to be

Benefited(Nos)

Gawadar 150 449 615 4,000

Noshki 552 97 4,308 28,000

Kot Ghulam Muhammad & Mir

Jee Landhi 297 447 3,901 25,355

*Surab (non operational) 380 … 2,450 15,925

Total 1379 993 11,274 73,280

• The LPG Plants are also proposed to be installed at Khuzdar, Loralai, Zhob, Chaman, Killa Saifullah and Muslim Bagh of Balochistan.

• SSGCL and SNGPL have also established LPG companies to cater for gas requirements of various consumers.

******

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2.3.3 DIRECTORATE GENERAL OF PETROLEUM CONCESSION

i) Licenses granted = 01 ii) Survey 2D = 6,527 Line Km iii) Survey 3D = 1,063 Sq.Km iv) Wells drilled = 50 v) Discoveries = 4 vi) Total Oil produced = 24.04 Million Barrels vii) Total Gas Produced = 1.47 Trillion Cubic Feet

Number of operating E&P companies 28 Number of Exploration Licences 134 Total area of the blocks 278,475.20 Sq. Kms Number of Development & Production Leases 130 Total area of Leases 11,884.10 Sq. Kms

Average daily production

Gas 4,032 MMCF/ per day Oil 65,866 Barrels/ per day LPG 1,100 Tons/ per day

During the last fiscal year, four (4) discoveries were made, out of these only two namely Hadier Deep-1 producing 1.15 MMCFD while Domial is producing at the rate of 4.36 MMCFD of gas and 403 BBL of oil per day. Both are on test production / EWT while other two discoveries are being appraised. Normally an oil discovery takes 2-3 years to develop whereas gas discoveries take longer time of 4-5 years depending upon the availability of infrastructure and processing requirements. Exploration & Production Sector Targets for the Next Three Years (Projection)

S.No. Year Exploration licenses

Exploratory Wells

App./Development Wells

Oil (BOPD)

Gas (MMCFD)

1. 2011-2012 25 31 45 69,000 4,200

2. 2012-2013 30 42 53 70,000 4,500

3. 2013-2014 30 50 50 75,000 5,000

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GEOLOGICAL SURVEY OF

PAKISTAN

(GSP)

http://www.gsp.gov.pk/

21

CHAPTER 3

3.1 INTRODUCTION

Geological Survey of Pakistan (GSP) is an attached department of the Ministry of Petroleum and Natural Resources with its headquarters located at Quetta and as per its charter the GSP is responsible for study of geology of the country in all pertinent details and to assess its geological resource potential. With a balanced, efficient and competitive structure, GSP is now fully capable to explore mineral resources and undertake geological, geophysical, geo-technical and geo-chemical investigations, and drilling. During the recent past GSP’s technical services were frequently availed by the local and foreign companies, institutions and private sector organizations. The GSP also undertakes development projects to cater to immediate needs in the fields of geological mapping and mineral exploration. It undertakes:

• Geological mapping and other geoscientific surveys,

• Basic and applied research in earth sciences,

• Scientific investigations for an accurate understanding of the country’s geological resources and their prudent management, and

• Environmental geology and hydrogeological studies.

3.2 INSTITUTIONAL STRUCTURE

The GSP was established in 1947 with the creation of Pakistan. The department is headed by the Director General. The technical and other activities of the department are planned and controlled by the Management Advisory Committee (MAC) with all Deputy Director General and equivalent officer as its member under the Chairmanship of the Director General. Region and category wise distribution of the manpower available in the department are given below:

REGION-WISE DISTRIBUTION OF GAZETTED AND NON-GAZETTED STAFF

OF THE GEOLOGICAL SURVEY OF PAKISTAN

S. No. Name of Office Gazetted Staff

Non-Gazetted

Staff Total

1. GSP’s Headquarter office, Quetta.

126 386 512

2. GSP’s Regional office, Lahore. 50 113 163

3. GSP’s Regional office, Karachi. 41 99 140

4. GSP’s Regional office, Islamabad.

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57

79

5. GSP’s Regional office, Peshawar. 18 56 74

6. GSP’s Regional office, AJK. 4 13 17

7. GSP’s Advance Geoscience Research Lab, Islamabad.

3 19 22

Total

264 743 1,007

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CATEGORY-WISE DISTRIBUTION OF GAZETTED AND NON-GAZETTED

STAFF OF THE GEOLOGICAL SURVEY OF PAKISTAN

S. No. Category Number

1. Geologists 146

2. Geophysicists 18

3. Chemists 21

4. Drilling Engineers etc 25

5. Photogrammetrists 7

6. Other technical 18

7. Administration & Accounts 29

8. Technical Staff 280

9. Ministerial Staff 155

10. BPS 1-2 staff 308

Total

1,007

3.3 BUDGET AND FINACNCE

The GSP gets its annual budgetary allocation in the federal budget every year and some allocation is also made for the department in the federal PSDP for undertaking its Development Projects. The budget figures for the last five years are given below:

GSP’S BUDGET FOR LAST FIVE YEARS

Year 2007-2008

2008-2009 2009-2010 2010-2011 2011-2012

Current

Budget

(Rs. in million)

198.026 214.332 247.432 268.835 282.250

Development

Budget

(Rs. in million)

161.162 112.584 370.886 557.458 86.221

TOTAL

359.188

326.916

618.318

826.293

368.471

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3.4 ACTIVITIES, ACCOMPLISHMENTS AND PROGRESS 2010-2011 Major accomplishments of the department during the fiscal year 2010-2011 are described below: 3.4.1 REGIONAL GEOLOGICAL MAPPING Regional geological mapping of total area of 8,028 sq. km on 1:50,000 scale was completed in different parts of the country. The geological mapping included the coverage of 3,200 sq. km. area in Sindh (including 640 sq. km. area under AGM Development project); 3,100 sq. km. area in Balochistan (including 2,560 sq. km. under AGM Development project); 640 sq. km. in Punjab and 1,088 sq. km. area in Khyber Pakhtunkhwa (KPK).

3.4.2 PALEONTOLOGIC AND STRATIGRAPHIC STUDIES

Completed the following projects under the Paleontology and Stratigraphy Branch, GSP headquarter, Quetta.

� The Sedimentological studies of the K/T boundary especially in Lower Indus Basin and Balochistan especially Jamboro Group and Jhakar Group.

3.4.3 REGIONAL GEOPHYSICAL MAPPING AND SURVEY

During this period investigations were carried out for the following Geophysical Mapping and Exploration projects:

� Completed Ground Penetration Radar Survey for Islamabad International Airport on the request of the Planning Division, Islamabad.

� Completed geophysical survey for groundwater at CENAR, Quetta. � Geophysical surveys for groundwater, Engineering Geology and mineral

exploration under request for Public/Private sectors/agencies.

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3.4.4 ECONOMIC GEOLOGY

During this period investigations were carried out for the following Economic Geology projects:

� Spot investigation for white and grayish marble exploration has been done at Kasa in surroundings of Loralai (toposheet 39B/15).

� Geo-chemical investigations for Raswa iron ore in Raskoh, district Chagai, Balochistan.

� Carried out field investigations for GSP-PPL collaborative project in Kharan Basin, Raskoh area.

� Exploration for Phosphate mineralization in Abbottabad Formation in Muzaffarabad and adjoining areas.

� Mineral investigation and geochemical sampling in Chipursan area, Karakorum Range, Gilgit-Baltistan.

� Mineral and genesis of Langrial iron ore prospects, Khyber Pakhtoon Khwa (KPK) province.

� Geological sampling for gold and precious metals in Ranthak area, toposheet No. 52 A/12) near Skardu, Ladakh Range, Northern Pakistan.

3.4.5 RESEARCH PROJECTS: During this period field and laboratory studies were completed on the following Research projects: � Geological investigation and geo-environmental studies of Head Marala &

Kulluwal areas, toposheet Nos. 43 L/6 & 10, district Sialkot, Punjab. � Mineralogical studies of Langrial Iron ore Prospects of Khyber Pakhtoon Khwa

(KPK) province. � Geological investigation for gold and precious metals in Ranthak area near Skardu,

Northern Pakistan. � Mineralogical and geochemical exploration in Bamborait area Khyber Pakhtoon

Khwa province. � Geologial appraisal and systematic study of hot springs of Pakistan. � Exploration and evaluation of Subhan Gali area, Abbotabad, (KPK).

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3.4.6 DRILLING OPERATIONS

The Geological Survey of Pakistan undertakes drilling under various programmes for energy (coal) and mineral exploration. During this period GSP undertook drilling operations for Chamalang Coal Project by completing 1 bore hole for the depth of 138 meters and 11 bore holes for Underground Coal Gasification (UCG) project at Thar. Under UCG project 10 bore holes were completed for 191 meters depth for gasification and 1 bore hole for ground water for a depth of 83 meters. In addition 158 meters coring was done and bore hole washing was also completed.

3.4.7 CHEMICAL LABORATORY WORK Analyzed 1333 samples for 11939 estimations in GSP laboratories at Quetta, Lahore and Karachi and GSP Geoscience lab, Islamabad. Prepared 824 powdered samples and 63 thin sections. Analysed 278 samples by XRD/ DTA. Petrographic studies of 26 samples completed at the GSP Advance Geoscience Research Laboratories, Islamabad. Remote Sensing Section processed 468 satellite imageries and 84 VNIR imageries, rectified and prepared mosaic of Zone 43.

3.4.8 SEMINARS/SYMPOSIA/LECTURES/ WORKSHOPS

i. International Workshop on Makran Tsunami Hazards, 19-23 July, 2010,

Karachi As a part of its Human Resource Development program and to increase awareness

level of masses, the Geological Survey of Pakistan organized an International Workshop on Assessment & Awareness of Makran Tsunami Hazards during 19-23 July, 2010, at Karachi. The 5 days workshop was organized in collaboration with UNESCO’s Inter governmental Oceanographic Commission (IOC). Leading subject specialists from Australia, USA, Yemen and Pakistan provided a unique opportunity for exchange of views for skills development and increasing levels of awareness for natural hazards preparedness in the country.

The inaugural session was held at Carlton Hotel, Clifton and was chaired by

Lt. General Muhammed Aslam Haroon, Deputy Chairman, Earthquake Reconstruction & Rehabilitation Authority (ERRA). Dr. Imran Khan, Director General, GSP in his welcome address highlighted the potential dangers of tsunami generating region of Makran coast and

26

along the triple junction of three major plates. He stressed the need to make people and masses aware about the natural hazards and how to minimize their negative impacts. Ms. Velley Asvaliantina from IOC, Australia was of the view that in Pakistan, natural and anthropogenic disasters have been frequently occuring. However, despite huge losses, the focus for comprehensive disaster risk management has been lacking and mainly been laid upon the conventional response mechanisms. There is a dire need for paradigm shift in our approach to pre-empt the disasters. The first technical session “Tsunami Scenarios in Makran area..Past and Future” was chaired by Mr. A.H. Kazmi, former DG, GSP. Mr. Abbas Ali Shah former DDG, GSP acted as the secretary and Mr. Muhammed Anwar, Chief Chemist GSP was the rapporteur of this session. The second session was chaired by Mr. Waheeduddin Ahmed, and Mr. Shahid Noor Khan former DGs GSP as Secretary, while Mr. Muhammed Ali Tagar, DDG, GSP was the rapporteur of this session. Prof. Dr. Qasim Jan, former Vice Chancellor of Quaid-e-Azam University, Peshawar University and Sarhad University, gave a detailed presentation on seismic hazards assessment of Karachi. Dr. Annette Lisy representing BGR, Germany gave an overview on Geo-hazard Risk Mapping program. M/s Naseer Mughal and Riaz H. Rajpar from GSP presented their research work on tsunami potential of Makran subduction zone and its possible threats to the coastal areas of Pakistan. More than sixty participants from the University of Karachi, Federal Urdu University, NED University, Pakistan Met Deptt, NIO, SUPARCO and GSP attended this workshop.

ii. Director General Geological Survey Of Pakistan Delivers Keynote Address At

Annual Technical Conference (ATC) 2010 At Islamabad Dr. Imran Khan, Director General GSP was invited to deliver the Key Note

Address in the inaugural session of the PAPG Annual Technical Conference (ATC) 2010 on November 10, 2010 at Islamabad. The conference was attended by a large number of professionals related with the Oil & Gas Industry in the country. Dr. Imran in his address entitled “Impact of Climate Change and Disaster Management Strategies: Need for a Paradigm shift” elaborated the need of policy making and its effective implementation at all levels for reducing the great loss of life and property in future. He emphasized that the nation now faces a great challenge of Rehabilitation, Reconstruction and Revival of flood affected people. In addition to these activities, we also need to conduct a comprehensive Root Cause Analysis of these unprecedented devastations and must find ways to avoid heavy losses in case of reoccurrence of the same in future.

