PM Imran Khan to make a significant announcement regarding oil within 3 weeks

[Hate_Nooras]

I hope this ends well but somehow they are always exaggerated. Even if we find oil/gas our ability to exploit them will be pretty limited. And then there is the problem of seeing this as a panacea to all our problems-it wont be. Most countries that have oil and gas are poor as fuuck because like us they have had / or still have corrupt mafias in charge. IA its a game changer.

 

[HSiddiqui]

ایک خوشخبری تو گائینی وارڈ میں لیٹی نورا سے بھی متوقع ہے۔۔
بس قوم صبر کرے۔۔

جہاں تک تیل کی بات ہے ۔۔وہ تو ویسے بھی نکل رہا ہے۔۔
بلو اور اس کے ابے کے نامعلوم مقام سے۔۔​

Ha ha ha you are a philosopher

 

[HSiddiqui]

https://www.facebook.com/video.php?v=373689219887572

May ALLAH help him, he has proved to be the real leader.

 

[jani1]

Ha ha ha you are a philosopher

شکریہ جی۔??۔
مگر میرے خیال میں ۔۔فلاسفرہ کے ہوتے ہوئے کوئ اور فلاسفر نہیں ہوسکتا۔۔​

 

[xohail]

Dear All, I am Geophysicist and have studied and worked on offshore Indus. The first thing, please note that we are not expecting any oil from the reservoir, its the Gas which is a possibility. Carbonates of Miocene age are the primary target. This is the 13th well in Offshore Indus basin. Previous 12 either went dry or were commercially not viable but this is perfectly normal. Please understand this fact that subsurface is very complex and when it comes to offshore, it becomes really hard to establish a petroleum system. Same is happening is Indus offshore, Pakistan. 12 wells do not provide enough data to fully understand the complexity of subsurface and this is applicable for all offshore deltas of the world. First discovery in every offshore delta of the world came after a few dozen dry wells.
The drilling to Kekra-1 TD (Target depth which was 5460 meters) is about to be completed very soon. I have contacts on the drilling site, who have unconfirmed news that prospect has been found but of what quantity and quality has yet to be determined. Professional run several tests and flow the well in order to estimate that. So fingers crossed, just praying for commercially viable discovery. And let me tell you, this discovery will not be big news itself, for professional like us, the big news will be that we have understood and established the petroleum system of offshore Indus basin. More wells will be easier to drill on right location and that would be the actual beginning of new era in Pakistan's offshore history. But remember, this will take atleast 8 to 10 years to fully develop the field.

 

[umer_javed]

Asslam-u-Alaikum,

Having Oil is good thing perhaps selling may not help us (I wish i'm wrong) because we need to see the cost of production which will be the real factor. In Gulf countries cost of production is almost 9$ to 12$ but still Gulf countries are not making much. Reason behind this is that they are totally dependent on Oil and prices are crippling.

Now when it comes to Pakistan if the cost of production of this Oil is less than cost of import then it reduce our Oil overhead and perhaps if Govt (I'm talking about any Govt) is loyal to people of Pakistan then our energy prices should come down too.

If our Oil price is less than that of Gulf then we may attract customer and our prime potential customer will be china. Why China? because of their silk road cost of Oil import from Pakistan will be lot cheaper than any other country.

Let's hope for good May Allah bestow his mercy upon the poor people of Pakistan. Ameen

Regards,

 

[Will_Bite]

IK should not announce it, no matter how big the find. The Pakistani society still includes idiots who think that once a find is announced, the prices of oil should go down the next day.

Fact is, the time to delivery of actual fuel to the pumps will be long....might take up to several months to go from drilling to production. Then refining, and then to the pumps. It will be a 1-2 year process at the minimum. And Pakistan will need to sign up deals with importers in order to benefit from the sale..which would take another 3-5 years.

 

[Gujjar1]

Such good news have been hearing since year 0, we found this we found that, what happened to worlds largest gold reserves? What happened to thar coal etc, nothing going to happen till we ourselves becomes smart and get rid of these khanzeers NS and Zardaris.

 

[insouciant]

It's not the cost alone which is the main concern for Pakistan. It's also the Import bill. Even if we get the local oil/gas at the same price we currently import, for a limited export-oriented country like ours, we will be much much better off as we won't be spending $13 billion on oil imports!

Asslam-u-Alaikum,

Having Oil is good thing perhaps selling may not help us (I wish i'm wrong) because we need to see the cost of production which will be the real factor. In Gulf countries cost of production is almost 9$ to 12$ but still Gulf countries are not making much. Reason behind this is that they are totally dependent on Oil and prices are crippling.

