Conversation with Mr Zafar Iqbal Ahmed — founding Managing Director, SAI Company (Private) Limited
[box type=”shadow” align=”” class=”” width=””]Profile:
Founding Managing Director SAI Company (Private) Limited (founded in 1962) providing technical services and equipment to oil & gas industry.
President:
SAI Institute of Studies
President:
Society for the Promotion of Arabic (SPA) (established in year 1973) — About 45000 students have received certificates who had passed in basic and advance Arabic language courses.
Founder President:
Defence Residents Society (DRS) (established in 1990), which has been making concerted efforts in bringing tangible improvement in the environment and living conditions of DHA residents.
Founder President:
Small & Medium Enterprises Alliance (SAMEA) (Established in year 2000)
Founder President:
Bazm-e-Kiran/Society for the Prevention of Waywardness (established in year 2007)
Established a skill development centre and dental treatment for hundreds of inmates in the Juvenile Jail in Karachi and a school in PECHS Block-2 for street children providing free education, books, uniforms to all students.[/box]
PAKISTAN & GULF ECONOMIST had conversation with Mr Zafar Iqbal Ahmed vis à vis the prevailing energy situation in the wake of pandemic and the future prospects. Following are the excerpts of the conversation:
In March 2020 the oil prices in international market started to decline as a consequence of oversupply of crude oil and finished products due to lower demand by consumers hit by COVID-19 and the price war between Saudi Arabia and Russia. Worldwide there was a slump that has recovered considerably. The behavior in Pakistan was somewhat different due to COVID-19 impact which was seen by various phases and degrees of lockdowns with the closure of borders with Iran and Afghanistan starting end February early March. Oil demand dropped with the worst impact during May and rapidly picking up in early June 2020 and since than normal pattern is seen with supply chain getting normalized.
Oil and gas investments are for long-term development of the energy resources and have remained cyclic by the rise and fall in crude prices, largely remaining unaffected by other socio-economic factors. COVID-19 is unlikely to deter investments in this sector since the energy demands are springing back with the global attempts to revive economies combined with the rising crude oil price.
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Despite the pandemic, governments all over the world, including Pakistan, endeavoured to keep the economy functional to protect from long term devastation of GDP. About six months through the pandemic, and the opening up of the country with SOPs, has already brought back the oil demand near to normal for the domestic consumers. The export sector is, however, not so resilient in picking up due to its dependency on international markets and the disrupted commercial arrangements with creditors, currency devaluation and the markets depression, all of which would require time to fix. It is anticipated that the overall demand for oil and gas during the next one year would remain cautious, rather than ambitious, mostly due to the time it takes for normalizing the economies all over.
LNG is fast becoming cheaply available with the fall in oil prices and the situation is likely to persist. Energy dependent development economies having no energy security of indigenous production would gain in the short term prevailing circumstances on their energy import bill. Renewable energy projects are on the rise to take a bigger share of energy mix, however, the Renewable Energy Solar, Wind, Hydro etc. projects growth remains slow as compared with the development growth, thereby, dependency on imported energy would exist albeit with a relatively lower impact on bottom line under the current circumstances.
The last six months was a classic test of whether Pakistan’s economy could be impacted by less global production and export and the country remained immune, partly due to swings of lower demand, but more so because the world saw no reduction in production and export of energy, rather the energy remained surplus at an attractive cost. Pakistan’s supplies of oil are secured from the Arabian Gulf region through long-term commitments whereas the LNG is also secured through term contracts as well as currently low priced easily procured spot cargoes. Therefore there is no probability that there would be global production and supply shortage hence Pakistan’s economy is very unlikely to be hit by such a scenario.