ATC was jointly organized by Pakistan Association of Petroleum Geoscientists (PAPG) and Society of Petroleum Engineers (SPE). This has been an annual event for more than a decade. It is a common platform for oil industry professionals to meet and discuss the issues of mutual interest. It provides opportunities to E&P companies, service providers, government agencies and other stake holders for professional discussions that help in resolving relevant technical issues.

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iii. International Disaster Management Conference - IDMC 2010, Bara Gali

Mr. Asif Nazeer Rana, Deputy Director, Geoscience Advance Research Labs. GSP Islamabad participated in the three days Int’l Conference on “Good Governance in Disaster Risk Reduction and Climate Change Adaptation” organized by the Centre for Disaster Preparedness & Management (CDPM), University of Peshawar. The Conference was held from October 19-21, 2010, at the Bara Gali Campus. Prof. Dr. Azmat Hayat Khan, Vice Chancellor, University of Peshawar was the chairman of inaugural ceremony. Mr. Rana presented his research paper on the Effusion of Lava in Ziarat, Balochistan. He also chaired a technical session on Earthquake Engineering and Disaster Mitigation.

Various technical sessions were held on the themes of ecological changes, climate change adaptation, emerging significance of flood hazard reduction, social aspects and policy issues of disaster risk reduction. The concluding session was chaired by Mr. Saleem Altaf, Chairman Earthquake Reconstruction & Rehabilitation Authority (ERRA). He lauded the role of CDPM in successfully organizing the IDMC 2010 to sensitize and create awareness among the general public, civil society and key stakeholders about disaster preparedness and management.

iv. SAARC Workshop at Bhutan

SAARC Workshop on Landslides Risk Management was held during May 10-14,

2010 at Thimphu, Bhutan. His Excellency Jigme Thinley, Prime Minister of Bhutan inaugurated the event. Mr. Naseer Mughal, Deputy Director, GSP, Islamabad, represented Pakistan in the workshop and presented a paper titled “The Current Status of Landslides Risk Management in Pakistan”.

v. Coal of Sindh-Endeavors for Powering Pakistan

Mr. Akhtar Ahmad Kakepoto, Director, GSP, Quetta attend the National Conference on “Coal of Sindh-Endeavors for Powering Pakistan” on 19th February, 2011. Conference was arranged by Mr. Sarfraz H. Solangi, Director, Centre for Pure and Applied Geology with the Collaboration of Weatherford Oil Tool M.E. Ltd and Pakistan Petroleum Ltd (PPL) at Sindh University, Jamshoro, Sindh.

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3.4.9 GENERAL

i. Sino - Pakistan Geological Surveys MoU During the visit of the Honourable President of Islamic Republic of Pakistan, Mr. Asif Ali Zardari to People’s Republic of China during July, 2010, a landmark Memorandum of Understanding (MoU) between the Geological Survey of Pakistan (GSP) and China Geological Survey (CGS) was signed at the Great Hall, Beijing on 7th July, 2010 by Dr. Imran Khan, Director General, GSP and Dr. Wing Wang, Director General, CGS. President Hu Jintao and President Asif Ali Zardari alongwith their respective cabinet members witnessed the signing of the MoU.

The MoU provides unique opportunities for joint research in earth sciences,

comprehensive geological surveys and cooperation in minerals related exploration. In a meeting held at the CGS Headquarters, Beijing on 8th July, 2010, the D.G., GSP discussed the full scope of bilateral cooperation for corporate research and use of minerals, training programs for Pakistani counterpart, metallogenic and metallurgical research along Sino-Pak border area. A delegation from GSP is expected to visit China to prepare and sign implementation agreement through bilateral consultations with Chinese counterparts. ii. Reception at Dhaka in Honour of Director General, Geological Survey of

Pakistan by Geological Survey of Bangladesh A reception was arranged in the honour of the Director General, Geological

Survey of Pakistan (GSP) by the Geological Survey of Bangladesh (GSB) in the same building in Dhaka which used to be the Regional Office of the Geological Survey of Pakistan until 16th December 1971. The GSB had also invited several former officers of the GSP to the Reception along with their present officers. Some stalwarts of the science of Geology like Dr. Mujeebur Rehman Khan, who is former Director General of the GSB and Managing Director of Petrobangla and other speakers expressed their heart touching good wishes for the Geological Survey of Pakistan and the people of Pakistan. Their speeches reflected a sense of ownership for the institution which groomed them to their present positions. Dr. Imran Khan also expressed his best wishes for the Geological Survey of Bangladesh and presented a set of recent publications of the GSP that was reciprocated by the presentation of the Geological Map of Bangladesh by Mrs. Moonira Akhter Chowdhury, Director General, Geological Survey of Bangladesh.

Dr. S. M. K. Abdullah former DG, GSB, could not attend the Reception due to

illness, so Dr. Imran Khan went to the home of Dr. S. M. K. Abdullah to pay his regards and good wishes to a former employee of the GSP. Mrs. Moonira Chowdhury, DG, GSB, Dr. M. R. Khan, former DG, GSB accompanied Dr. Imran Khan.

29

iii. Second Regional Meeting of Early Warning Mechanism for Landslides in

Asian Region (RECLAIM Phase – III) at Dhaka

Second Regional Meeting for Early Warning Mechanisms for Landslides in Asian

Region (RECLAIM Phase III) was organized during 1-3 December, 2010 at Dhaka,

Bangladesh, in partnership with the Geological Survey of Bangladesh (GSB), to discuss

the outcome of activities during 2009-2010. The Asian Disaster Preparedness Center

(ADPC) in collaboration with Norwegian Geo-technical Institute (NGI) has developed the

Asian Program for Regional Capacity Enhancement for Landslide Impact Mitigation

(RECLAIM) with the idea of promoting a dialogue between decision makers and

professionals about the theoretical and practical aspects related to landslide hazard

mitigation. RECLAIM is being implemented with the funding support from Royal

Norwegian Ministry of Foreign Affairs and with technical assistance from Norwegian

Geo-technical Institution (NGI). Phase III of RECLAIM focuses on the use of early

warning systems for landslide prone areas, which have advanced fairly rapidly over the

last years. Eleven Countries participated in project activities namely Bangladesh, Bhutan,

China, India, Indonesia, Nepal, Pakistan, Philippines, Sri Lanka, Thailand, Vietnam and

Norway.

Dr. Imran Khan, Director General, GSP, delivered a Key Note Address at the meeting titled “Impacts of Climate Change in South East Asia and Disaster Mitigation Strategies: Need for a Paradigm Shift”. The presentation touched the participants of the meeting because of the miseries of the common people due to frequently occurring mega-disasters in South East Asia. After a thorough debate, it was decided that the next meeting of the Regional and other countries will be held at the Geological Survey of Pakistan’s Geoscience Advance Research Laboratory, Islamabad during November, 2011. All the expenses in this regard will be borne by the ADPC and Government of Norway. It is pertinent to mention here that the GSP has vast experience of interacting with global institutions and organizing such meetings, conferences and seminars. It is expected that major institutions from 15 countries will participate in this event.

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iv. Thar - Underground Coal Gasification Project

The GSP had discovered over 175 billion tons of lignite coal in Thar desert in 1992. The development of Thar coal reserves has been included in the priority list of projects which are likely to be launched during the current financial year. Mr. Asif Ali Zardari, President, Islamic Republic of Pakistan has underlined the need for expediting Thar Coal Gasification project by removing the bottlenecks and holding regular review of the progress. While talking to Chairman Board of Governors of Thar Coal Gasification the President assured that difficulties in the way of utilization of Thar Coal would be removed to accomplish the task within stipulated time. In this connection after a series of meetings between Dr. Samar Mubarakmand, Member, Science & Technology Planning Commission and Dr. Imran Khan, Director General , Geological Survey of Pakistan to carry out drilling project of “Underground Coal Gasification” (UCG) at Thar Sindh. The agreement was signed on June 23, 2010 with approval of the Ministry of Petroleum and Natural Resources. As per agreement, GSP has deployed two of its rigs along with drilling engineers and trained staff for the Project. Dr. Imran Khan, Director General also visited the Thar Coal field in Decemeber 2010 and further motivated the GSP crew for this great national cause.

Under UCG project, till now, 10 bore holes were completed for 191 meters depth

for gasification and 1 bore hole for ground water for a depth of 83 meters. In addition 158 meters coring was done and bore hole washing was also completed. v. Visit of Syed Imtiaz Hussain Kazi, Secretary Ministry of Petroleum &

Natural Resources to GSP Headquarter’s, Quetta

Syed Imtiaz Hussain Kazi, Federal Secretary, Ministry of Petroleum & Natural

Resources visited the Geological Survey of Pakistan’s Headquarter’s Office, Quetta on October 30, 2010. Mr. Irshad Khokhar, Director General (Minerals), Brig (Retd.) Khalid Khokhar, Managing Director, Pakistan Mineral Development Corporation and Mr. Mohammad Raziq Sinjrani, Managing Director, Saindak Metals Limited accompanied the Honourable Secretary. The Director General briefed the honourable Secretary about the administrative structure of the GSP, its activities, achievements and services rendered to other organizations/universities vis-a-vis industries. In his presentation to the distinguished guests, Dr. Imran Khan, highlighted the role of GSP in mineral exploration and in Disaster management program.

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The Director General apprised the honourable Secretary about major issues of GSP

and gave his humble recommendations in formulation of policy. The honourable Secretary

decided the following for implementation:

• Training of highly skilled technical staff - Ph.D.’s to head each directorate.

• Incentive package for qualified officers.

• Revision of recruitment rules to get fresh blood.

• Proposals for promotion.

• Technical staff repatriation to the original place of posting.

• Formulation of coordination committee called “National Committee of Minerals

Development”, which will coordinate between the Ministry and provinces. vi. GSP-BGR Collaborative Project on “Geohazards Assessment in Northern

Areas of Pakistan”

After the devastating 8th October, 2005 earthquake in Pakistan that led to

thousands of fatalities and huge loss to infrastructure, landslides have been recorded as the major secondary geohazard in the earthquake affected areas. Understanding geohazard assessment as need of time, a technical cooperation project concerning risk mapping and assessment of geohazards was signed on March 08, 2010 between the Federal Institute for Geosciences and Natural Resources (BGR), Germany, and the Geological Survey of Pakistan (GSP), where Mansehra District has been selected as pilot area. The overall objective of the project intends to support Pakistan’s government in its efforts to minimize the risk and the effects of geohazards, especially landslides. Geographic Information System will be used to generate adaptable digital maps which will be utilized in spatial planning. Trainings and Project Activities:

Under the GSP-BGR project, the following trainings have been organized by BGR, to understand the requirements for standardized project implementation. In the preliminary phase of the project Mr. Adnan Alam Awan and Muhammad Awais Khan, Assistant Directors participated in training course on GIS based Landslide inventory mapping and Susceptibility analysis (A case study of Balakot Quadrangle) arranged by BGR from 14th October, 2008 to 15th February, 2009 in Hanover, Germany.

32

Dr. Imran Khan, DG GSP and Mr. Adnan Alam Awan participated in a series of meetings from June 05-10, 2010 in Cologne, Hannover and Potsdam in Germany organized by BGR. President of BGR Prof. Dr. Hans-Joachim Kümpel and Director General Dr. Imran Khan agreed on project milestones and possibilities of future cooperation. President of BGR acknowledged and appreciated the efforts and cooperation of GSP for project implementation. After successful completion of the first phase of the project “Geohazard Assessment in Northern Pakistan”, Mr. Adnan Alam Awan and Mr. Simon Sadiq, Assistant Director, submitted project methodology based on GIS, Remote sensing and detailed field verification during 2010 to the experts of Georisk section of BGR headed by Dr. Dirk Balzera at BGR office, Hannover from October 30 to November 12, 2010.

