Pakistan’s dependence on the hydrocarbons has been growing immensely where the dwindling indigenous resources are being counterpoise by imports. According to the Economic Survey 2016-17, the domestic production of crude oil stood at 24.2 million barrels during 9 nine month fiscal year 2017.
Pakistan imports large quantities of oil and petroleum products from Saudi Arabia and other Middle Eastern countries. These crude oil imports stood at 5.9 million tonnes in nine month fiscal year 2017 versus 4.2 million tonnes in nine month fiscal year 2016. Transportation and power are the two major users of oil, and the share of oil consumption has increased in these two sectors.
For nine month fiscal year, transport sector accounted for 57 percent of consumption, particularly in the form of refined petroleum products like petrol and diesel. Share of power sector in total oil consumption on the other hand has seen some decline post fiscal year 2015, as the government initiated various coal and LNG-based projects to lower furnace oil consumption.
Indigenous gas still stands at around 4.0 billion cubic feet per day. The imports have come in the form of liquefied natural gas (LNG), which according to the Economic Survey 2016-17 increased to 129,092,714 mmbtu in nine month fiscal year 2011 versus 62,373,272 mmbtu in nine month fiscal year 2016.
The survey highlights that the average natural gas consumption was near 3,654 million cubic feet per day (mmcfd) including 410 mmcfd volume of RLNG. The illustration shows that the power sector has been the key consumer of gas followed by the industry, which has seen a decline in the last couple of years as gas curtailment policy continued amid limited supply.
The share of transport sector (in the form of CNG) has also tapered off over the years after peaking in fiscal year 2012, as the government has continued with its policy to restrict the heavy CNG usage.
Energy through biomass and agriwaste
Pakistan is an agricultural country and has a strong potential to produce energy through biomass and agriwaste. Also Pakistan has the edge from solar energy and can produce 2.3 million mega watts per annum. This is an alternate source of energy available in Pakistan after oil and gas.
The country can produce energy from befouled using its own land and resources for cultivation.
Possessing all these resources Pakistan is still lacking in fulfilling energy demand due to several reasons. With the total reserves of 0.31 billion barrels of oil Pakistan is not able to fulfill the demand of oil through home resources because the production of oil in the country is only 59.08 thousand bbl/day and the consumption is 426.72 thousands bbl/day, rest of the demand is fulfilled by oil imports.
The reason behind is less exploration and production. While in the gas sector Pakistan has 30 tcf reserves of gas and the natural gas consumption which is growing rapidly.
Due to sudden increase in CNG the current supply of natural gas is not meeting the energy demand in gas sector. Pakistan is suffering the worst shortage of oil, gas and electricity. The reason behind is improper channelizing of energy, less exploration activities in oil and gas sector, inappropriate distribution of resources, poor management, law and order situation and bad governance.
Pakistan can overcome the energy crisis which it is facing by optimizing the indigenous resources, adopting alternate energy technologies, focusing on the renewable energy and improving the government policy to grab the foreign investments. Besides the conventional energy resources Pakistan has the capability to produce energy through different alternate energy resources.
Pakistan produces two million tons molasses per year that is a reasonable amount to produce ethanol fuels for transport sector. Also by the cultivation of Jatropha crucas plants Pakistan can produce a large amount of biodiesel for automotives. Also having the edge of sunlight Pakistan has potential to produce solar energy.
By allocating biogas units in rural areas and at grid levels, adopting fuel cell technology and by biomass to energy production Pakistan can overcome the energy crisis by utilizing local resources. Even then the oil and gas sector of a country is an important part of its economy. The oil and gas sector of Pakistan has massive share in the country’s economy.
Oil and gas sector key to boost economy
Development of oil and gas sector is the major to boost up a country’s economy. Government is trying to offer a better and competitive policy that should meet to the international standards to attract the foreign investments in the country.
The requirement now is for fulfilling the energy needs is to improve law and order situation in the country for the sake of foreign investments, intensive rationalizing of oil and gas prices and focus management for utilization of resources.
