International studies revealed that approximately 80 percent of the world’s total proven natural gas reserves are placed in ten nations. Russia tops the list, holding about a quarter of world’s total gas reserves then comes Iran and Qatar. It has also been revealed that the worldwide natural gas consumption grew by 1.5 percent (63 bcm), quite a bit feebler than its ten years average (2.3 %); while worldwide gas production was basically flat (0.3 %), the weakest growth in gas output for thirty four year, other than in the immediate aftermath of the financial crisis. This sub-par growth went hand-in-hand with declining gas rates – Henry Hub prices were 5 percent lower than in 2015, European and Asian gas markers were down 20-30 percent as rates continued to adjust to increased LNG supplies.
Much of the lackluster performance can be traced back to the US, mainly on the supply side where declines in gas (and oil) rates caused US gas production (-17 bcm) to decline for the first time since the US shale gas revolution started in earnest in the mid-2000s. Furthermore, researcher found that the gas consumption in Europe grew strongly (6 percent) assisted by both the rising competitiveness of gas relative to coal and weakness in European nuclear and renewable energy. The Middle East (3.5 percent) and China (16 bcm, 7.7percent) both also registered strong rise aided by enhancing infrastructure and availability of gas.
The largest declines were in Russia (-12 bcm) and Brazil (-5 bcm) both of which benefited from strong increases in hydropower. If we review the growing market for LNG, although China continued to offer the major source of growth, it’s striking that the rising availability of supplies has prompted a number of new states, counting Egypt, Pakistan and Poland, to enter the market in the last year or two. It is also said that the year 2016 was the first year of the growth spurt we expect to see in LNG, with worldwide supplies set to rise by around a further 30 percent by 2020.
If we focus more about Pakistan, so the natural gas rates in the country are low and the commodity is available to only 27 percent of Pakistan’s consumers. All this while, majority pays higher rates for consumption of LPG, RLNG or any other way of burning stove or engines.
Pakistani researchers mentioned that the cost of gas marketing firms is higher than tariffs which consequences in higher receivable for gas marketing firms. In Pakistan, Natural gas contributes about 46 percent of the total primary energy supply mix. The Government of Pakistan has an extensive gas network of over 12,202 km Transmission 119,736 km Distribution and 32,823 Services gas pipelines to cater the requirement of greater than 8.4 million consumers in the entire country by offering about 4 Billion Cubic Feet per day natural gas.
During July-March FY2017 the LNG imported stayed 129,092,714 mmbtu as against to 62,373,272 mmbtu during the corresponding period previous year. The average natural gas consumption was about 3,654 mmcfd counting 410 mmcfd volume of RLNG during July 2016 to February.
The government officials also reported that during July 2016 to February 2017, the two gas utility firms (SNGPL & SSGCL) have laid 814 km Gas Transmission network, 4,153 km Distribution and 1,162 km Services lines and linked 104 villages/towns to gas network. During FY2017, the gas utility companies have spent Rs. 17,925 million on Transmission Projects, Rs. 11,183 million on Distribution Projects and Rs. 14,925 million on other projects bringing total investment to about Rs. 44,033 million. During this period, 360,824 additional gas connections counting 360,465 Domestic/local, 339 Commercial and 20 Industrial were offered in the country.
The present government is pursuing its strategies for enhancing indigenous gas production as well as imported gas to meet the growing demand of energy in Pakistan. It is predicted that gas will be supplied to almost 414,723 new consumers during this fiscal year 2018. Gas utility firms have planned to invest Rs. 12,702 million on Transmission Projects, Rs 43,045 million on distribution projects and Rs. 8,462 million on other projects bringing the total investment of Rs. 64,209 million during the FY2018. Researchers also said that Pakistan has become the world leading CNG user country with more than 3 Million NGVs (Natural Gas Vehicles) plying on the roads. Presently greater than 3,416 CNG stations have the CNG marketing licenses in Pakistan. However, keeping in view the mushroom growth of CNG stations in Pakistan vis-à-vis depletion of natural gas reserves, government has imposed a ban on establishment of new CNG stations in the country w.e.f. 07.02.2008.
For sustainable growth of this sector, Government of Pakistan has accepted provision of RLNG to this sector with fiscal incentives of GIDC at the rate of zero and Sales Tax at the rate of 5 percent. The first LNG re-gasification Terminal was commissioned on 27th March 2015 in a record time of less than 11 months. Since March 2015, 83 LNG Cargoes have been handled at the LNG Terminal. The Terminal has re-gasification capacity of 600 mmcfd. Moreover, 2nd LNG Terminal has also been awarded to Pakistan Gas Port Company Limited (PGPCL) by the Government Company i.e. Pakistan LNG Terminal Limited (PLTL). The finance ministry of Pakistan mentioned in the present report that at present one LNG Terminal is in operation and is handling 4.5 MTPA of LNG which equals 600 MMCFD of RLNG. With the establishment of 2nd LNG Terminal LNG import volumes may reach 9 MTPA i.e. 1200 MMCFD of RLNG.