Pakistan and fossil gas

From Global Energy Monitor
This article is part of the Global Energy Monitor coverage of fossil gas
Sub-articles:

Pakistan is the world's fifth largest country in the world with a population of 217 million people as of 2019. The GDP growth rate was 5.8% in 2018 and has averaged 3.8% for the 2007-2017 period.[1] GDP is forecasted to remain around 5% in the near-term until 2025.[2]

As of 2019, domestic natural gas makes up 34.6% of primary energy, with LNG imports having a 8.7% share of the energy mix.[3] Due to rapidly growing consumption and depleting domestic reserves, Pakistan started importing LNG in 2015.[4]

In August 2020, Pakistan announced that their new energy plan aims for 30% renewable generation, mainly wind and solar, by 2030, up from current levels of 4%.[5]

Electricity Demand
Pakistan Power Generation by Fuel[4]

In FY 2019, total electricity generation was 122,708 GWh and in FY 2020, electricity generation declined 1% to 121,867 GWh[6], mainly due to the economic slowdown resulting from COVID-19.[3] Pakistan's Indicative Generation Capacity Expansion Plan IGCEP 2047 Main Report shows under the normal GDP growth rate assumption of 5.5%, electricity demand is forecasted to reach 237,996 GWh and peak demand is forecasted to be 43,820 MW in FY 2029-2030. By FY 2039-2040, electricity demand and peak demand are predicted to reach 394,338 GWh and 72,606 MW, respectively, under the normal GDP growth case.[7]

Energy Shortages

Between 1998 and 2004, natural gas demand grew at an average rate of 17.5% per year. Low gas prices and subsidies resulted in growing demand in the power, industrial and residential sectors. Pakistan's generation capacity has been unable to meet demand in the last few decades. In 2004, supply/demand imbalances started and were managed by sector gas allocation and load shedding. Additionally, power supply cuts and shortages for the industrial and transportation sector are now common.[4]

While installed generation capacity has increased from 23,337 MW in 2014 to 33,836 MW in 2019, Pakistan continues to face energy shortages of several thousand MWs especially in the non-summer months when hydropower output is low.[1] A World Bank report estimates that the total economic cost of power sector distortions (unreliable electricity to industry and households) in Pakistan was US$17.7 billion in FY15, or 6.5% of GDP.[8]

In winter of 2021, amid rising spot LNG gas prices and gas shortages, foreign traders of LNG cargo supply have defaulted and other bidders have been unable to deliver at original bid prices, causing the government to consider discontinuing gas supply to industries on a long term basis.[9]

In January 2021, Pakistan suffered another nationwide electricity blackout, further exposing the country's energy infrastructure's weaknesses.

Major Players

Oil and Gas Development Company Limited (OGDCL) and Pakistan Petroleum Limited (PLL) are the largest exploration and production company in Pakistan, with a 29.2% and 19.2% share of gas production, respectively.[3]

Natural Gas Demand

The power sector accounts for one-third of Pakistan's natural gas consumption. The residential and industrial sectors also account for a large portion of gas demand. [10]

In the period of 2005-2014, natural gas consumption was mostly flat, largely due to gas supply constraints.[4] Since LNG imports began in 2015, gas demand has increased, reaching 7% in 2018.[1]

Natural Gas Consumption by Sector in Pakistan FY18-19[10]

Key Demand Drivers

Natural gas use in the industrial sector is a major driver of gas demand in Pakistan.Gas use in the production of feedstock accounts for half of total gas consumed in the industrial sector.[4] Due to gas shortages, some fertilizer plants (Agritec and Fatima Fertilizer) in Pakistan only get regasified LNG supply for 3-4 months of the year and are forced to close the remainder of the year.[10]

Textile exports make up 60% of the country's overall exports.[9]

In December 2020, Sui Southern Gas Company (SSGC) announced a one month gas fuel supply cut to non-export industries in order to meet gas demand for the domestic sector. Many industrial users have switched to alternative fuels including furnace oil and diesel due to the continued unreliability of gas.[11]

Natural gas is heavily used in the transportation sector, with a high growth in NGV usage in Pakistan. Pakistan has more than 3.7 million CNG vehicles and 3,400 refuelling stations. However, in 2008 the government implemented a ban on construction of CNG stations and licensing of NGVs due to gas shortages.[4]

Natural Gas Demand Forecast by Sector, Pakistan, mmscfd[10]

Projection of Demand Growth

Pakistan Natural Gas Demand Supply Forecast[10]