Petroleum consumption rose 9.64 percent during 2016-17
A report released by the Oil Companies Advisory Council (OCAC) for the year 2016-17 revealed Pakistan’s petroleum productions consumption grew by 9.64 percent compared to 2015-16. According to OCAC’s report, not only did this fuel a rise in import bill but also put pressure on Pakistan’s two ports FOTCO at Port Qasim and KPT Oil Piers at Keamari.
OCAC’s report stated the fuel consumption was expected to rise in lieu of increased activities due to China-Pakistan Economic Corridor (CPEC) in 2018. The report mentioned the downstream oil sector faced many challenges during 2016-17, although global oil prices remained steady, which helped Pakistan take advantage from the low price point.
OCAC’s report added an increase in demand for transport fuels in lieu of lower global oil prices remained a major challenge.
Petroleum consumption during 2016-17 was recorded at 27 million tons, a rise of 9.64 percent compared to 2015-16. High-speed diesel and PMG posted a rise of 10 and 15 percent respectively compared to 2015-16.
Presuming a growth rate figure of 7 percent, OCAC stated Pakistan’s annual petroleum demand could reach around 55 million tons by 2030, from the projected demand of 29.6 million tons in 2018.
The report stated it was important to ensure the provision of quality petroleum products like Euro IV/V to the consumers.
Another frightening situation spread over Pakistan as the country’s oil reserves are expected to deplete during the next 10 years. Gas reserves are also expected to diminish after 13 years, if they are being used up at the current pace.
POL products consumption up 9.7pc, production 3.2pc
The consumption of petroleum products registered a growth rate of 9.7 percent during fiscal year 2016-17 as compared to previous year’s increase of 5.2 percent.
During the year, main drivers of increased consumption were transport and power sectors, which registered high growth of 12 percent and 10 percent respectively as compared to the year 2015-16, Oil and Gas Regulatory Authority (OGRA) said in its annual report for the year 2016-17.
The consumption of Motor Spirit (MS) in transport sector witnessed an increase of around 16 percent during the period under review, which could be attributed to rising demand of transport sector particularly the growing number of motorcycles and cars.
Consumption of High Speed Diesel (HSD) grew by 10 percent compared to previous year mainly on account of higher utilization by transport sector indicating increased economic activity in the country. Transport and power sectors consumed almost 90 percent of total Petroleum Oil Lubricant (POL) consumed in the country, with 57 percent and 33 percent shares respectively.
Pakistan State Oil remained the lead player in total energy products supply to the consumers with 55 percent market share, followed by Shell with 9 percent, Attock Petroleum Limited and Hascol Private Limited with 8 percent each.
Total PARCO Marketing Limited and Total PARCO Pakistan Limited captured 4 percent shares each. While, Byco Petroleum Pakistan Limited and other oil marketing companies contributed 3 percent and 8 percent shares respectively. Total production by the refineries stood at 11.67 million tons as compared to previous year’s 11.31 million tons, showing a growth of 3.2 percent.
Pak-Arab Refinery Company was the largest and main producer of petroleum (POL) products with 39 percent market share in the total production, followed by National Refinery Limited with 20 percent share, Attock Refinery Limited, Pakistan Refinery Limited and Byco Petroleum Pakistan Limited with 18 percent, 14 percent and 10 percent respectively.
The demand for HSD, MS and FO were mostly met through imports as domestic production was not enough to meet the domestic requirements.
Around 73 percent of MS, 69 percent of FO, 46 percent of HSD and 14 percent of Jet Fuels demand was met through imports of finished POL products in the country during the last fiscal year.
Oil consumption to come down
Oil consumption has been projected to come down to 17 percent of total energy consumption in 2030, from the present proportion of 37 percent (2016).
Gas consumption will also go down from 42 percent to 30 percent in the same period; gas consumption will be dominated by imported LNG component of 67 percent of total, if no major gas discovery is made in the meantime, which may not be the case.
Coal consumption is to grow from 5 percent (mostly used in industrial sector presently, 2016) will more than triple its share to 17 percent, wherein the increase will be mostly due to installation of coal power plants, based both on imported and domestic coal.
Domestic Thar coal may have a 40 percent market share while imported coal will have a market share of 60 percent within the coal sector. Hydro and Renewable energy has been projected to grow from 11 percent to 25 percent. It should be noted that these are percentages of total energy consumption and not of electrical consumption only.
