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Pakintan's Oil Company To Invest $800 million
Pakistan's national oil company will invest more than $800 million developing new projects this year as 50-year-old gas and oil fields can't keep up with rising energy demand. Attacks by insurgents on pipelines and installations have disrupted gas supplies to textile exporters, which account for two-thirds of Pakistan's overseas shipments.
Oil & Gas Development Co. plans to drill in Baluchistan for the first time in six years as the government increases security against attacks from insurgents, tapping a region that holds half of Pakistan's gas reserves. Oil & Gas, Pakistan's biggest explorer, will drill at least nine of 51 planned wells in the western province that borders Iran and Afghanistan, Chief Executive Zahid Hussain said. "In Baluchistan we have entered areas that for about six years were high security zones," Hussain said in an interview in Islamabad yesterday. "The government and local people are supporting us." "The company is aggressive in exploration and investment" compared with its rivals Pakistan Petroleum Ltd. and Pakistan Oilfields Ltd., said Farhan Mahmood, an oil analyst at Karachi- based JS Global Capital Ltd., who has a "buy" recommendation on the stock. The company usually meets 85 percent of its targets and its success in finding fuels is also high, he said. Pakistan's government is targeting $15 billion investment over five years to develop its oil and natural gas industry in order to reduce dependence on imports and meet local demand, which it expects will double by 2020. Overseas Exploration Oil and Gas Development also plans to search for fuels overseas in a joint venture, Hussain said. Oil & Gas Development teams have been looking for exploration opportunities in Africa and the Middle East, he said. Oil and Gas shares, which account for 18 percent of the benchmark Karachi 100 Index, have gained 89 percent this year, outpacing the 37 percent rise in the key index. They rose 1.8 percent to 89.71 rupees at the 3:30 p.m. local time close in Karachi. The company produces about 1 billion cubic feet of gas a day, or a quarter of the country's total output. Its oil production is 60 percent of the country's total of 62,000 barrels a day. Pakistan imports 85 percent of the oil it uses. Pakistan needs to boost oil and gas production as the government battles extremist violence and its worst economic crisis in a decade. The government's bid to revive the economy has been hurt by Taliban militancy in the northwest. Share of Revenue Baluch nationalists want political autonomy and a share of the gas in the province, where Pakistan's largest gas fields, including Sui, are located. "We have to be close to the local people," Hussain, a former diplomat, said. Under the government's new petroleum policy announced this year, companies are bound to spend $25,000, up from $10,000, on the welfare of local people besides employing them on priority, he said. Gas supply to the Pirkoh purification plant from the Sui field in Baluchistan was suspended yesterday after unidentified men blew up the pipeline, the state-run Associated Press of Pakistan reported today, citing police. Nawab Akbar Bugti, a Baluch tribal chief, was killed in August 2006 in a military operation ordered by the country's former military ruler, Pervez Musharraf. Interior Minister Rehman Malik said in April Brahamdagh Bugti, Akbar's grandson, is now leading the rebellion.read source article