Now when it comes to Pakistan if the cost of production of this Oil is less than cost of import then it reduce our Oil overhead and perhaps if Govt (I'm talking about any Govt) is loyal to people of Pakistan then our energy prices should come down too.

If our Oil price is less than that of Gulf then we may attract customer and our prime potential customer will be china. Why China? because of their silk road cost of Oil import from Pakistan will be lot cheaper than any other country.

Let's hope for good May Allah bestow his mercy upon the poor people of Pakistan. Ameen

Regards,

 

[insouciant]

Agree with your point on managing Nation's expectations and timelines for the realization of the project.

But the gain from such finds is assessed beyond direct benefits. For example, if you have proven natural reserves, it increases your repayment capacity on loans and increases your credit ratings! Put in simpler words, your credit terms with IMF can change significantly in your favor!

IK should not announce it, no matter how big the find. The Pakistani society still includes idiots who think that once a find is announced, the prices of oil should go down the next day.

Fact is, the time to delivery of actual fuel to the pumps will be long....might take up to several months to go from drilling to production. Then refining, and then to the pumps. It will be a 1-2 year process at the minimum. And Pakistan will need to sign up deals with importers in order to benefit from the sale..which would take another 3-5 years.

 

[paittibahi]

پاکستان کو بہت ہی زیادہ ہوشیار رہنا پڑےگا۔ کیونکہ جس ملک میں بھی تیل یا کوئی اور قدرتی معدنیات نکلی ہیں۔ اس ملک اور اسکے عوام پر بڑی طاقتوں نے بڑے ظلم ڈھائے ہیں۔​

 

[islamabadi]

https://www.facebook.com/video.php?v=373689219887572

He is NOT going to announce a complete overhaul of Punjab Police
He is NOT going to announce a complete overhaul of public schools
He is NOT going to announce a complete overhaul of Public hospitals
He is NOT going to announce the building of first of 5 million homes

But he IS going to announce discovery of oil by EXXON and try to run away with the credit. Actual kaam is ZERO. Business sentiment is ZERO. Kaam karnewala 1 banda nahi hai in k paas

 

[umer_javed]

I understand your concern but will you buy 100 Rs per liter imported patrol or 200 Rs per liter local product. There is a long list of products which we import from china even, in the past, we used to produce them in Pakistan. Why we stop making them? because local produced products are mush expensive them import. Here I would like highlight 1 factor and that is our labor is cheap but then how can we sell local made expensive product to the cheap labor.

Formula is:
Salary of labor = 1000
Price of local product = 2000
total local deficit = 1000 - 2000 = -1000
All the governments of the world seek help from IMF incase of deficit in budget, but who will help common man?

It's not the cost alone which is the main concern for Pakistan. It's also the Import bill. Even if we get the local oil/gas at the same price we currently import, for a limited export-oriented country like ours, we will be much much better off as we won't be spending $13 billion on oil imports!

 

[insouciant]

Your example is fine for Consumer Goods. But this is not how OTC commodities work! ?

Start by reading this if you want to develop a basic understanding of the market, pricing, and impact on Fx Trade: https://www.amazon.com/gp/product/1119962722

I understand your concern but will you buy 100 Rs per liter imported patrol or 200 Rs per liter local product. There is a long list of products which we import from china even, in the past, we used to produce them in Pakistan. Why we stop making them? because local produced products are mush expensive them import. Here I would like highlight 1 factor and that is our labor is cheap but then how can we sell local made expensive product to the cheap labor.

Formula is:
Salary of labor = 1000
Price of local product = 2000
total local deficit = 1000 - 2000 = -1000
All the governments of the world seek help from IMF incase of deficit in budget, but who will help common man?

 

[umer_javed]

Jazak'Allah Khair bhai for sharing the valuable link for book. Bhai I believe you've already read that book and you will save me some money buy giving little explanation why the Oil price is not right. Insha'Allah it will help me and other readers of this thread and will increase our knowledge.

I think we should also look towards the current situation of Venezuela, which is a Oil rich country, their cost of production is so high that they cannot offer to sell their Oil in any market. In current situation, even for them, its better to import then local produce. Bhai very simple logic if our cost of product is higher than cost of production any product out of this will also be expensive our product will not even survive our local market.

Your example is fine for Consumer Goods. But this is not how OTC commodities work! ?