Total primary energy supplies have been projected to almost triple in the forecast period from 72 MTOE in 2016 to 199 MTOE in 2030.
Petrol consumption to surge by 80 percent
Pakistan’s petrol consumption is estimated to surge by 80 percent to 14 million tonnes by 2021-22. Overall oil demand is to increase by about 18 percent despite an estimated 65 percent fall in furnace oil needs in the said period.
The report said the demand for motor gasoline, commonly known as petrol, currently stood at about 7.97 million tonnes that would jump to 14.17 million tonnes in 2021-22, showing an increase of about 78 percent.
On the other hand, consumption of furnace oil has been estimated to reduce by almost 65 percent to 3.2 million tonnes in five years from current consumption of about 9 million tonnes.
The demand for total POL products is estimated to increase from 27 million tonnes this year to about 32 million tonnes in five years, showing an increase of 17.5 percent. High speed diesel (HSD) would be another major driver for growth in consumption of petroleum products.
The HSD consumption is estimated to increase by 46.4 percent to 13.7million tonnes in five years from current level of 9.3m tonnes. The demand for kerosene oil and light diesel oil is also estimated to increase by 8.24 percent each to 141,000 tonnes and 25,000 tonnes respectively in five years.
The OCAC said meeting the challenge of sustained energy supplies was of critical importance to Pakistan’s growth. It said a road map for ensuring sustained supply of Petroleum Oil Liquids (POL) to the Pakistan market was necessary to help keep the economy turning and ensure that projected growth targets were achieved.
The year 2016-17 was very challenging for the downstream oil sector. The crude prices remained stable and Pakistan also benefitted from the low oil prices in the international market, the phenomenal growth in demand for transport fuels, riding a wave of low prices at the forecourt, was a major challenge.
Balochistan producing 17pc gas consumed 2pc
Baluchistan produces 17 percent of the total natural gas in the country; however, the province consumed only 2 percent natural gas during 2015-16, according to the Oil and Gas Regulatory Authority (Ogra) report.
The gas consumption in all the provinces have increased during the year 2015-16; however, it was decreased in Balochistan where the gas consumption was reduced by 4 mmcfd from 55 mmcfd in 2014-15 to 51 mmcfd in 2015-16, said the Ogra report on the State of the Regulatory Petroleum Industry 2015-16.
In Punjab, the consumption increased from 1035 mmcfd in 2014-15 to 1154 mmcfd in 2015-16, Sindh consumption from 1139 mmcfd to 1256 mmcfd while Khyber Pakhtunkhwa consumption increased from 241 mmcfd to 266 mmcfd, the report maintained.
The report said that Sindh and Punjab are the biggest gas consumers with 46 percent and 42 percent share respectively, followed by Khyber Pakhtunkhwa and Balochistan using 10 percent and 2 percent gas, respectively.
About the province-wise gas production and consumption during fiscal year 2015-16 in SNGPL and SSGC Systems, the report said that Sindh produces 63 percent of the natural gas, Balochistan 17 percent, Khyber Pakhtunhwa 7 percent, Punjab 3 percent while 7 percent is LNG import, the report said.
On average, during the last 5 years, more than 324,534 consumers are connected to gas network in 2015-16 out of which about 255,736 consumers were in Punjab. The consumption of Motor Spirit (MS) in transport sector witnessed a growth of around 22 percent during period under review.
This may be attributed to lower prices and increased demand of generators. Similarly, Pakistan State Oil (PSO) remained the lead player in total energy products supply to the consumers with 56 percent market share. In 2014-15 PSO share was 57 percent; however, PSO lost around 1 percent of its total market share to other players and lost five percent of its share in Motor Spirit (MS) sale which was reduced from 47 percent last year to 42 percent during the year.
PSO supplied about half of total High Speed Diesel (HSD) sales during 2015-16, however, its market share was reduced to 48 percent from the nearly 50 percent last year. Furnace Oil (FO) was mainly supplied by the PSO and its market share was increased to 71 percent from 67 percent last year. Total production by the refineries during 2015-16 was 11.31 million tonnes compared to previous year’s 11.43 million tonnes. This year’s production fell to 1 percent from 3.5 percent last year.