Mr. Adnan Alam Awan and Sardar Saeed Akhtar participated in the 6th Nepal Geological Congress at Kathmandu, Nepal from 15-17 November, 2010. Mr. Adnan Alam Awan presented the paper on “Landslide Hazard Assesment in Mansehra District” in connection with the GSP-BGR project. The main theme of the paper was to present and discuss the project methodology with the landslide experts present in the congress from different parts of the world. The project methodology was appreciated and participants took keen interest in the GSP-BGR project.

vii. GSP’s Team Investigates the Appearance of an Offshore Island Near Hingol,

Makran, Balochistan.

A soft muddy island appeared a few kilometers offshore in Hingol area on the Makran coast, Balochistan on 16th November, 2010. The DG, GSP dispatched a team to investigate the sudden appearance of this white mud dome, three km away offshore near Kund Malir beach. The island is 90 metres high with a span of approximately three kilometres (km). The geological field investigations for the emergence of Arabian Sea Sapt Island (ARSSI) revealed that the island is located 17 km from the Wad Bandar and 3.2 km from the Chadman coast. The island is spread over an area of 0.8 sq.km and its height is 35 metres above sea level. There are five vents on the island which are still active and erupting mud with pressure.Before the upsurge of sludge, local fishermen reported high tides near the coast and several boats were trapped due to the emergence of this mud volcano. Another island of similar nature also reportedly appeared twelve years ago in this area which disappeared into the sea after four months. It is inferred that this mud dome which is given the name of Khizr will also disappear with passage of time when methane and other gases are released from this structure. The pictures taken by GSP earth scientists

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during their field investigations shows eruption of white hot muddy sludge on top of the island. The ejected material is a slurry of fine solids, hydrate bearing sediments suspended in acidic water and hydrocarbon fluids. This mud dome seems to be formed by geo-excreted liquids and methane gas when hot water mixes with mud and surface deposits. Mud volcanoes are associated with subduction zones and the Makran coastal area is in close vicinity of triple junction where three major tectonic plates – namely Eurasian, Arabian and Indian plates meet. Mud volcanoes are not true magmatic volcanoes. They are like steam vents erupting pressurized gases and the strength of their eruption is quite diverse. It may be a result of a piercement structure created by pressurized mud diaper which breaches the earth’s surface or ocean bottom. Mud volcanoes along tectonic subduction zone may be indicative of petroleum products. These mud domes tend to start out as small bulges in the earth which develop into cones. The bulge is created by a build up of pressure underneath relatively plastic rock. Areas of increased tectonic activity are frequent sites for mud volcanoes. More than 80 active mud volcanoes have been identified on the Makran coast; there are about 10 locations in Hingol and Hinglaj area having clusters of mud volcaones. One of the highest and biggest mud volcano in the world with namely Chandargup is located in close proximity. It is 125 metres high and more than 450 metres wide. Such type of mud volcanoes are associated with active subduction zones and tectonic forces and large sedimentary deposits have created these geological formations.

The Mud volcanoes sometimes temporarily emerge in response of earthquakes but

mechanism by which earthquakes trigger changes in submarine mud extrusions is not completely understood. An earthquake may have resulted in mud flow and release of methane and hydrogen sulfide gases which can cause the volcano to flare. On 28 November, 1945 during M8 Great Makran Earthquake which also generated tsunami, a light was reportedly seen over the Chanay mountain in the direction of Hinglaj and fell on the sea, burning for about three days in two parts. Interestingly enough, an earthquake of 5.1 magnitude was recorded in the area on the 16th November, 2010.

viii. Visits of National Institute of Management (NIM) Course Participants to GSP

Headquarter, Quetta

Course participants of 10th Mid Career Management Course (MCMC) from

National Institute of Management, Peshawar visited the GSP headquarter, Quetta on 2nd December, 2010, as a part of their field/study tours to various government functionaries. The group comprised 14 participants who were senior BPS-18 officers from various departments, with 2 faculty members.

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The groups were given briefing on working of the GSP highlighting its achievements and its vital role in the development of mineral / energy sector in the country. Briefing was given by Mr. Mehtabur Rahman, Superintending Geophysicist. The participants also visited various galleries of the museum of the department, which was conducted by M/S Nazar-ul-Islam and Joozer Marzban, Deputy Directors, GSP, Quetta.

Course participants of 10th Mid Career Management Course (MCMC) from

National Institute of Management, Quetta visited the GSP headquarter, Quetta on 21st December, 2010, as a part of their field/study tours to various government functionaries. The group comprised 23 participants who were senior BPS-18 from various departments, with 5 faculty members. The groups were given briefing on working of the GSP highlighting its achievements and its vital role in the disaster management and its awareness in the country. Briefing was given by Dr. Imran Khan, Director General, GSP. The participants showed keen interest in various exhibits displayed in the museum and actively participated in discussions for understanding the functioning of the department and its efforts in exploring the natural resources of the country. ix. UNESCO delegation visited Geolabs, Islamabad

A high level delegation from United Nations Educational, Scientific and Cultural

Organization (UNESCO) from Paris visited the Geosciences Advanced Research Laboratories, GSP Islamabad on November 12, 2010. The delegation was headed by Dr. Gretchen Kalonji, World Director UNESCO. Dr. Alberto Tejada and Dr. Shahbaz Khan from Water & Sustainable Development section, Division of Water Sciences, Natural Sciences Sector, UNESCO and Mr. Arshad Mazari, Joint Secretary (Development), Ministry of Petroleum & Natural Resources accompanied the delegation. Dr. Imran Khan, Director General, GSP gave a detailed briefing on the state of the art facilities available in the Geolabs. He apprised the delegates about the collaborative research projects with national and international agencies like SAARC, OIC, BGR, NGI. IOC and ECO. The delegates discussed matters of mutual interest such as mitigation of natural hazards like landslides, earthquakes, glacial lake bursts floods and hydrogeology projects for groundwater quality checks. The visitors appreciated the services rendered by the GSP and lauded the achievements of the department especially, its role in the exploration of minerals, geological mapping of the country, groundwater investigations, drilling and hazard mitigation for natural disasters. They hoped that the UNESCO will benefit from the human resource and facilities provided in the GSP in collaborative projects.

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x. Student Groups Visit Geoscience Lab, Islamabad

Students of Environmental Sciences Department, Fatima Jinnah Women University, Rawalpindi and Department of Earth Sciences, Sargodha University visited the Geoscience Advanced Research Laboratories, GSP Islamabad on December 9 and 14, 2010. The delegates were given a detailed briefing on the research activities of the department. Later the delegates were taken around various sections of the research labs. They were shown state-of-the-art facilities at Geoscience Advanced Research laboratories. The visitors appreciated the services rendered by the GSP and lauded the achievements of the GSP especially, its role in the exploration of minerals, geological mapping of the country, groundwater investigations and hazard mitigation for natural disasters. xi. Chinese delegation visists GSP’s Geolabs Islamabad

Mr. Kamal Majidullah, Advisor to Prime Minister on Water Resources accompanied the delegates. Dr. Rehanul Haq, Geoscience Lab., GSP gave a detailed briefing to the distinguished delegates about the climate change adaptation, impact of glacial melts, threats of glacial lake outburst floods in the country and disaster risk reduction measures for flood hazards. 3.4.10. HUMAN RESOURCE DEVELOPMENT

i. Comprehensive Training Module Completed for Newly Appointed Officers in

Geological Survey of Pakistan

The Geological Survey of Pakistan has inducted 21 new technical officers

including 18 geologists (Assistant Directors), 2 Chemists, and 1 Drilling Engineer in BPS-17, through Federal Public Service Commission. All the officers joined the department during the month of March-April, 2010. Keeping in view the importance of capacity building for upgrading the professional standards, the Geological Survey of Pakistan conducted a comprehensive training module for the newly appointed officers at the Geological Survey of Pakistan, Quetta. The module spanned for about six months and covered the most basic concepts of the profession to prepare the new officers for undertaking challenging professional tasks in the field as well as compilation of technical reports and maps.

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Dr. Imran Khan, Director General, and eminent technical officers of the department delivered technical lectures covering various aspects of geology, geophysics, geochemistry, regional geological mapping, mineral exploration and geological hazard mitigation. The presentations also included the introduction to various functional units of the office to give the newly inducted officers an orientation to the working of the functional units to acquaint them with various procedures practiced in the department.

Dr. Said Rahim, Director, GSP AJK Office, Islamabad, Dr. Rehanul Haq Siddiqui

and Dr. Tehseen Ullah Khan, Deputy Directors, GSP Geoscience Lab., Islamabad, Mr. Hasan Shaheed, Director and Mr. Ghulam Qadir, Assistant Director, GSP, Quetta conducted extensive courses on various aspects of ophiolites, petrography & ore microscopy, regional geological mapping and GIS respectively. As part of training in regional geological mapping, Mr. Hasan Shaheed, Director, GSP, Quetta imparted practical exposure to interpretation and annotation of aerial photographs and satellite imageries of the Axial Belt from Lasbela to Zhob for geological mapping and mineral exploration. He also supervised practical sessions for grooming the new geologists in technical report writing. The participants greatly benefited from this comprehensive training module which groomed and prepared the newly inducted officers for taking up their assignments in the department in a professional manner. The entire training programme was assisted and managed by Joozer Marzban, Deputy Director, P&I. At the end of the programme newly appointed officers also gave technical presentation on various topics of their liking or field of their specializations. All the technical officers of the GSP headquarter attended these presentations. ii. First International Applied Geological Congress (IAGC 2010) at Mashhad,

Iran Ms. Yasmin Rizvi, Deputy Director, Geological Survey of Pakistan, Karachi

attended the First International Applied Geological Congress (IAGC) held at Mashhad, Iran from 26-28 April, 2010 in the department of Geology, Faculty of Sciences, Islamic Azad University- Mashhad Branch. Ms. Yasmin Rizvi presented her paper on “Preliminary Petrological Studies of Basement Rocks, Thar Coal Basin, Tharparker District, Sindh, Pakistan”. iii. Management Course at PIDE, Islamabad

S. Afzal Ahmed, Director (P&I), GSP, Quetta participated in Management course

at Pakistan Institute of Development Economics (PIDE), Quaid-e-Azam University Islamabad, from 6-11 December, 2010. Training course was on “Result Based Management” with emphasis that the project to be set on well defined resources and to address problems & needs, which make the core of the project design and the deciding factor.

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iv. Natural Resources Workshop - October 19-21, Islamabad - SAARC-OGDCL

Joint Workshop on Geophysical Techniques for The Exploration of Natural

Resources

The training workshop on “Geophysical Techniques for the Exploration of Natural Resources” was held in OGDCL Training institute Islamabad from 19-21 October 2010. The training workshop was organized by SAARC Energy Center Islamabad. Mr. Muhammad Saeed, and Mr. S. Ali Abbas, Geophysicists from GSP Quetta participated in the workshop. The training workshop covered all the geophysical methods used for exploration of the natural resources. v. Training in Petrography under Benazir Bhutto Youth Development

Programme A 4-month training programme in petrography was organized at the GSP,

Southern Zone, Karachi from January-April, 2010. Nomination of 11 participants was made by the Government of Sindh, Department of Antiquities, under Benazir Bhutto Youth Development Programme (BBSYDP). Out of these seven nominees turned up and attended the training including M/S Majeed, Raja Gohar, Lal Muhmmad, Ahmad Kamal, Muhmmad Furqan, Muhmmad Aslam and Syed Muhmmad. Ms Tabinda Akhter, Deputy Director, GSP, Karachi was the coordinator who conducted the training course, including:

� Introduction to arts, functions and use of binocular, polarizing and ore microscopes. � Megascopic identification of samples of rocks and minerals on the basis of

physical properties like colour, streak, hardness and acid testing etc. � Crystalography and microscopic properties / characteristics including colour,

paleochroism, form, cleavage, relief, birefringence, extinction, twining and interference figures etc. used for identification of different mineral groups.

� Observing these properties and textural relationship under the polarizing microscope. � Preparation of thin sections including all steps involved from cutting a chip out of

rock to grinding and polishing and samples preparation for ore microscopic studies.

� Briefing on igneous, sedimentary and metamorphic rocks and their identification.