The Oil & Gas Regulatory Authority (OGRA) 2018-2019 State of Regulated Petroleum Industry Report, forecasts total gas demand of 6,938 mmcfd, or 71.7 bcm, for FY30. OGRA's forecast shows a gap in supply of 5,389 mmcfd, or 55.7 bcm, by FY2030, which can only partially be met by LNG imports, the TAPI pipeline (1,342 mmcfd, or 13.9 bcm, capacity), and Iran-Pakistan pipeline (750 mmcfd, or 7.75 bcm, capacity).[10]

The OGRA forecast also shows demand increasing primarily in the residential and industrial sectors.[10]

2020 Emerging Asia LNG Demand, Oxford Institute for Energy Studies (OIES) Report

The 2020 OIES Report forecasts gas demand to reach 51.11 bcm by 2030 and then decreases to 42.3 bcm by 2050. [4]

Natural Gas Supply

LNG imports began in 2015. In 2019, Pakistan had 33.9 bcm of domestic gas production. In 2019, Pakistan imported 11.8 bcm of LNG, with the largest quantity of 7.2 bcm from Qatar.[12] As of 2021, there are four long-term LNG supply contracts totalling 6 mtpa of LNG.[3]

As of 2020, Pakistan's natural gas reserves are depleting at a rate of 9.5 percent per year. [13] As of 2021, there are no pipeline imports but several pipeline projects are in development.[4]

Pakistan also buys a large amount of LNG on the spot market. The current winter 2020/21 gas shortage and high LNG prices have only exacerbated Pakistan's ongoing energy shortage problems.[14]

Potential New Gas Sources

Pakistan has a large untapped shale gas potential. A study in 2015 by Pakistans Ministry of Energy concluded that Pakistan had 95 trillion cubic feet of risked recoverable reserves.[3] However, geography, environmental constraints, security concerns, and low natural gas prices in Pakistan are challenges to development of these resources.[15] Conventional gas reserves are estimated at 20 trillion cubic feet.[16]

In July 2020, Pakistan discovered new oil and gas deposits in the Kohat district of Khyber-Pakhtunkhwa province. The discovery was made by state-owned firm, Pakistan Oilfields Ltd, at the exploratory well in Tal Block. Preliminary tests show 16.12 mmscfd.[17]

In late 2020, Pakistan Petroleum Limited (PLL) discovered another gas field in Balochristian, with an estimated gas volume of approximately 1 trillion cubic feet.[18]

Oil and Gas Development Company Limited (OGDC) announced in late 2020, a new oil and gas deposit discovered in Khyber-Pakhtunkhwa. Preliminary tests show 1.6 mmscfd of gas in exploratory well Siab-1.[19]

In early 2021, Pakistan received bids for 15 out of 20 blocks in a second round of auction for onshore exploration rights. After a poor response to first round bids, the government decided to initiate a second round, but still did not attract many responses. [20]

Current Gas Supply Projects

Pakistan's domestic gas production comes from 42 onshore fields, mainly located in southeast and central Pakistan. Pakistan has an extensive gas pipeline infrastructure, with 13,000 km of gas transportation pipelines and 140,000 km of distribution lines.[4]

Proposed Gas Supply Projects

Proposed Gas Pipelines and LNG Facilities in Pakistan[3]
Table 1: Proposed LNG Import Terminals in Pakistan
Project Name Location Capacity Expected Commencement Date Sponsor Project Status Main Users
Energas LNG Terminal[21] Port Qasim 5.23 mtpa 2022 Energas, Exxon Mobil Exxon Mobil pulled out of project in November 2020 but Energas continues[21][22]
Fatima LNG Terminal[23] Port Qasim 5.23 mtpa 2022[24] Shell, Engro Elengy, Gunvor, Fatima Group
Tabeer Energy LNG Terminal[25] Port Qasim 5.23 mtpa 1st quarter 2023[22] Tabeer Energy Tabeer Energy will not make investment decision until pipeline construction[26]
Engro FSRU Expansion[27] Port Qasim 1.05 mtpa Winter 2020 Engro Elengy Terminal, Excelerate Awaiting government approval[28]
Gasport FSRU LNG Terminal Port Qasim 0.63 mtpa[29] December 2021[30] Gasport Consortium Limited, Trafigura
Table 2: Proposed Gas Power Plants in Pakistan

