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Import of gas should be the last option

Attention needed for exploration of untapped gas reserves

Feb 19 - 25, 2001

To meet the growing energy demands (estimated at 8 per cent per annum), the government seems to have opted for an easy solution of importing gas instead of developing the available resources in the energy sector.

Official sources confirm that against the prognostic reserves of 200 Trillion Cubic Ft (TCF) only 32.5 TCF have so far been discovered in Pakistan. Pakistan Petroleum Ltd. (PPL) made first giant gas discovery in 1952. Later on significant discoveries of Sui, Uch, Khairpur, Mari, Kandhkot, Meyal etc followed during 50s and 60s. Upto July 2000, only 509 exploratory wells drilled which comes to 6 wells per 10,000 sq. km against world average of 100 wells. So far the major part of exploration was confined to Indus Basin while the highly rich Balochistan and offshore basins are virtually unexplored in Pakistan.

In fact Pakistan is not short of gas supply, as even the discovered resources have not been linked up with the main distribution system. The real bottlenecks in the energy sector are the transmission and distribution system, which is an area, which demands for investment on a massive scale. It sound strange that instead of tapping the available resources, the government is thinking to import gas from the neighbouring countries like Iran, Qatar and the Central Asian States. Obviously, the import of gas which required construction of pipelines from the originating countries would naturally involve foreign investment at a massive scale, the prices of gas which are so far within reach of the people would also go beyond their capacity. It is okay to lay the gas pipeline from Iran or any other country for export to India, however import for local consumption may have its fallbacks on our economy. Importing gas may also hurt the interest of the foreign investors in this sector. According to Usman Aminuddin, Minister for Petroleum and Natural Resources, China has shown interest in joining Pakistan's options for importing gas. He said that China has recently expressed interest in joining one of these projects and Pakistan encourages other partners also. He was of the view that in order to meet the growing demand in future; Pakistan was working on three options of gas import from Turkmenistan, Qatar and Iran. Qatar's joining in with the Iran pipeline may also be a possibility, he said. These projects are open for participation by any interested party.

National resources

He said that government has adopted two pronged policy of exploiting the national potential through aggressive oil and gas exploration and prudent use of discovered reserves by replacing imported oil with indigenous gas. The minister has however sought investment in the augmentation of gas transmission network that entrails laying large diameter 800-km long gas pipelines at an estimated cost of $700-800 million. He said that government approved the conceptual plan prepared by SNGPL and SSGC. The government also intended to undertake the projects related to development of gas storage infrastructure. He disclosed that the government is considering revising the onshore policy package to incorporate more incentives for investors. The minister said that gas accounted for almost 38 per cent of energy demand with its 33 trillion cubic feet of commercially discovered gas reserves, whereas the potential is estimated at 200 trillion cubic feet in Pakistan.

The pipeline network of gas consisted of 7800km of transmission lines and 55,000 km of distribution lines supplying gas to more than three million consumers in the country. The present production of 2.4 billion cubic feet per day which is equivalent to 350,000 barrels a day is far less than the demand in power generation, fertilizer, industrial, domestic and commercial consumers. This shortfall in gas supply is mainly due to limited capacity of the existing transmission and distribution network. Even otherwise the gas companies would be unable to induct the imported gas into the existing distribution system unless the transmission and distribution systems are expanded. The expansion in this mechanism naturally demands for more investment whether from local or foreign resources.

The government was however expecting to add 1 billion cubic feet gas per day after signing a gas pricing structure agreement with multinational companies for newly discovered gas fields. The first new field Zamzama will come into production from next month. The new gas fields would enable the government to convert oil-run power generation to gas, which would be naturally less expensive when compared to oil.

It is a matter of great satisfaction that a major part of power generation is likely to be switched over from oil to locally produced gas that would certainly bring down the power generation cost. The power consumers in Pakistan are liable to pay exorbitant charges of power consumption to WAPDA and KESC. People in Pakistan are rightfully attaching hopes that electricity charges would certainly comedown to an affordable level as a result of switching to indigenous fuel i.e. natural gas.