LNG: A game changer in Pakistan’s energy equation

Article by Rahil Pitafi, Assistant Executive Director, Pakistan Oil and Gas Regulatory Authority

Pakistan is the sixth most populous country in the world with an estimated population of 191.7 million in year 2015. It is among the developing countries having quite high population growth i.e. 1.95% which is higher than average growth rate of other South Asian countries.

 

Energy availability is the key factor to economic growth. Pakistan’s economic growth demands higher energy inputs whereas indigenous oil and gas production is not sufficient enough to quench energy thirsty economy of the country. Pakistan’s constrained demand for natural gas in 6,000 mmcfd against supply of 4,000 mmcfd whereas the unconstrained demand is estimated to be 8,000 mmcfd which is double the current domestic production.

The total T&D network is approx. 150,000 kms with the consumer base of nearly 7.5 million. Pakistan is ranked as World’s top CNG consuming country with approximately 3 million vehicles running on CNG. Currently, Pakistan has been meeting nearly 26% of power generation requirements from gas fired plants.

Besides other factors like international economic crises and domestic pressures of war on terrorism, energy shortages have also played a vital role in decline in GDP growth from last few years. The two Government owned companies are majorly undertaking natural gas transmission and distribution activities in Pakistan i.e. SNGPL and SSGCL.

Pakistan is strategically placed in the proximity of world’s richest gas countries like Iran, Turkmenistan, Qatar and Russia. It is placed as a regional energy corridor and well placed for both pipelines and LNG. Iran-Pakistan-India (IPI) pipeline and Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline are the two options for import of gas through pipelines but prevailing geopolitical situation is a great impediment for materialization of both pipeline projects. The $7.5 billion IP pipeline has appeared as casualty of hardcore geopolitical power play.

Import of gas in the form of LNG is the only option for Pakistan which can act as a stop-gap arrangement for ever widening demand-supply gap. Pakistan has been weighing option of import of LNG since 2005. Ever since many attempts were made to import LNG but all went in vein. In a recent effort of the present government and after necessary procedures, a company i.e. M/s Engro Elengy Terminal Limited has established LNG Terminal, at Port Qasim, Karachi in March 2015.

Pakistan is undoubtedly a potentially developing gas market for domestic producers and imported gas suppliers mainly due to the reasons that it has large existing consumer base, comprehensive gas infrastructure, regulated environment and large evolving demand supply gap offering investment opportunities to potential investors. LNG import is being considered as panacea of all ills for Pakistan. This is high time to develop more and more terminals to meet the pace of anticipated development in the country. The LNG imports can help supporting dwindling economy of Pakistan otherwise energy conundrum in the country could turn into an energy catastrophe and the whole economic structure built around natural gas industry will be dilapidated.

Gastech News recently heard that Gazprom discussed with the Federal Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi, about the chance of delivering Russian LNG to Pakistan. How important is LNG for Pakistan’s energy needs? Leave your comments below.

Rahil Pitafi spoke about Pakistan’s LNG developments at Gastech Singapore. Find out more about next year’s event: Gastech Japan 2017.

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  • Ali Hasnat

    Very interesting, much said in a short write-up. Governance is the biggest issue!

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