Balochistan has sizable reserves of coal and natural gas, and there is speculation that it may also hold large reserves of petroleum. At the moment, however, it is the province’s natural gas that has special importance in Pakistan’s energy profile.
There are three reasons for its importance. One is that natural gas, accounting for about 50 percent of Pakistan’s total energy consumption, is currently the country’s principal energy source. Indeed, Pakistan’s economy is one of the world’s most natural gas dependent.
The second is that, of Pakistan’sproven natural gas reserves—in 2006 estimated at 28 trillion cubic feet (tcf)—as much as 19 trillion tcf (68 percent) are located in Balochistan.
The third is that Balochistan accounts for from 36 to 45 percent of Pakistan’s natural gas production, but consumes only a modest 17 percent of it.
Of particular note is that the largest share of the province’s contribution to the nation’s natural gas production comes from the long operating Sui gas fields in the Bugti tribal domain, located among the parts most seriously afflicted by Baloch militancy.
The militant nationalists’ capability to either block or disrupt the operations of the natural gas industry is clearly considerable, constituting a genuine threat, not a mere nuisance.
The state-owned Sui Southern Gas Company alone, for instance, maintains a 27,542- kilometer pipeline distribution network, sprawling across the two provinces of Sindh and Balochistan, the size of which obviously defies continuous monitoring and policing.
According to reports compiled by writers for the Washington-based Jamestown Foundation, militant attacks and incidents of violence in general have become commonplace since the insurgency began escalating in 2002, and attacks against natural gas installations and pipelines in particular are steadily increasing in number.
For Baloch nationalists, the over half-century history of Pakistan’s domestic natural gas industry is one of unremitting indifference to the province’s indigenous tribal population. When it came to jobs, for instance, the gas industry’s well-paid managers and technicians were almost invariably drawn from outside Balochistan; local Baloch, inevitably viewed with some suspicion, were mainly employed in lowend jobs as day laborers. An obvious remedy for the shortage of technically skilled Baloch qualified for employment in the gas industry—government funding of technical training institutions in Balochistan—was never seriously considered until recently.
The nationalists’ strongest dissatisfaction is reserved, however, for what they term Balochistan’s lopsidedly deficient share of revenues from the government’s sale of natural gas. As it has evolved, the fiscal arrangement honoring provincial “ownership” of natural resources is fairly complex. Balochistan suffers from having been the first province in which gas was discovered. The royalty on natural gas paid by the central government to the provinces is based on wellhead production costs. These costs, since Balochistan’s gas fields were discovered and developed much earlier than those in the Punjab and Sindh, were long ago stabilized and are today much less than in the other provinces. The result is that Balochistan receives proportionately only about one-fifth as much in royalty payments as the other two gas-producing provinces, a fiscal circumstance that has the ironic effect of turning Balochistan, the country’s poorest province but leading supplier of gas, into an important subsidizer of the richer provinces. The nationalists also maintain that historically very little of the huge earnings of the central government in natural gas revenues was ever returned to the province in the form of development expenditures.
Pakistan’s annual consumption of natural gas, currently running at about 1 trillion cubic feet, is increasing at a fast pace at the same time that proven reserves are shrinking. This means that, apart from any increased reliance on imported supplies, pressure on Pakistan’s natural gas resources coming from industrial, commercial, transport, and residential consumers is bound to increase. Some of that pressure can be relieved with more aggressive domestic exploration and extraction. But that avenue of relief could be negated by any production lost to militant strikes. The remedy there will have to come either by thoroughly crushing the militants or by striking a political bargain with them. That fact, in turn, guarantees that Pakistan’s indigenous natural gas supplies, as long as they last, will remain a focal point of sharp controversy between Islamabad and Baloch nationalists.