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The group was given reference books and literature for consulting and improving their knowledge and expertise. They were also given a number of samples and thin and polished sections for practical studies. An the end of course various tests were served assessing their knowledge and expertise gained through the training course. Each participant also gave a presentation before all the technical officers of the GSP, Southern Zone, Karachi to express the level of technical confidence they gained through the training.

vi. National Workshop on Application of Isotope Techniques in Water

Resources Research and Management at PINSTECH

Mr. Khadim Hussain Rajper, Chemist, GSP Geoscience Lab., Islamabad attended National Workshop on Application of Isotope Techniques in Water Resources Research and Management held at Islamabad from 4-7 October, 2010. The workshop was organized by Pakistan Institute of Nuclear Science & Technology (PINSTECH), Directorate of Coordination (Human Resource Development) at its Isotope Application Division (IAD). The workshop was aimed at providing general background information about the nuclear techniques and illustrating case studies to demonstrate how these techniques can be used as powerful tools for solving hydrological issues. The main focus of the work was promotion of cooperation among the scientific community for the best utilization of nuclear techniques for water resources research and management in Pakistan. vii. International Conference on Geotechnical Engineering

An International Conference entitled “International Conference on Geotechnical Engineering” was organized by Pakistan Geotechnical Engineering Society & University of Engineering & Technology, from November 5-6, 2010 at Lahore. Mr. Asmatullah, Geophysicist, GSP, Lahore attended the conference and presented following papers in co-authorship with Muhammad Saeed, Geophysicist, GSP, Quetta, Mr. Khurshaid Alam, Geophysicist, GSP, Lahore and Muhammad Atif, Assistant Geophysicist, GSP, Lahore:

� Islam Barage Reinforcement Structure Scanning by Ground Penetration Radar (GPR).

� Resistivity Signature of Freshwater at Manageable Depth near Jhang, Pakistan. � How the Overstressed Aquifer Under Lahore Urban Area Looks Like Through the

Eyes of Geophysicist.

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It is worth mentioning that these three papers accepted by the conference organizers, were amongst the 51 papers received from all over the world. The conference provided a platform for exchange of technical ideas between clients, consultants, contractors, manufacturers and management. The conference provided a great opportunity to the engineers, geologists, seismologists, and other professionals engaged in the field of geotechnical engineering, foundation design, construction and manufacturing, to share their expertise in the realm of Geotechnical Engineering, by bringing together the knowledge available in these fields, for future guidance. 3.4.11. LATEST PUBLICATIONS OF GSP

i. Geological Map of Lutar Quadrangle (43 E/7), Kohistan District,

Pakistan The Geological Survey of Pakistan (GSP) has issued the geological map of Lutar Quadrangle (43 E7), in March 2010. The purpose was to study the geology of the investigated area in all pertinent details and to assess its resource potential. The investigated area consists of a number of narrow and deep valleys which are connected with foot tracks and can only be accessed during May to October. The technical team comprised officers from GSP’s Geoscience Advance Research Laboratories, Islamabad, and GSP’s H-8 Office, Islamabad. Geology was studied by Mr. Hafiz Ur Rehman, Dr. Tehseenullah Khan, Mr. Fida Ali, Dr. Allah Bakhsh Kausar, Mr. Mohammad Latif and Mr. Simon Sadiq, while the work was reviewed by Mr. Tahir Karim. Regional geological set up in the Northern Pakistan comprises, the Higher Himalayan Crystalline rocks (mainly the felsic and pelitic gneisses, carbonates, amphibolites, eclogites and granitoids), separated by the Main Mantle Thrust (MMT) or Indus Suture from the Kohistan Island Arc (Jigal - Sapat Mafic – Ultramafic Complex, Kamila Amphibolites, Chilas Complex and other overlying units). The area included in the Lutar Quadrangle (43 E/7) comprises Kamila Amphibolites in the south and Chilas Complex in the north (both units are part of the Kohistan Island Arc). The main rock units i.e. amphibolites and gabbronorites, can be used only for construction purposes. Some minor malachite stainings and epidote crystals are also reported. Microgranite in some areas is fresh, white and can be used as dimension stones.

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ii. Post Disaster Threats in Atta Abad and Adjacent Areas, Hunza Valley, Gilgit-Biltistan Much anticipated disaster of Atta Abad landslide occurred on January 04,

2010. The Geological Survey of Pakistan had already given the parameters of the anticipated in its report on September 02, 2009 i.e. four months in advance of disaster. The post disaster studies of Atta Abad and surrounding areas (Hunza District) were carried out by technical officers of the Geological Survey of Pakistan (GSP) in March 2010 on the request of National Disaster Management Authority (NDMA). The team comprised Mr. S. Hamid Hussain, Deputy Director; Mr. Simon Sadiq and Mr. Adnan Alam Awan, Assistant Directors and Mr. Muhammad Latif, Deputy Director. The Atta Abad landslide is of complex nature mainly involving plane and wedge failures. It is 1900m long and 600m wide and has blocked the Hunza River creating a natural dam and the resultant lake. Controlled discharge of water is the only possible remedy to avoid the disaster. The villages of Atta Abad, Atta Abad Paeen, Sarat and partly Salmanabad are not suitable for habitation. Atta Abad Paeen and Sarat villages will be directly hit by flood in case of dam failure. Sarat is also facing a threat of failure of a large block of rock in its upslope area; its visible detachment from main body is up to one meter. The only possible remedy to avoid major disaster in these areas is immediate evacuation and controlled discharge of water from the lake through deepening of spillway.

iii. Geotechnical Causes for Failure of Karli Dam, Hattian Bala,

Muzaffarabad, Azad Jammu & Kashmir

The Director General GSP, constituted a team of Geologists consisting of

M/s M. Naseer Mughal and S. Saeed Akhtar to conduct the field surveys and furnish a report for the assessment of post breach dam scenario at Hattian Bala Karli area and its future implications. After conducting a thorough study based on the Geomorphological aspects of the slope failure and Geotechnical factor of the dam breach the conclusion that there had been some technical flaws in spill way exaction, so it did not serve the purpose and deep erosion caused the dam breach, Similarly overflow of water and this water push due to sliding in side the dam resulted the dam failure. Based on the recommendation of GSP, AJK Govt. plant the evacuation of Karli village inhabitants and selection of site for new settlement.

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iv. Study of Hazardous Areas of Hunza-Nagar District, Gilgit-Biltistan

Gilgit-Baltistan Government through National Disaster Management Authority (NDMA) requested Geological Survey of Pakistan (GSP) to carry out landslide studies in Hunza Valley in September-October 2010. GSP’s team comprised Mr. Mohammad Latif and Mr. Hamid Hussain, Deputy Directors and Mr. Simon Sadiq, Assistant Director investigated area of Hunza-Nagar District lies in the extreme north of Pakistan. Due to heavy rains of summer 2010 and high flood in Hunza River, many new landslides got triggered and some old landslides got partially reactivated in Hunza Valley, specially, the area between Pakhar and Chalt is severely affected because lithology of the rocks and structure of the area are favourable for different kinds of mass movements.

v. Geological Upheavels in Kharmong Valley District Skardu, Gilgit -

Baltistan

Geological Survey of Pakistan (GSP) carried out landslide studies in Ghundus and Braqhaltas villages of Kharmang Valley, Skardu during October 11-15, 2010 as it was requested by Commissioner Baltistan through National Disaster Management Authority (NDMA). GSP’s team comprised Mr. Hamid Hussain and Mr. Mohammad Latif, Deputy Directors and Mr. Simon Sadiq, Assistant Director. Ghundus is located at about 105 km from Skardu while Braqhaltas lies further 25 km away in the upstream direction in a side valley along left bank of Indus River. In Ghundus village, about 10 to 12 houses are affected with small cracks and settlement problems. Residents of Brakhaltas village are under a constant threat of large boulders, loosely lying on the backslopes of the village. GSP’s team has studied both the areas in detail and suggested remedial measures.

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vi. Gems and Gemmology in Pakistan

Dr. Tahseenullah Khan and Dr. Allah Bakhsh Kausar, former researchers of Geolabs have brought out GSP’s special publication on Gems and Gemology in Pakistan. The publication is the outcome of frequent and intensive geological field work undertaken in the gem bearing areas of Khyber Pukhtunkhwa and Northern Areas of the country. The authors have worked effectively to compile existing data and information about precious and semi precious stones of Pakistan and evaluated the prospects of undiscovered deposits of gemstone resources. The book is useful in providing information to the geologists and non geologists working in the gemstone sector with the aim of promoting sustainable economic development of the country. Such results may be used as a foundation for further work on areas of mineral resource potential and in building country’s natural resource sector. It is hoped that the book will be appreciated by the non-geologists and the gem collectors and lovers of precious stones. 3.4.12. DEVELOPMENT PROJECTS EXECUTED BY GSP (2010-2011)

i. Accelerated Geological Mapping & Geochemical Exploration of the out-crop area of

Pakistan.

• Analyses of already collected more than 2900 samples are in progress in various laboratories of the GSP.

• Compilation/Digitization of geological maps on 1:50,000 scale is in progress.

• On the job training is being provided to the new project personnel.

ii. Up-gradation/Strengthening of Geoscience Advance Research Laboratories,

Geological Survey of Pakistan

• An amount of Rs. 10.00 million has been provided to Pak PWD. Construction work will resume soon.

• Scanning Electron microscope has been purchased and installed.

• On the Job training of the officers of Geolab. on Analytical Techniques of XRD and XRF has been completed.

• Training course on ore microscopy has been completed.

• Analysed 1020 samples.

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3.4.13. PROGRAMME OF ACTIVITES AND TARGETS 2011-2012

A. REGULAR ACTIVITIES

(a) During the year 2011-12 an area of about 9,600 sq. km is planned to be mapped in different parts of the country.

(b) About 350 samples will be collected and analysed under geochemical surveying. (c) Efforts will be concentrated on exploration and evaluation of coalfields in Sindh,

Balochistan and NWFP. These studies are aimed at enhancing the coal resource base and supplementing power generation and substituting furnace oil in different industrial units in the country.

(d) Cupriferous massive copper and lead-zinc sulphide mineralization in Lasbela-

Khuzdar and Zhob districts and iron ore occurrences in Chagai district in Balochistan will be further explored.

(e) A total of 15 bore holes are tentatively planned to be drilled for a cumulative depth of 3,500 meters under different development / regular projects during the year.

B. DEVELOPMENT PROJECTS Ongoing Projects

Mineral Sector

• Accelerated Geological Mapping and Geochemical Exploration of the out-crop area of Pakistan (2005-2012).

• Up gradation/Strengthening of Geosciences Advance Research Laboratories, Geological Survey of Pakistan (2005-12).

New Approved Projects

Mineral Sector

• Acquisition of Four Drilling Rigs with accessories for the Geological Survey of Pakistan (2010-2012).

Fuel Sector

• Appraisal of Newly discovered coal resources of Badin coal field and its adjoining areas of southern Sindh (2009-2012).

• Exploration of Tertiary coal in Central Salt Range, Punjab 2009-2012.

• Exploration and Evaluation of Coal in Raghni area Tehsil Shahrig, Balochistan (2009-2012)

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CHAPTER 4

HYDROCARBON DEVELOPMENT

INSTITUTE OF PAKISTAN

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ACTIVITIES, ACHIEVEMENTS & PROGRESS

DURING 2010-11

The following activities were undertaken and the achievements made during the

year 2010-11:

4.1 UPSTREAM ACTIVITIES- Oil & Gas Exploration

A. Research Activities.

HDIP has carried out a number of research projects as follows to assess and determine the prospectivity of various unexplored and under explored areas:

• The draft report for research project titled “Petroleum Potentials of Mangla-Jhelum sub-basin, Pakistan, has been completed.

• The draft report on “Distribution and Evaluation of Source Potential of Datta Formation” has been completed.

• “Geochemical Evaluation for the definition of Petroleum System of Potwar-Kohat Basin is in progress. Analytical work for the following sub-projects is in progress.

• “Distribution and Evaluation of Source Potentials of Patala Formation”

• “Distribution and Evaluation of Source potential of Dandot Formation”

• “Distribution and Evaluation of Source Potential of Salt Range Formation”

• Report writing is in progress for the project, “Correlation of Porosity determined in Lab with porosity calculated from Wireline Logs of Injra - 1 and Nuryal-02 wells, Western Potwar, Pakistan”.

B) Consultancy Work

In addition to R & D activities, the institute also offers consultancy services in different geo-scientific disciplines of oil and gas exploration. A total of 645 samples were analyzed for different companies, organizations and institutions. Besides, consultancy services for environmental monitoring were also provided to public and private sector.

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C) Organization of well Core cuttings in Pakistan National Core House

During the reported period Pakistan Petroleum Core House received cores from 28 Oil and Gas wells and drill cuttings samples from 73 wells. In addition to that around 20,000 drill cutting samples from 50 wells were sorted. PPL, BP Pakistan, OMV Pakistan, and Petronas Carigali have benefited from the facility for their ongoing research and exploration studies.