Project Name Location Capacity Expected Start Sponsor Project Details/Status
Bin Qasim Power Plant 3[31] Karachi 900 MW Late 2021 Siemens, Harbin Electric International Proposed
Trimmu RLNG[32] Jhang[33] 1263 MW June 2021 PTPL Proposed
RLNG OCGT 1577 MW 2028 "Candidate" Project in IGCEP 2047[7]
RLNG OCGT 1129 MW 2029 "Candidate" Project in IGCEP 2047[7]
RLNG OCGT 2162 MW 2030 "Candidate" Project in IGCEP 2047[7]

The North-Shore Gas Pipeline Project (NSGPP), is a proposed 1,100 km project, with a capacity of 1.2 bcfd[3], in collaboration with Russia in order to build additional LNG terminal projects and meet gas demand in Pakistan. It will transport gas from Karachi to Lahore.[13] Pakistan will have the majority share in the project. Construction, which will be lead by a Russian consortium, is expected to start in July 2021. [34]

The Turkmenistan Afghanistan Pakistan India (TAPI) Pipeline, is a 56-inch diameter[4] 1814 km pipeline project with a capacity of 1.3 bcfd.[3] The TAPI pipeline has a target completion of 2024 and construction commenced in 2021.[35]

The Iran-Pakistan Pipeline is a proposed 42-inch diameter 1880 km pipeline from Iran's South Pars field to Pakistan with a capacity of 7.8 bcm.[4] As of early 2020, work on the pipeline had stalled due to international sanctions on Iran. Iran and Pakistan signed an amendment agreement extending the period of the project by 5 years.[36]

Pakistan Natural Gas Domestic Supply Forecast, mmcfd[10]

Table 3: Proposed Gas Pipeline Projects in Pakistan

Project Name Capacity Owner Expected Start Length (km) Diameter (inches)
North-Shore Gas Pipeline Project (NSGPP) 12.4 bcm/yr 2023-2024 1100 km
Turkmenistan Afghanistan Pakistan India (TAPI) Pipeline 33 bcm/yr [37] 2024 1814 km 56 in.
Iran-Pakistan Pipeline 7.8 bcm/yr TBD 1880 km 42 in.

Projection of Gas Production

Pakistan Natural Gas Supply Demand Projection[4]

The Oil & Gas Regulatory Authority 2018-2019 State of Regulated Petroleum Industry Report forecasts total domestic gas supply of 1,548 mmcfd, or 16 bcm, and LNG supply of 1,299 mmcfd, or 13.4 bcm, for FY30.[10] There is a large unmet gap in demand, that will most likely be filled by LNG imports combined with curtailing gas supply to power plants, industry users, and NGVs.[4]

A 2020 Oil and Gas Industry Development Plan for Pakistan report showed that capacity additions of 929 bcf (26.3 bcm) of domestic gas supply and 2,260 bcf (64 bcm) of LNG gas imports are necessary in order to meet Pakistan's growing gas demand.[3] This includes an additional 1,800 mmcfd, or 18.6 bcm, of LNG import capacity by 2030 and 4,800 mmcfd, or 49.6 bcm, of gas pipeline capacity from coastal areas to inland areas by 2030.[3]

The 2020 OIES Report forecasts gas production around 21 bcm in 2030 and the remainder of demand, 30 bcm, being met by LNG imports. [4]