Start by reading this if you want to develop a basic understanding of the market, pricing, and impact on Fx Trade: https://www.amazon.com/gp/product/1119962722

 

[insouciant]

Sure! Can you please share your educational background? So I know what level of technical stuff you'll understand and how much I need to simplify! I'll try to explain it accordingly then!

Jazak'Allah Khair bhai for sharing the valuable link for book. Bhai I believe you've already read that book and you will save me some money buy giving little explanation why the Oil price is not right. Insha'Allah it will help me and other readers of this thread and will increase our knowledge.

I think we should also look towards the current situation of Venezuela, which is a Oil rich country, their cost of production is so high that they cannot offer to sell their Oil in any market. In current situation, even for them, its better to import then local produce. Bhai very simple logic if our cost of product is higher than cost of production any product out of this will also be expensive our product will not even survive our local market.

 

[umer_javed]

Jazak'Allah khair Bhai, consider me layman and shed some light on this topic and you may proceed explaining in english for my convenience i'll use dictionary.

Sure! Can you please share your educational background? So I know what level of technical stuff you'll understand and how much I need to simplify! I'll try to explain it accordingly then!

 

[insouciant]

OK. I'll try to explain it as simply as I can but I'll omit some technical details so don't quote me to an expert oil trader.

There are two main differences you need to consider on oil trades:

1) Oil and other commodities in the world are traded on an exchange. Just like shares are traded on the Stock Exchange. Whoever gives the best bid wins it and clears the price. Unlike regular goods where the seller determines the sale price and a buyer if he likes it buys it or if he doesn't like it, he walks away!

Chicago Mercantile Exchange (CME) Group and the New York Mercantile Exchange (NYMEX) are the two biggest oil exchanges!

2) Oil is traded in USD ($). So you need to have $$$'s to buy Oil. You can't buy Oil directly from a country that is producing it in your or seller's local currency. So you need to have enough $$$'s to buy it.

But you don't need to buy oil from the international exchange if you are locally producing it and consuming it yourself. That's why we don't use $$$'s for SUI GAS because we produce it locally and bear the cost of production in PKR!

For America, the dollar supply is not an issue because they can print as many as they want to, whenever they want to! Hence for them, if buying oil on the international exchange is cheaper than the local production cost for them in $$$'s then they would buy from the international exchange. This is why they are not fully exploiting Shale Gas reserves yet!

However, for every non-American country, the dollar supply is a bottleneck. Pakistan or any other country cannot print dollars! We need to EARN dollars by exporting things in dollars!

This creates two problems for us:

1. Today we are spending about $13 Billion on buying Oil alone. Meaning, $13 Billion of our exports are offset by Oil Bill that we can maybe use to import some other things like new Aircrafts, better engines, machinery for industries etc.
2. The lesser the number of dollars you have in your bank, the more expensive dollar becomes and PKR/USD exchange rate increases, increasing the cost of other imported goods for a normal man!

For us to become a developed country, we need more energy/oil --> For more energy/oil we need more $$$'s --> For more $$$'s we need more exports --> For more exports we again need more $$$'s to buy machinery for industry and oil to run it! ???

I think you can now see that we are locked in a position where we cannot grow because of this dollar supply!!

But this problem can be solved by fixing this point I've highlighted in red before: For more energy/oil we need more $$$'s by meeting our energy needs locally.

How this new discovery can solve our problems?

This project is a conglomerate between two foreign and two local companies on 50/50 basis. Similarly, half of the cost will be borne in $$$'s because Exxon/Eni pay their employees in Dollars and a half in PKR.

And it would be sold to Pakistan Government with half the price taken in dollars and a half in the local currency. So even if the cost of production would be 4 times more than any other well in the world, it would still be cheaper for us to use it. The costs don't vary between extractions to as much as 4 times. It's in the 1x to 2x range max. And you'll understand that why is that so, if you'll understand what drives cost of extraction!!

Now what drives cost of extraction?
There are two main components of the cost:

1. Fixed cost: It's the cost to deploy the equipment/machinery etc. This is the biggest portion of the cost (75-90% of the cost)
2. Variable cost: It's the cost borne day to day on extraction. e.g: drill bits / employee salareis etc.

Whether a reserve is small or big, Fixed costs are usually almost in the same range. In this case, estimates are that it's as big a reserve as Kuwait's. So your fixed cost split across barrels becomes very very tiny!! Hence, your cost becomes insignificant!

The cost would be an issue for us ONLY if we want to export it! In that case, our cost in $$$'s at prevalent exchange rate needs to be less than the price Oil is being cleared in the exchange because if it is not, then nobody will buy it!