D) Implementation of Development Project “Capacity Building for Hydrocarbon

Research and Development”.

HDIP initiated 02 development projects to strengthen its existing facilities. These projects are i. Establishment of hydrocarbon information Research and exploration support

system. ii. Strengthening and expansion of existing Research facilities. a. Strengthening of Labs by induction of new equipments.

Major equipments which include Gas Chromatography-Mass Spectrometer, Rock-Eval-6, TGA (proximate Coal Analyzer), UV-Visible Spectrometer, Biological Oxygen Demand and COD have been purchased, installed and commissioned. Method development and optimization is completed and now they are fully operational.

The Lab is fully functional and capable to carry out the following analysis:

• Exploration Geochemistry.

• Formation Water/Drinking Water/Industrial Effluents.

• Environmental Studies.

b. Hardware Acquisition

i. Networking Hardware were Acquired and Installed ii. Rack Mount Servers, Storage Devices, UPS, etc. were Acquired and

Installed. iii. PC’s, Workstations were Acquired and Installed. iv. Printers, Plotter, Scanner were Acquired and Installed.

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c. Applications Software Acquisition

i. Operating System, MS ISA, Exchange Server and MS Office etc. were Acquired and Installed. ii. Geo Graphix Discovery Suite was Acquired and Installed.

iii. ESRI GIS, AutoCAD MAP, etc. were Acquired and installed.

iv. Custom GIS Development is in progress.

v. Managed for migration to new release of ESRI ArcGIS 9.3.1 which includes

installation, testing of 9.3 and 9.3.1 upgrade on user PCs alongwith installation of Crystal Report Viewer and installation and configuring of licensing information on Application Server.

vi. Managed one year renewal of UTM License and warranty support for Juniper

Firewall from Ms Premier Systems for 2010-11 and activated on firewall.

vii. Procurement for LIMS Software in process.

On going Projects for the fiscal year 2010-2011.

Following are the ongoing projects with PPL and OGDCL. Projects with PPL:

• Assessment and Evaluation of Shale gas potential of middle Indus Basin and Sulaiman Lobe, including Sui and Kandkot.

• Re-evaluation of Hydrocarbon Potential of Western Potwar.

Projects with OGDCL:

• Distribution and Hydrocarbon Potential of Datta Sands in Upper Indus Basin.

• Evaluation of Infra-Cambrian Plays in Punjab Platform. Proposed Projects for the Year 2011-2012:

• HDIP-JSC ZARUBEZHNEFT Technical Cooperation: Two projects related to, “Geology and Geochemical Evaluation of Hydrocarbon Potential of Unexplored and Under-explored Areas of Pakistan” have been prepared and submitted for joint collaboration with Russian Government.

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• PC-1 has been prepared for Accreditation of HDIP Labs (both upstream and downstream) as per international standard ISO-17025. PC-1 has been approved by Board of Governors of HDIP and now sent to Ministry of Petroleum for approval.

4.2 DOWNSTREAM ACTIVITIES

A) Consultancy Work

The institute is providing consultancy services to exploration/marketing/companies, R&D organizations and universities in addition to its R&D activities. A total of 196 samples were analyzed for different organizations. Consultancy services for environmental monitoring were also provided to public and private sector. The Institute offers consultancy services to the Companies/ Organizations i.e.MOL,Shell Pakistan Ltd., Dewan Petroleum Ltd., Waste Buster, POL, Maple Leaf, Pakistan Tobacco Company, Askari Cement, PPL, SKAT Swiss Resource Centre and New Horizons.

a) Joint Sampling and Testing of Crude/Condensate,

Sampling at field site and testing of the following Crudes/Condensates were jointly carried out by HDIP and National Refinery Ltd.

• M/s. Oil and Gas Development Corporation

• M/s. ENI Pakistan Ltd.

• M/s. MOL Oil and Gas Pakistan Ltd.

• M/s. Mari Gas

• M/s. Pakistan Petroleum Ltd.

• Petronas Chargali Pakistan Ltd.

• BP Pakistan

b) Inspection of Lubricating Blending Plants:

Inspections were carried out of the listed (Annexure A) blending plants.

c) Calibration of Viscometers Hydrometers & Thermometers

An 88 Viscometers Hydrometers & Thermometers were calibrated

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B) Monitoring of Quality for Imported/Exported Products for OGRA. Karachi Operations Analytical facilities are provided round the clock to the Importers and Exporters for their different POL products. During the period under review, 215 samples have been carried out in HDIP Laboratory. C) Total revenue generated by each HDIP units for POL Samples Analysis is given below:

Branch/Region

Total

Sample

Tested

Income/Re

venue

Islamabad 198 679,390

Lahore 325 797,780

Multan 318 987,964

Quetta 53 29,100

Peshawar 650 425,400

Karachi 2093 14,564,900

Total 3,637 17,484,534

4.3 Other Activities for the Year 2010-11

HDIP and Pakistan Petroleum Ltd. signed an MOU to intensify cooperation between Research organization and Oil industry. Under this MoU, following two R&D projects will be carried out: 1. Re-Evaluation of Hydrocarbon potential of Western Potwar Play. 2. Assessment and evaluation of shale gas potential of middle Indus Basin and Sulaiman lobe, including Sui & Kandkot. The objective of the joint studies and analysis is prospectivity evaluation of selected areas of Pakistan by applying latest available knowledge and technology in order to promote oil and gas exploration and exploitation.

4.4. HDIP CNG Operations

For the past 2 decades, HDIP is known for the success story of introducing CNG as an alternative fuel and with continuous endeavor, since 2007, elevating Pakistan to the highest level of global leader. Currently there are more than 3,400 operational CNG Stations and nearly 2.6 million CNG vehicles with an average growth rate of 53% in the last 5 years. This fast growing CNG industry has generated about 100, 000 jobs with an estimated investment of Rs. 150 million.

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CNG Operation is carrying out extensive work on the following assignments:

i) Safety Inspections of Private Sector CNG Stations ii. Periodic Testing of CNG Cylinders at CTLs iii. Operation of four CNG Refueling Stations iv. Training of Technical Manpower v. Development work at CNG Station Peshawar vi. Overhauling of CNG Compressors at Islamabad and Peshawar CNG Stations vii. Establishment of CTL at Quetta viii. Setting up of Standard Kit Testing Laboratory ix. Feasibility Report for the economic production of Hythane

A. HDIP CNG Operation Progress during the Year 2010 to May 2011

HDIP CNG Operation is playing a vital role development of CNG Industry. A brief summary during the subject period is given below: a) CNG Inspection Wing

Altogether 308 CNG Inspection of various CNG stations were performed during the period of July 2010 to May, 2011(excluding the period of July to November 2010) in which the HDIP’s CNG stations inspection was suspended. b) Cylinder Testing Laboratories During the review period 12559 CNG Storage Cylinders and 3570 Vehicles, Cylinders have been tested. c) Training Programme HDIP has also initiated CNG Operations Revitalization Programme (CORP) which may be completed within two years. This programme includes, training of Technical manpower, increase in sale at HDIP CNG Stations by increasing compression capacity, provision of consultancy services to CNG industries, outsourcing of CNG cylinder Testing Laboratories in major cities of Pakistan, annual inspection of CNG converted vehicles and annual testing of CNG conversion kits manufactured locally/ supplied from aboard. HDIP also plans to carry out following projects apart from its routine activities during year 2010-11.

d) Evaluation of CNG equipments

Evaluation of 9 equipments was accomplished during this period.

51

B) Compressed Natural Gas (CNG) Karachi i) CNG Inspection Wing.

During the review period, Altogether 62 CNG Inspections of different CNG Stations in Karachi and Sindh were performed, in which 2 were Pre-Commissioning Inspection, 57 were Annual Inspection and 1 was Progress Inspection. These figures are for five months only i.e., from December 2010 to April 2011. During the period 1st July 2010 to 30th April 2011 HDIP Karachi Operations was not assigned the job of CNG Inspection.

ii) CNG Cylinder Testing Laboratory, Karachi.

During the review period, Altogether 6,100 CNG Cylinders from the different vehicles and from different CNG Stations were tested in which 3,267 were Vehicle Cylinders and 2,833 were Storage Cylinders of different CNG Stations in Karachi and Sindh.

4.5 Publication

The Institute plays a vital role in the development of the domestic energy sector by

maintaining a national energy database and disseminating vital technical information in the form of regular publications.

Pakistan Energy Year Book 2010 and Pakistan Journal of Hydrocarbon Research (Volume-18) were published. Pakistan Journal of Hydrocarbon Research 2008 has been published and processing and approval of PJHR-2009 is in progress.

4.6 Conclusion

The HDIP thus works as the scientific and technical arm of the Ministry of Petroleum & Natural Resources in the oil, gas and energy sectors while at the same time it facilitates private sector investment by providing professional guidance and advice. Although a public sector outfit, it earned 77% of its budget from its own services performed to high professional standards. HDIP has achieved the Goals and Targets assigned to it for expansion of CNG industry in Pakistan.

52

Annex-A

Blending/Reclamation/Transformer Oil & Grease Plants Inspected

on Quarterly Basis (Year 2010-2011)

Karachi Region Multan Region

M/s Delta Petroleum M/s Sun Lubricants (Pvt) Ltd

M/s Petromark (Pvt) Limited M/s Golden Lubricants

M/s Karachi Lubricants (Pvt) Ltd M/s Roshan Lubricants

M/s World Petroleum M/s Sial Lubricants

M/s Oil Industries of Pakistan M/s Amir Oil (Redg)

M/s Adam Lubricants Limited M/s Kamran Lubricants

M/s Universal Petroleum M/s PENZ Petroleum Industries

M/s Pak-Hy Oil Ltd M/s Shiraz Lubricants

M/s Pakistan Lubricants Ltd M/s Shervo Motor Oil

M/s Fine Lubricants M/s Faran Ahmed Petroleum

M/s Union Chemical M/s Sheraz & Afaq Lubricants

M/s Asia Lubricants M/s Masha Allah Sial Lubricants

M/s Jamia Lubricants Industries (Pvt) Ltd Lahore Region

M/s Lubritech Industries (Pvt) Ltd M/s Hi-Lux Autos

M/s Super Pakistan Lubricant M/s Zamir Sons Petroleum Industries Ltd

M/s Hammad Lubricants M/s Vega Lubricants

M/s Haroon Oils Ltd M/s Punjab Petroleum Industries (Pvt) Ltd

M/s MAL (Formerly Mobil Askari Lubricants Ltd) M/s Mian Petroleum Industries (Pvt)

M/s Shell Pakistan Ltd. M/s Pak Trans Oil

M/s Burraqe Oils Mills M/s Haider Petroleum

M/s PSO Blending Plant M/s Sheikh Brothers Lubricants

Pak Grease Mrs. Co Ltd M/s Islam Lubricants Ltd.

M/s Orient Lubricants M/s Mirza Lubricants

M/s Total Atlas Lubricants M/s Artham Lubricants

M/s Mehran Oils Pvt Ltd M/s Falcon Lubricants

M/s Indus Lubricating Oil M/s United Lubricants

M/s Shams Lubricants M/s Imran Ali Lubricants

M/s Chevron Pakistan Ltd M/s Guard Friction Ltd

M/s Maxron Lubricants

Peshawar Region

M/s Norvac Pvt Limited

M/s Maclon Reclamation Plant

53

CHAPTER 5

http://www.ogdcl.com

OIL AND GAS DEVELOPMENT COMPANY LIMITED

(OGDCL)

54

5.1 Background:

Oil & Gas Development Company Limited (OGDCL) is the largest Exploration & Production (E&P) Company in Pakistan, listed on all three stock Exchanges of Pakistan as well as on the London Stock Exchange. OGDCL was initially created under an Ordinance in 1961, as a Public Sector Corporation which subsequently in pursuance of the Petroleum Policy 1994, was converted from a statutory Corporation into a Public Limited Company w.e.f. October 23, 1997. Government of Pakistan (GOP) divested 4.98% of its shareholding in the Company in November 2003 through Initial Public Offering (IPO). GOP further divested 9.5% of its shareholdings through secondary offering in the form of Global Depository Shares (GDS) to international and local institutional investors in December 2006 and 0.5% to the general public in February 2007. On August 14, 2009, GOP transferred 432,189,039 shares to Employee Empowerment Trust under Benazir Employees Stock Option Scheme (BESOS). GOP now owns 74.97% of the shares of the Company.