Articles and Resources

References

Related GEM.wiki articles

External resources

External articles

  1. 1.0 1.1 1.2 "Transforming the power sector in developing countries: Geopolitics, poverty, and climate change in Pakistan". Atlantic Council. 2020-01-09. Retrieved 2021-01-22.
  2. "Pakistan - Gross domestic product (GDP) growth rate 2025". Statista. Retrieved 2021-01-22.
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 "Development Plan for Pakistan: Oil and Gas Industry 2020" (PDF). Ministry of Energy (Petroleum Industry). Retrieved January 21, 2021.
  4. 4.00 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.10 4.11 4.12 4.13 "Emerging Asia LNG Demand". Oxford Institute for Energy Studies. Retrieved 2021-01-21.
  5. "New Pakistani energy plan aims for 30% renewable generation by 2030". Institute for Energy Economics & Financial Analysis. 2020-08-10. Retrieved 2021-01-22.
  6. "Electricity generation in Pakistan rising, despite the pandemic". Profit by Pakistan Today. 2020-07-26. Retrieved 2021-01-25.
  7. 7.0 7.1 7.2 7.3 "Indicative Generation Capacity Expansion Plan IGCEP 2047 Main Report" (PDF). NEPRA. Retrieved January 25, 2021.
  8. "In the Dark: How Much Do Power Sector Distortions Cost Pakistan?" (PDF). The World Bank. Retrieved January 22, 2021.
  9. 9.0 9.1 "Naphtha rallies on petchem strength | S&P Global Platts". www.spglobal.com. 2021-01-21. Retrieved 2021-01-22.
  10. 10.0 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 "State of the Regulated Petroleum Industry, 2018 - 2019". Oil and Gas Regulatory Authority, Government of Pakistan. Retrieved January 21, 2021.
  11. "Gas crisis crippling industrial activities". The Express Tribune. 2021-01-02. Retrieved 2021-01-22.
  12. "BP Statistical Review of World Energy 2020" (PDF). Retrieved January 22, 2021.
  13. 13.0 13.1 Desk, News. "Construction on 1,100-KM North-South gas pipeline likely in July". Mettis Global News. Retrieved 2021-01-21.
  14. Jaganathan, Gibran Naiyyar Peshimam, Jessica (2020-12-15). "UPDATE 1-Pakistan LNG tender for Jan cargoes receives offers above spot rates - traders". Reuters. Retrieved 2021-01-22.
  15. "EIA - Pakistan Overview". Retrieved January 22, 2021.
  16. Jorgic, Drazen (2019-03-12). "Pakistan to offer gas fields to foreign explorers, investors: official". Reuters. Retrieved 2021-01-22.
  17. "Pakistan confirms large oil and gas discovery in Khyber-Pakhtunkhwa province". gulfnews.com. Retrieved 2021-01-22.
  18. "PPL finds new gas reserves in Kalat". Profit by Pakistan Today. 2020-09-10. Retrieved 2021-01-22.
  19. "OGDC finds fresh oil, gas reserves in K-P". The Express Tribune. 2020-12-23. Retrieved 2021-01-22.
  20. "Pakistan gets bids for 15 out of 20 blocks". The Express Tribune. 2021-01-16. Retrieved 2021-01-22.
  21. 21.0 21.1 "Energas to Start Pakistan's Largest LNG Terminal in 2021". www.rigzone.com. Retrieved 2021-01-20.
  22. 22.0 22.1 "Energas all set to start construction of $180 mln Pakistani LNG terminal — CEO". Arab News PK. 2021-01-20. Retrieved 2021-01-20.
  23. "Pakistan's third LNG terminal expected to rack up $5bln in annual turnover". www.thenews.com.pk. Retrieved 2021-01-20.
  24. Nickel, Rod (2019-09-20). "Exxon Mobil, Shell among groups picked to build five Pakistan LNG terminals". Reuters. Retrieved 2021-01-20.
  25. "Mitsubishi's subsidiary plans to set up LNG terminal – Business Recorder". Retrieved 2021-01-20.
  26. "Setting up LNG terminal at Port Qasim Mitsubishi's Tabeer Energy to invest $400M". Engineering Post - Leader in Engineering Journalism. Retrieved 2021-01-20.
  27. L.P, Excelerate Energy. "Excelerate Energy and Engro Elengy Terminal Agree to Expand Pakistan LNG Import Terminal". www.prnewswire.com. Retrieved 2021-01-20.
  28. "Engro awaits govt's approval to build second LNG terminal". www.thenews.com.pk. Retrieved 2021-01-20.
  29. "Trafigura Confirms Plans for Pakistan's Second LNG Terminal". Offshore Energy. 2017-11-21. Retrieved 2021-01-20.
  30. "PGPL to build LNG terminal by Dec 2021". The Express Tribune. 2020-10-10. Retrieved 2021-01-20.
  31. "Siemens and Harbin Electric to build 900 MW Pakistan gas plant". Retrieved January 20, 2021.
  32. "PRIVATE POWER & INFRASTRUCTURE BOARD". www.ppib.gov.pk. Retrieved 2021-01-25.
  33. "12,464MW electricity to be added to national grid through IPPs' projects". Profit by Pakistan Today. 2020-06-01. Retrieved 2021-01-25.
  34. "Pakistan-Russia to build 1,100-kilometre gas pipeline from July". gulfnews.com. Retrieved 2021-01-21.
  35. "TAPI pipeline Afghanistan construction to start in Herat". Oil & Gas Journal. 2020-12-09. Retrieved 2021-01-22.
  36. "Work on IP gas pipeline project stalls". www.thenews.com.pk. Retrieved 2021-01-22.
  37. "Transaction Technical Assistance Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas Pipeline Project (Phase 1)" (PDF). Asian Development Bank. Retrieved January 28, 2021.