Venezuela/Nigeria oil issues is a separate topic that needs another detailed understanding.

I hope this clarifies!

Jazak'Allah khair Bhai, consider me layman and shed some light on this topic and you may proceed explaining in english for my convenience i'll use dictionary.

 

[umer_javed]

Jazak'Allah Khair Bhai for such detailed explanation. It saved me money and time which i would spend reading the whole book.

kindly consider my message as last comment for this discussion because our thinking and points of views are similar to same ends of magenet which will never stick together. In your explanation the story roam around US$ and my point is cost of production. In any case I would stop making Roti at home it pathan is selling cheaper in US$ or PKR. Any how your explanation worth appreciation. Jazak'Allah Khair for your explanation and patience.

Last point Natural Gas for Pakistan is lot more cheaper than LNG which we import from Qatar same way water in Punjab is almost free.

End Discussion

OK. I'll try to explain it as simply as I can but I'll omit some technical details so don't quote me to an expert oil trader.

There are two main differences you need to consider on oil trades:

1) Oil and other commodities in the world are traded on an exchange. Just like shares are traded on the Stock Exchange. Whoever gives the best bid wins it and clears the price. Unlike regular goods where the seller determines the sale price and a buyer if he likes it buys it or if he doesn't like it, he walks away!

Chicago Mercantile Exchange (CME) Group and the New York Mercantile Exchange (NYMEX) are the two biggest oil exchanges!

2) Oil is traded in USD ($). So you need to have $$$'s to buy Oil. You can't buy Oil directly from a country that is producing it in your or seller's local currency. So you need to have enough $$$'s to buy it.

But you don't need to buy oil from the international exchange if you are locally producing it and consuming it yourself. That's why we don't use $$$'s for SUI GAS because we produce it locally and bear the cost of production in PKR!

For America, the dollar supply is not an issue because they can print as many as they want to, whenever they want to! Hence for them, if buying oil on the international exchange is cheaper than the local production cost for them in $$$'s then they would buy from the international exchange. This is why they are not fully exploiting Shale Gas reserves yet!

However, for every non-American country, the dollar supply is a bottleneck. Pakistan or any other country cannot print dollars! We need to EARN dollars by exporting things in dollars!

This creates two problems for us:

1. Today we are spending about $13 Billion on buying Oil alone. Meaning, $13 Billion of our exports are offset by Oil Bill that we can maybe use to import some other things like new Aircrafts, better engines, machinery for industries etc.
2. The lesser the number of dollars you have in your bank, the more expensive dollar becomes and PKR/USD exchange rate increases, increasing the cost of other imported goods for a normal man!

For us to become a developed country, we need more energy/oil --> For more energy/oil we need more $$$'s --> For more $$$'s we need more exports --> For more exports we again need more $$$'s to buy machinery for industry and oil to run it! ???

I think you can now see that we are locked in a position where we cannot grow because of this dollar supply!!

But this problem can be solved by fixing this point I've highlighted in red before: For more energy/oil we need more $$$'s by meeting our energy needs locally.

How this new discovery can solve our problems?

This project is a conglomerate between two foreign and two local companies on 50/50 basis. Similarly, half of the cost will be borne in $$$'s because Exxon/Eni pay their employees in Dollars and a half in PKR.

And it would be sold to Pakistan Government with half the price taken in dollars and a half in the local currency. So even if the cost of production would be 4 times more than any other well in the world, it would still be cheaper for us to use it. The costs don't vary between extractions to as much as 4 times. It's in the 1x to 2x range max. And you'll understand that why is that so, if you'll understand what drives cost of extraction!!

Now what drives cost of extraction?
There are two main components of the cost:

1. Fixed cost: It's the cost to deploy the equipment/machinery etc. This is the biggest portion of the cost (75-90% of the cost)
2. Variable cost: It's the cost borne day to day on extraction. e.g: drill bits / employee salareis etc.

Whether a reserve is small or big, Fixed costs are usually almost in the same range. In this case, estimates are that it's as big a reserve as Kuwait's. So your fixed cost split across barrels becomes very very tiny!! Hence, your cost becomes insignificant!

The cost would be an issue for us ONLY if we want to export it! In that case, our cost in $$$'s at prevalent exchange rate needs to be less than the price Oil is being cleared in the exchange because if it is not, then nobody will buy it!

Venezuela/Nigeria oil issues is a separate topic that needs another detailed understanding.

I hope this clarifies!