5.2 PERFORMANCE OF OGDCL

During the 50 years since its inception, OGDCL has come a long way and overcome many

challenges – from acquiring and sustaining its position as a self-financing OGDCL, the local market

leader in terms of reserves, production and acreage, and the first Pakistani E & P Company to list its

shares on the London Stock Exchange. Equipped with a forward looking professionally developed

Business and Strategic Plan, competent professionals to implement the same, a debt-free and robust

balance sheet, OGDCL is ready to take on the challenges of an internationally listed company.

55

PHYSICAL ACHIEVEMENT DURING (July-June 2010-11)

Physical achievement during financial year 2010-11 is as follows and is tabulated as Annexure-A

1. DRILLING ACTIVITIES

OGDCL has spudded 21 wells (10 Exploratory / Appraisal & 11 Development wells) during the period July to June 2010-11. In the previous year during the corresponding period 15 exploratory/appraisal and 11 development wells were drilled.

2. SEISMIC SURVEY

OGDCL has carried out 1,500 Line Km (2D) and 660 Sq Km (3D) of seismic survey during July 2010 to June 2011 as against 2,493 line km and 292 sq km respectively during the corresponding period last year.

3. PRODUCTION

OIL

OGDCL’s average oil production during the period July to June 2010-11 was 36,842 barrels per day against 35,925 barrels per day during the corresponding period last year.

GAS OGDCL’s average production of gas during July 2010 to June 2011 was 862 MMscfd as against 856 MMscfd during the corresponding period last year.

LPG

The average LPG production during the financial year 2010-11 was 121 Metric Ton per day as compared to 120 Metric Tons per day during the corresponding period last year.

SULPHUR

Average Sulphur production during period under report was 73 Metric Tons per day. During the corresponding period in the previous financial year, the average production of Sulphur was 70 Metric Tons per day.

4. Oil and Gas discoveries (July to June 2010-11)

i) Discovery of Hydrocarbons at Gopang Exploratory Well No.1

Oil & Gas Development Company Ltd (OGDCL) has discovered gas from its exploratory well Gopang Well# 1, on July 01, 2010.

The well is located in District Hyderabad of Sindh Province. The short duration post completion testing results of the well produced 3.25 MMscfd of gas and 100 BPD of condensate at well head flowing pressure of 780 psi at 32/64” choke size.

56

ii) Discovery of Gas at Sheikhan Exploratory Well No. 1

Oil & Gas Development Company Ltd (OGDCL) has discovered gas from its Sheikhan exploratory well # 1, on July 05, 2010.

The well is located in District Kohat of Khyber Pukhtoonkhawa Province. The Short duration initial testing results produced 15 MMscfd of gas through 32/64” choke size at well head flowing pressure of 2500 psi.

5. FUTURE OUTLOOK

OGDCL as a leading exploration and production Company has set aggressive targets in its strategic plan for the next five years (2010-11 to 2014-15). The current financial year 2011-12 targets are given at Annex-B.

OGDCL BUSINESS PLAN TARGETS: 2011-12

• To drill 27 wells (including 9 contingent and 2 security dependent wells)

• Oil and Condensate production of 39,565 barrels per day

• Gas production of 980 MMcfd

In order to achieve its strategic plan targets which are in line with the redefined vision, mission and goals, the Company is following the strategies of continuous reserve addition through design and maintenance of a balanced exploration portfolio of all blocks ranked according to size of reserves, profitability and associated risks, optimizing company’s portfolio through aggressive exploration activities, formation of joint ventures with leading E&P Companies inside and outside the country and continuous review and improvement of policies & internal processes. In addition, the Company is endeavoring to further enhance corporate goodwill through focused social welfare activities for the benefit of the local communities.

OGDCL is also pursuing selective international expansion while domestic expansion remains OGDCL’s core focus. The Company intends to grow and diversify its portfolio through selective international expansion in the medium to long-term. In order to achieve its strategies, the Company is implementing international best practices by ensuring an efficient organizational structure and business processes that are focused on enhancing its production and reserves base.

The Company’s strategies will further strengthen it’s production base and with sustained growth, we anticipate improving our financial results in the years ahead which will help the Company to achieve the targets set out in its Strategic Plan. Our exploration, development and production efforts backed by a healthy financial position, will help in adding significant value for the shareholders in the years to come.

57

Annexure-A OGDCL’S PHYSICAL PERFORMANCES STATEMENT

FOR THE FINANCIAL YEAR 2010-11

S.

No.

Name of Activity Achievements

Daily Average

1.

Production from operated fields:

i. Oil {Bbi.}

ii. Gas {MMcft}

iii. LPG{Tonnes}

iv. Sulphur {Tonnes}

36,842

862

121

73

Annexure-B OGDCL’ s TARGETS FOR THE FINANCIAL YEAR 2011-12

S.

No.

Name of Activity Targets

1.

Total Wells:

i. Exploratory

ii. Appraisal

iii. Development

Production from operated fields:

iv Oil {Barrels}

v. Gas {MMcft}

27*

12

5

10

39,565

980

58

http://www.sngpl.com.pk

SUI NORTHERN GAS PIPELINES LIMITED (SNGPL)

59

Annexure-III

SECTOR-WISE/ COMPANY-WISE CONSUMPTION OF NATURAL GAS (MMCF)

For The Period of 01-07-2010 to 30-06-2011

Gas Consumption MMCF MMCFD

Power 117,127 321

Domestic 151,963 416

Commercial 26,281 72

Transport (CNG) 84,261 231

Cement 577 2

Fertilizer (Feed) 32,814 90

Fertilizer (Fuel) 9,513 26

General Industry - -

Pak Steel - -

Capative Power 49,246 135

Other Industry incl Textile 110,153 302

Total 581,935 1,594

Gas usage by non consumers in Gurguri & Lost in Floods 2,136 6

Net GSNB (34) (0)

Gas Carried for PPL & POL 636 2

UFG 67,143 184

Volume detected- Non Consumers 6,607 18

Under Measured Vol- Minimum Consumers 6,883 19

Internal Consumption 8,366 23

Total 673,673 1,846

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Target & Achievements

S.No. Item Unit 2010-11 2010-11

1. LPG Production -

2. Gas Consumers (Addition) Million 0.169 0.260

3. Supply of Gas Villages/ Abadies (Addition)

Nos 230 230

4. Transmission Pipelines (Addition)

Km 172 152

5. Distribution Pipelines (Addition) Mains & Services

Km 5,249 6,372

6. System Losses % 7%

11.21%

7. CNG Stations (Addition) Nos Part of Targets given at Sr. No. 1

48

8. LPG Stations (Addition) - - -

61

SSGCL http://www.ssgcl.com.pk

SUI SOUTHERN GAS COMPANY LIMITED (SSGCL)

62

63

mmcf mmcfd

Power 79,610 218

Cement 801 2

Pakistan Steel 11,951 33

Fertilizer 24,100 66

Textiles 30,005 82

CNG 28,794 79

Other Industries 90,313 247

Industrial Total 265,574 728

Commercial 10,184 28

Domestic 80,282 220

Total 356,040 975

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GAS SALES

FY 2010-11 FY 2009-10

VOLUME IN MMCF

VOLUME % VOLUME %

KARACHI 270,817 76.06 289,017 74.33

INTERIOR SINDH 66,133 18.57 80,319 20.66

BALOCHISTAN 19,090 5.36 19,492 5.01

TOTAL GAS SALES 356,040 100.00 388,828 100.00

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REVENUE EARNED

FY 2010-11 FY 2009-10Rupees in Million

AMOUNT % AMOUNT %

NET SALES 116,485 89.42 107,737 89.66OTHER OPERATING INCOME 3,760 2.89 3,790 3.15

OTHER NON OPERATING INCOME 10,028 7.70 8,641 7.19130,273 100.00 120,168 100.00

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FIELDS

ACTUAL 2010-11 ACTUAL 2009-10

Volume%

Volume %

MMcf MMcf

Sui 39,210 9.91 38,944 9.11

Badin 47,211 11.93 68,660 16.07

Bhit 121,453 30.69 122,265 28.61

Kadanwari 27,719 7.00 15,698 3.67

Miano 23,603 5.96 25,204 5.90

Sawan 20,519 5.18 20,062 4.69

Zamzama Phase-I 46,447 11.74 59,462 13.91

Zamzama Phase-II 28,551 7.21 43,824 10.26

Naimat Basal 9,701 2.45 12,755 2.98

Bobi 4,628 1.17 4,536 1.06

Mazarani 3,817 0.96 4,028 0.94

Sari Hundi 604 0.15 687 0.16

Mari 280 0.07 278 0.07

Kandhkot 580 0.15 473 0.11

Latif 14,550 3.68 7,387 1.73

SNGPL 1,423 0.36 1,118 0.26

Aadam X-1 4,343 1.10 1,530 0.36

Pakhro 1,106 0.28 415 0.10

Haseeb 34 0.01 - 0.00

395,779 427,326

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Industrial 2010 2011

Karachi 3,245 3,380

Sindh (Interior) 564 607

Balochistan 54 55

Sub - total 3,863 4,042

Commercial

Karachi 17,673 17,998

Sindh (Interior) 4,465 4,872

Balochistan 2,018 2,128

Sub - total 24,156 24,998

Domestic

Karachi 1,482,439 1,544,709

Sindh (Interior) 535,736 582,916

Balochistan 200,963 211,228

Sub - total 2,219,138 2,338,853

Total 2010 2011

Karachi 1,503,357 1,566,087

Sindh (Interior) 540,765 588,395

Balochistan 203,035 213,411

Grand Total 2,247,157 2,367,893

68

As at July 1, 2010Addition during FY 2010 - 11

As at June 30, 2011

KarachiInterior

SindhBalochistan Total Karachi

Interior

SindhBalochistan Total Karachi

Interior

SindhBalochistan Total

MM

MAINS

Steel Mains 8,624 10,924 4,834 24,382 89 1,628 100 1,817 8,713 12,552 4,934 26,199

Polyethylene Pipe 2,621 1,670 501 4,792 190 70 - 260 2,811 1,740 501 5,052

Total Mains 11,245 12,594 5,335 29,174 279 1,698 100 2,077 11,524 14,292 5,435 31,251

SERVICES

Steel Pipe 2,730 2,737 1,225 6,692 63 201 48 312 2,793 2,938 1,273 7,004

Polyethylene Pipe 423 366 130 919 46 30 3 79 469 396 133 998

Total Services 3,153 3,103 1,355 7,611 109 231 51 391 3,262 3,334 1,406 8,002

TOTAL

NETWORK14,398 15,697 6,690 36,785 388 1,929 151 2,468 14,786 17,626 6,841 39,253

69

INTER STATE GAS SYSTEM

(PVT.) LIMITED (ISGS)

www.isgs.pk

70

8.1 INTRODUCTION

The Economic Coordination Committee (ECC) of the Cabinet in June, 1995, in consideration of the proposal on ‘Import of Gas from Iran to Pakistan’ submitted by the Ministry of Petroleum & Natural Resources approved formation of a joint venture company and directed Sui Southern Gas Co. Ltd. (SSGC) and Sui Northern Gas Pipelines Ltd. (SNGPL) to participate in the joint venture company. The Inter State Gas Systems (Pvt.) Ltd. (ISGS) was thus established in 1996 as a private limited company incorporated under the Companies Ordinance 1984, as a joint venture of SSGC and SNGPL. However, with participation in equity GHPL has become the majority shareholding company.

8.2 CORPORATE STRUCTURE

Initially ISGS was wholly owned by Pakistan’s two major gas utility companies; SSGC owned 51% while SNGPL owned 49% of shareholdings. However, with majority shareholding by Government Holdings (Private) Limited (GHPL), under the Companies Ordinance 1984, ISGS is a subsidiary of GHPL. Under its Memorandum and Articles of Associations, the Company has nine (9) members on its Board of Directors nominated as representative Directors by the shareholders.

8.3 SHARE CAPITAL

In order to meet the growing capital requirements of the Company to implement on-going projects on import of natural gas through pipelines, and Strategic Under Ground Storage (SUGS), the shareholders on the recommendations of the Board of Directors increased the Authorized Share Capital of the Company from Rs. 10 million to Rs. 20 billion. The Company took up the process of increasing its Paid-up Capital to cater its expanding capital requirements. The paid up capital of the Company as on June 30, 2011 stood at Rs. 159.408 million with the majority being subscribed by the GHPL.

