Premier faces Pakistan gas flare-up

by BBC News Online's Stefan Armbruster

Britain's Premier Oil is locked in a showdown with environmental groups in Pakistan's courts over the right to explore for gas in the country's oldest national park.

At issue are the environmental integrity of the Kirthar National Park, the country's goal of energy self-sufficiency and Premier's desire to open up what could be the largest gas reserve in Pakistan.

We operate in countries and regions where the commercial, financial and political risks may be relatively high. We view the associated risk as an acceptable additional cost of doing business

Premier Oil

Premier, which specialises in operating in high risk countries, is opposed by local environmental groups which allege that laws have been bent in favour of the oil company.

"This is totally untrue," Charles Jamieson, chief executive of Premier, told BBC News Online.

"We are acting within the law, what we are doing is totally legal and it is up to the judicial process to decide," he added.

The case, which was dismissed by the high court on Thursday but will be taken on to the Supreme Court, continues against the background of possible US and British military action in neighbouring Afghanistan.

"It is a bit of a blow, but not unexpected... We intend to take the matter up at the Supreme Court level, the highest court of the land," said Farhan Anwar of Karachi-based Shehri-Citizens for a Better Environment, which is leading the opposition to the project.

Foreign dependence

With a population of over one billion, analysts estimate that South Asia's energy demands for gas will be at least half of Europe's within two decades.

Pakistan's economy needs more gas if it wants to maintain growth

Pakistan imports much more energy than it produces and wants to reduce its dependence on outside sources and price fluctuations to sustain its economic growth.

Plans to build a pipeline from the oil rich Central Asian states of Kazakhstan, Turkmenistan and Uzbekistan, through Afghanistan to Pakistan were put on hold when Taleban came into power.

But even if the Taleban were to be removed, a pipeline could take many years to build, so Pakistan is trying to secure other sources.

Rule of law

Local environmental groups, backed by Friends of the Earth (FoE), claim that Premier and the government have ignored their arguments that the exploration should remain banned.

Friends of the Earth claim this photo proves that mining was banned

Premier, which entered a joint venture with Shell, was awarded the Dumbar mining concession, which covers over 96% of the Kirthar National Park, in 1997.

The law protecting the park banned "clearing or breaking up of any land for cultivation, mining or for any other purpose".

Premier took up the licence, even though it was illegal to mine, because "it was there", said Mr Jamieson and repeats, "We hadn't done anything until we were allowed to by law".

Environmentalists believed they had scored a victory when Shell pulled out of the project in May on the grounds of a "re-alignment of the Pakistan business portfolio".

"Shell pulled out a week before their annual general meeting because it had become too controversial for them," said Craig Bennett of Friend's of the Earth.

The High Court refuses to throw out the environmentalists case

But the environmental camp was thrown into disarray in June when the Sindh regional governor, a former director of Shell-Pakistan, changed the law to allow exploration in Kirthar, conditional on an environmental impact assessment (EIA).

Under the current military rule of Pakistan, government officials can amend legislation without parliamentary consent.

After the EIA was completed, Premier petitioned the Sindh High Court to have the environment groups' case thrown out, but the court rejected this claim.

"The EIA was approved by the local authorities but local groups have called it a white wash," said Mr Bennett.

But Premier is not too worried about losing the case because there are plenty of other fields to develop in Pakistan, said Mr Jamieson.

Smelling gas

In June, a Premier spokesman in Pakistan, Phil Maclaurin, said they hope to find at least 4.5 trillion cubic feet of gas, more than the combined size of the company's nearby gas fields.

He added that nowhere else in Pakistan has there the same potential.

Premier has promised to repair damage caused by exploration work

The EIA commissioned by the government found "no negative socio-economic impacts are anticipated, provided appropriate mitigation measures are applied".

A gas pipeline already runs through the park which Premier claims would minimize environmental damage and it has promised that it will return the park to its original condition once the exploration is complete.

"We're not even taking any vehicles into the park, all the equipment will go in with camels," said Mr Jamieson.

"The park has no management process and our involvement in it will allow a more sensible and progressive plan and provide some finance to back it up," he said.

Kirthar's rugged mountains lie north-east of Karachi

The 3,000-square-kilometre national park, in the rugged Kirthar mountains, a four hour drive north-east of Karachi, was created in 1972.

It is populated by about 70,000 people and a number of animal species like the ibex mountain goat, urial sheep and chinkara gazelle, as well as cats, leopards and desert wolves.

Other attractions include numerous 18th century tombs, pre-historic archaeological remains and the enormous Rani Kot Fort.

Troubled waters

Premier has a reputation for pumping gas and oil in troubled lands.

"We operate in countries and regions where the commercial, financial and political risks may be relatively high. We view the associated risk as an acceptable additional cost of doing business," the company's website claims.

Apart from Pakistan, it has interests in Guinea Bissau, Indonesia, Burma, as well as the calmer waters around the UK.

US oil company Amerada Hess and Malaysian state oil company Petronas, both hold 25% stakes in Premier, and are strategic partners in developing Asian gas fields.

In September, Premier Oil announced it was setting up a $200m joint venture with the Kuwait Foreign Petroleum Company (Kufpec), replacing Shell as its local partner.