8.4 NATURAL GAS DEMAND SUPPLY PROJECTION

Pakistan’s gas requirements are growing rapidly, while the domestic gas production is not growing at the same pace. Number of independent studies done during the last 2-3 years on natural gas demand supply forecast that the local supply resource shall be insufficient to meet the country’s demand and a considerable supply shortfall of natural gas in the country is expected in coming years.

Natural gas demand supply projections from FY 2010 to FY 2020 were updated based on the gas demand supply data provided by SUI companies. The study forecasts that even on the Constrained Demand scenario (demand based on long-term contracts of the SUI companies in projection period), the country is to face a huge supply shortfall of 6.47 Bcfd in FY 2020 as shown in the following Exhibit-I:

The above gas supply shortfall of 6.47 Bcfd, if not mitigated, will seriously cripple industrial activity and severely limit economic growth. The situation calls for immediate action on all fronts, to increase domestic exploration & production while augmenting supplies through piped natural and other economic import options.

71

In order to meet the growing energy deficit, the Government of Pakistan (GOP), besides encouraging local exploration and production, plans to import gas from across its borders from Iran and Turkmenistan. ISGS has been mandated by the GOP to serve as an interface between the GOP and other external agencies for the import of gas, in the following priority areas:

• Analyze long-term gas supply and demand position in the country on regular basis and develop future gas shortfall mitigation plans.

• Identify, analyze and assess opportunities for reliable sources of natural gas to be imported;

• Provide technical, commercial, financial and legal consultation in relation to cross border pipeline agreements, pricing and tariff project structure, and other matters related to cross border gas trade;

• Present information on investment/business opportunities to prospective local and international companies and business forums to attract investment interest;

• Develop underground gas storage projects.

8.5 IP PROJECT

The Iran-Pakistan (IP) Gas Pipeline is designed to carry 1.05 Bcfd (30 MMcmd) natural gas from Iran’s South Pars gas field in the Persian Gulf to Pakistan. The pipeline will start at Assaluyeh in Iran, to traverse a distance of 1,150 km upto the Iran-Pakistan border, which will be built and operated by Iran. Pakistan will build a 42 inch diameter pipeline from the Iran-Pakistan border upto its high pressure gas transmission network at Nawabshah, having a distance of nearly 785 km. The capital cost of the project is estimated at US$1.2-1.6 billion.

UP date on Project Implementation

� Under the GSPA, both the Seller and Buyer are required to undertake implementation of the project based on agreed construction and implementation milestones.

� Pursuant to the timely implementation of the project, the Engineering and Project Management (E&PM) consultancy contract was awarded to ILF NESPAK JV in April 2011.

� The E&PM consultant has already started work on Detailed Route Survey (DRS) and Front End

Engineering Design (FEED), to be followed by Bankable Feasibility, Study Route Reconnaissance, Social & Environmental Impact Assessment (SEIA) and supervision etc.

� On project financing/construction, keen interest has been expressed by various major

international investors from China, Russia and Middle East. Initial communication/information has been exchanged with interested parties in this regard.

� Further, the Steering Committee of ECC has already directed to call EOI from all parties

interested project financing/construction in due course once the E&PM consultant finalized project implementation strategy.

72

� As incorporated in the approved project financing strategy, the necessary process has already been initiated to appoint a Financial Advisor to arrange debt and equity in due time.

� On the matter of rate of return (ROR) to prospective investors, while steering Committee of

ECC has already given approval in principle, a summary shall be placed before ECC for policy decision in due course, as directed by Steering Committee.

8.6 COMPANY PROFILE:

CONTACT DETAILS Inter State Gas Systems (Pvt) Limited 517, Margalla Road F-10/2, Islamabad Tel: +92 (51) 926 7672-74 Fax: +92 (51) 926 7671 Website: www.isgs.pk Email: mail@isgs.p

NAME OF MANAGING DIRECTOR/CHIEF EXECUTIVE

Mobin Saulat

TYPE OF COMPANY

Private Limited

TYPE OF BUSINESS

Services

BOARD OF DIRECTORS

Members of Board of Directors, as of August 8, 2011:

01. Mr. Muhammad Ejaz Chaudhry,

(Chairman, ISGS Board),

Secretary, Ministry of Petroleum & Natural Resources, Islamabad

73

02. Mr. Muhammad Iqbal Awan Ex-Additional Finance Secretary Finance Division, Islamabad

03. Mr. Raashid Bashir Mazari,

Joint Secretary, Ministry of Petroleum & Natural Resources, Islamabad

04 Mr. Tariq Iqbal Khan (Ex-MD/Chairman, NIT) Director, Karachi

05 Managing Director

Government Holdings Private Limited Islamabad.

06. Mr. Azim Iqbal Siddiqui,

MD, SSGC, Karachi

07. Mr. M. Arif Hameed MD, SNGPL, Lahore

08. Mr. Javed Hussain (Ex-MD SSGC Karachi), Director, Lahore

09. Mr. Nessar Ahmed

Director, Karachi.

10. Mr. Mobin Saulat, 1

MD/CEO, ISGS, Islamabad

TOTAL PROFESSIONALS EMPLOYED

Project team at ISGS is under capacity expansion anticipating the implementation work of Iran-Pakistan-India gas pipeline project to start in the near future. Currently, ISGS comprises of qualified professionals from the fields of engineering, law, finance and commercial.

AUDITORS

M. Yousuf Adil Saleem & Co., Chartered Accountant, Islamabad.

LEGAL ADVISOR

Juristic Union, Islamabad.

BANKERS

Bank Alfalah Limited.

1 (Under Article 77 of the Memorandum and Articles of Association of the Company, the Chief Executive shall, if not already

a Director of the Company, be deemed to be its Director and be entitled to all the rights and privileges, and subject to all the liabilities, of that office.)

74

http://www.psocl.com

PAKISTAN STATE OIL COMPANY

(PSOCL)

75

9.1 INTRODUCTION

From its simple beginning as an oil company in 1974, Pakistan State Oil (PSO) has

emerged as the market leader in Pakistan’s energy sector. Reaching into every nook and cranny of

the country PSO’s caters to a wide range of customers including the retail, industrial, power project,

aviation, marine and defense sectors. A true blue-chip company PSO has won the “Karachi Stock

Exchange Top Companies Award” for ten consecutive years and is the only Pakistani company that

is a member of World Economic Forum. Growing drop-by-drop, day-by-day, PSO is turning the

wheels towards a progressive future with sustainable products and pioneering services that are

redefining the energy landscape of the country.

PSO is currently engaged in the marketing and distribution of various POL products including Motor

Gasoline, High Speed diesel, Furnace Oil, Jet Fuel, Kerosene, LPG, CNG, Petrochemicals and

Lubricants. PSO also has the largest distribution network in the country with approximately 3500

outlets servicing the automotive sector and is the major fuel supplier to the aviation, railways, power

projects, armed forces and agriculture sectors. PSO also provides Jet Fuel to Refueling Facilities at 9

airports in Pakistan and Ship fuel at 3 ports. The company also provides fuel to more than 2,000

industrial units and business houses across the country.

PSO’s 9 installations and 22 depots have a storage capacity in excess of 1 million metric tons and

represent over 80% of the total oil storage capacity of the country.

9.2 PSO’s VISION

To excel in delivering value to customers as an innovative and dynamic energy company

that gets to the future first.

9.3 PSO’s MISSION

We are committed to leadership in energy market through competitive advantage in

providing the highest quality petroleum products and services to our customers, based on:

• Professionally trained, high quality, motivated workforce, working as a team in an environment, which recognizes and rewards performance, innovation and creativity, and provides for personal growth and development

• Lowest cost operations and assured access to long-term and cost effective supply sources

• Sustained growth in earnings in real terms

• Highly ethical, safe environment friendly and socially responsible business practices

76

9.4 BOARD OF MANAGEMENT

1. Mr. Nazim F. Haji

Chairman

2. Mr. Jehangir Ali Shah Acting Managing Director

3. Mr. Malik Naseem Hussain Lawbar Member

4. Mr. Mahmood Akhtar Member

5. Mr. Hammayun Jogezai Member

6. Mr. Osman Saifullah Khan Member

7. Mr. Sabar Hussain Member

8. Mr. Pervaiz A. Khan Member

9. Dr. Abid Qaiyum Suleri Member

9.5 PSO’s SALES PERFORMANCE IN FY-2010

During FY10, despite global and domestic economic recession, PSO successfully maintained its

market leadership in major products of its business portfolio i.e. Motor Gasoline (Mogas), Hi-speed

Diesel (HSD) and Fuel Oil (FO).

During FY10, PSO sold 14.2 million tons of POL products as compared to 13.2 million tons during

the preceding year.

Black Oil

In Black Oil, PSO enhanced its market share appreciably from 85.8% in FY09 to 88.3% in

FY10. PSO also registered a highest ever sales volume of 8.2 million MTs for furnace oil mainly due

to increased demand from the power generation sector.

77

White Oil

In White Oil, despite a negative growth of 4% in the sales volume, PSO continued its

market leadership with a 55.4% market share.

The decrease in white oil volumes was mainly due to the overall economic downturn and circular

debt.

Mogas

In Mogas, PSO registered highest ever sales volumes of 0.89 million MTs as compared to

last year sales 0.73 Million MTs despite a 2.1% decrease in market share. Industry volume of Mogas

grew by 27% in response to increased generator usage and number of vehicles on the road.

HSD

HSD sales volumes by PSO during FY10 witnessed a decline of around 10% as part of an

overall downward trend in the industry which registered a decrease of 3%. The reason behind this

negative growth was the slow down of economic activity and floods which cut access to many parts

of the country. JP1

In FY10, PSO continued to provide fuel at 9 airports across the country and registered an

increase of 7% in its sales volume as compared to the preceding year. The Company maintained its

leadership with a market share of 65.8%.

The Company ended FY10 with an overall market share in liquid fuels of 71.1% as compared to

71.3% during FY08.

9.6 PSO’s KEY ACHIEVEMENTS FY10

Supply

PSO has over 90% share in import of deficit products in the country. In FY10, more than 11

million tons of products (228 cargoes) were arranged through imports in order to meet the dynamic market demand. PSO imported more than 6.7 million tons of FO, 3.75 million tones of Diesel, 0.44 million tons of Mogas and 0.37 million tons of Jet fuel during the year to cater the surge in demand. Furthermore, 2.96 million tons were arranged from the local refineries in FY10.

Logistics

The company successfully managed to maintain an uninterrupted and timely flow of POL

supplies to all retail and industrial customers despite enormous logistical challenges and constraints. In the period under review, PSO moved 9.96 million tones of POL products. New all time high records of supplies were made, with highest-ever volume of FO 1.03 million tones moved in a month i.e. May. The demand-supply balance was maintained through well-coordinated and integrated efforts of all components of the supply chain and with support of PSO’s cartage contractors and Pakistan Railways.

78

To enhance efficiency of oil transportation, 6 training sessions were arranged during FY10 which benefited 600 drivers and improved their professional skills. Being fully aware of its stakeholders valuable contributions towards efficient supply chain, PSO also provides life insurance cover of Rs. 300,000 to all PSO drivers and cleaners of tank lorries. In FY10 only one accident was reported.

Operations

During FY10, PSO focused on making operational activities more economical, efficient and

customer-oriented.

PSO also enhanced the loading facilities at Shikarpur Terminal and Keamari Terminal ‘B’. In FY10, PSO increased the Fuel Oil throughput by 20% as compared to last year to meet emergent demand in Energy Sector.

Also, in FY10, Zulfiqarabad Oil Terminal acquired IMS certification. Furthermore, surveillance audits of ISO 9001:2000 were carried out at Keamari Terminal-A, B, ZOT, Shikarpur, Sihala, Mehmoodkot, Machike, Tarujabba, Chakpirana, Lalpir, Vehari, Faisalabad & Quetta.

During the year ended June 30, 2010, the following operational milestones were reached:

• Highest filling of LSFO through Tank Lorries and Tank Wagons i.e 8529.91 MTs on 1st May 2010 from Keamari Terminal ‘B’.

• Highest HSFO dispatches from Zulfiqarabad Oil Terminal Complex through Pipeline, Tank Lorries and Tank Wagons i.e. 563,480 MTs in the month of April 2010.

• 13618 K.Ltrs of HSD were filled in a day i.e on 20th April, 2010 at Mehmoodkot terminal.

• Highest filling of PMG i.e 1028 K.Ltrs. was reported in a single day on 01st March, 2010 at Vehari

• Highest filling of PMG in a day at Faisalabd depot i.e. 1027 KL on 01st Jan, 2010.

• Highest ever volume i.e. 354,069 M.Ts of LSFO/HSFO/HSD were handled in a month of July 2009 at Lalpir depot.

Retail Business

PSO achieved an impressive sales volume of 0.89 million MTs of Mogas and 4.2 million MTs of HSD in FY10. It also successfully tested and launched E-10 Gasoline at more than 70 outlets in Sindh and Punjab provinces during FY10. This initiative is in line with the government’s strategy to promote alternate energy resources and will not only help the country in reducing its import bill in coming years but is also providing motorists with an economical fuel option.

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Consumer Business

In FY10, PSO outperformed its previous year’s sales record in furnace oil registering a growth of 18% as compared to last year translating into sales of 8,221,409 MTs sales of Furnace Oil. Similarly sales targets of HSD and SKO were surpassed by 23% and 6% respectively. Fuel Supply Agreements were signed with M/s PEPCO/GENCO (III) (for a period of 15 years) and with M/s KESC (for a period of 10 years). The agreement with GENCO (III) will secure FO volumes of 2 to 2.3 million MTs (70-73%) of total PEPCO/GENCO fuel oil requirement. In addition, PSO continued its dominating streak in winning tender business of major Govt. Entities including two Army tenders for Al Meezan with combined volumes of 7,743 MTs MOGAS, 31,357 MTs HSD and 9,201 MTs SKO. Fuel Supply Agreement was also signed with M/s Techno Power (150) MW (Rental Power Project) for period of 3 years. In the period under review, PSO entered into a Sales Purchase Agreement with M/s Chevron Pakistan Limited and M/s Bakari Oil Trading Company for the supply of POL products for a period of two years. FWO and NLC contracts for supply of black oil were extended uptil 2011.

Lubricant & Agency Trade

In FY10 the Lubricants market share increased to 26.6% as compared to 23.3% in the last fiscal year. PSO lubricants also maintained the market leader position in the sugar industry segment with 60% share. PSO won the lubes tender for Pakistan Railways and Pakistan Army for supplying 3680 Kls and 462 Kls respectively. Furthermore, lubricant sales were made of 6170 Kls to tender customers including Pakistan Army, Pakistan Railways, OGDC, NLC, FWO, Pakistan Steel Mill and DG Agriculture.

Cards

During FY10, PSO Company largely witnessed the consolidation, financial viability and streamlining of the overall Cards Business, focusing mainly on the potential, credit-worthy customers, generating a significant growth of 18% in terms of sales turnover as compared to the previous year. Despite the financial turmoil confronting the nation's economy, the revenue from Cards business recorded a phenomenal growth of over 134% in the current fiscal year.

Gaseous Fuels

PSO maintained its leadership position in the CNG industry in the period under review with a market share of 22% in fiscal year 2010. PSO showed a growth of 13% in FY10 against industry growth of 11% as compared to FY09.

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In order to ensure “Zero incident” at PSO CNG stations, PSO arranged a series of CNG Technical Training Seminars in Multan, Lahore, Karachi and Islamabad in FY10 for the Divisional Engineers and the business partners (PSO CNG operators). PSO also carried out “CNG Customer Awareness Campaign” as a step to make this industry safe for general public. On the LPG front, in FY10 all four PSO LPG Plants and LPG Head Office were certified on QMS ISO 9001: 2008. This certificate of ISO 9001:2008 Quality Management Systems for LPG Business is in line with the industry requirement for compliance to national and international standards. Customers will benefit from this certification by receiving products and services that are in conformance to the international standards.

Aviation & Marine

In FY10, despite the acute shortage of Jet Fuel throughout the country, PSO managed to retain its market share of 66% by delivering 442,340 MTs of Jet A-1 which is 7% more as compared to last year's volume. PSO Company successfully completed the pre and post Hajj operations and registered upliftment of 15,326 MTs of Jet fuel by fueling 531m flights. In the exports business, PSO also exported 292,035 MTs of JP-8, 70% more as compared to last year's volume.

Non Fuel Retail (NFR)

PSO NFR has taken long term steps to facilitate the customers by providing convenience and

services at our Retail outlets which distinguishes them from the competitors.

PSO and Wall Street Exchange Company (WSE) have entered into an agreement whereby WSE will

be establishing payment booths at selected PSO retail outlets located throughout Pakistan.

Through this venture, both PSO & Wall Street will facilitate disbursement of Home Remittances to a

large population through PSO retail outlets.

In FY-10, PSO established an exclusive merchandising alliance with Pepsi Cola International for

PSO Shop Stops. This is in congruence with the Company’s strategy to garner royalties from

prominent brands being displayed in PSO Shop Stops.

New Business Development

In pursuance of directives of the President of Pakistan for the popularization of biofuel crops in the

farming community, PSO submitted a detailed report to the relevant Government agencies in the

review period.

The Company signed MOU with NUST and Ghulam Ishaq Khan University for research work on

biodiesel impact on diesel engines ‘performance, and an MOU with KPT was signed and Terms of

Reference were finalized during the period under review for conducting feasibility study to connect

Keamari Port with Port Qasim through a pipeline.

In FY10, PSO Company completed study for optimization of current infrastructure at Port Qasim.

This would enable enhancement of imported petroleum products handling capacities of FOTCO

Jetty and PSO pipeline infrastructure.

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Internal Audit

In FY10, the Internal Audit Department at PSO took an initiative and embarked upon the project of

implementing an award-winning Audit Management System – CCH TeamMate already being used

by more then 1800 organizations worldwide.

CCH TeamMate streamlines and integrates every facet of the internal audit process system. From

risk assessment to scheduling to report generation and more. It also facilitates the key

stakeholders/auditees to provide updates on the audit observation through web integration. By

providing an integrating, paperless strategy for managing audits, TeamMate will eliminate the

barriers associated with paper-filled binders and disconnected electronic files, driving efficiencies

into all facets of the internal audit workflow.

Procurement & Services (P&S)

PSO has a comprehensive Procurement Policy that provides guidelines to ensure competitive

bidding through a very transparent procedure without compromising on quality of required goods

and given timeline.

In the quest of strengthening the vendor base, during FY10, PSO Company completed pre-

qualification of vendors for 30 categories. Furthermore to improve the purchasing process,

negotiation teams were formulated which played an integral role in achieving win-win situation for

the buyer and the vendors.

Total Quality Management (TQM)

In its pursuit to bring significant operating efficiencies and achieve the highest level of customer

satisfaction, the company has been focusing on TQM. In the period under review, PSO Company

established Mobile Quality Testing Units (MQTUs) for Quetta division for effective monitoring of

product quality and quantity at Retail Outlets. In FY10, MQTUs were equipped with ASTM Color

& RON Analyzers at 05 locations resulting in improvement of the testing capabilities. Furthermore;

a new method was developed in the period under review to detect the alcoholic contents in Motor

Gasoline at Retail Outlets and Storage Points.

In FY10, PSO Company’s TQM department developed several new lubricant blends. Moreover,

Bio-Diesel Formulation and Furnace Oil blending was carried out. The new formulation for LDO

blend was also developed in FY10.

Human Resource Management

PSO is fully aware of the fact that its significant growth and success is an outcome of the

contributions and commitment of the company’s greatest asset which is its human resource.

The attraction, preservation and development of high caliber people are a source of competitive

advantage for the business and PSO company is fully focused on this important aspect. In FY10

PSO Company revised car loan and house rent advance policy to facilitate its employees.

Furthermore a day care center was established to create work-life balance for employees. This

initiative played a significant role in contributing to the retention of female employees.

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Training & Development

A proper Training Need Analysis was conducted in FY10. During the period under review 113 in-

house customized training sessions were conducted and employees were nominated to attend 85

public sessions as part of the training schedule of the Company which benefitted 2,691 employees,

nationwide.

These trainings focused on marketing and sales, teamwork, general management, leadership,

communication, quality management, supply chain management, quality and quantity control of

cargo & tank systems, customized training for sales, operations and logistics staff.

The Company has been facilitating Universities by providing learning based professional internship

programs during summer and winter vacations by giving them projects for professional experience.

Health Safety & Environment

At PSO, safety is considered as a prime concern and given due priority. We believe that all

accidents/ incidents are preventable and our first aim is excellence in HSE standards in all PSO

businesses.

Reportable injuries and incidents analysis reflect the performance of an organization with respect to

work place safety during the reported period. The under mentioned results indicate PSO Company’s

performance in safety:

• The Company achieved 1,179,316 Safe Operational Man-hours during FY10 without any Lost

Work Day (LWD) injury.

• The Incident Rate remains at 1.01 Man-hours during this period.

Furthermore, HSE Champion program in FY-10 was launched to create a culture of safety at work

place.

Corporate Social Responsibility

During FY10, the company extended help to society in three major areas i.e. education, health care

and community building.

Being a conscientious corporate citizen, the company came to the aid of our compatriots hit by the

deluge in Hunza by providing free life saving medicines to the Attaabad Landslide victims.

During FY10 the company financially supported several NGOs to enable education to reach to the

under privileged, nationwide. With the help of TCF, PSO built schools in earthquake affected areas

i.e Nokot, Gulibagh Batang and Vehari. PSO also supported Aziz Jahan Begum Trust in the

construction of a residential complex for visually impaired children. In FY10 the company supported

many health care institutions through donations, prominent among which are Negahban Welfare

Trust (Civil Hospital, Karachi), Kohi Goth Hospital, Indus Hospital, Shikarpur Hospital for Women

& Children and Marie Adelaide Leprosy Center in Gawadar.

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9.7 FINANCIAL PERFORMANCE

For the year ended June 30, 2010, PSO achieved an impressive performance with turnover touching

the Rs. 877 billion mark compared to Rs. 719 billion in FY09, an increase of 22% mainly due to

heavy reliance of the power sector on PSO for the supply of Furnace Oil. During FY10, profit before

tax was recorded at Rs. 17.96 billion versus a loss of Rs. 11.35 billion last year and profit after tax at

Rs. 9.05 billion against a loss Rs. 6.69 billion registered in previous financial year. The earning per

share was Rs. 52.76 versus loss per share of Rs. 39.05 last year.

Despite being profitable, PSO continued to face liquidity problems due to ever-increasing

receivables throughout FY2010. As of June 30, 2010, various major power generation companies

including WAPDA, KAPCO, HUBCO and KESC and the PIA (Pakistan International Airlines) owe

your Company an aggregate amount of Rs. 111 billion. On account of PDC, GoP owes Rs. 11.86

billion. This has created such an acute financial crunch that we have to struggle to meet our import

payments. Consequently, the Company owed Rs. 81 billion to local refineries and hence had to rely

on short-term borrowings for its needs.

The heavy bank barrowings resulted in high financial costs borne by the Company in terms of

interest payments, which dented PSO’s profit margins. PSO ended up incurring Rs 9.88 billion as

financial charges during FY10 as compared to Rs. 6.2 billion as financial charges in FY09.

In addition to heavy financial charges borne by PSO, Pakistan Rupee devaluation of 4.9% against

the US$ also adversely affected the profitability of PSO as more than 90% of oil product imports in

the country are carried out by PSO.

The management of PSO has formulated various strategies to overcome the liquidity problems.

These include rigorous monitoring of the net working capital position of PSO to ensure that current

asset - current liability maturities are adequately matched with temporary mismatches being covered

through short-term borrowings. In addition, all out recovery efforts were made throughout FY10 to

ensure availability of products in the country. As a result of these measures, PSO received Rs. 377

billion from the power sector and Rs 5.5 billion on account of PDC from GoP. For the year ended

June 30, 2010, the Company achieved an impressive performance with turnover touching the

Rs. 877 billion mark compared to Rs. 719 billion in FY09, an increase of 22% mainly due to heavy

reliance of the power sector on PSO for the supply of Furnace Oil. During FY10, profit before tax

was recorded at Rs. 17.96 billion versus a loss of Rs. 11.35 billion last year and profit after tax at

Rs. 9.05 billion against a loss Rs. 6.69 billion registered in previous financial year. The earning per

share was Rs. 52.76 versus loss per share of Rs. 39.05 last year.

9.8 CONTRIBUTION TO THE NATIONAL EXCHEQUER

During FY10, PSO contributed Rs.175 billion to the government exchequer in the form of corporate

taxes, excise duty, sales tax, import duty and petroleum development levy (PDL).