EXPLORING DOMESTIC ENERGY RESOURCES

SHAMSUL GHANI
(feedback@pgeconomist.com)
June 28 - July 04, 20
10

According to the Pakistan Economic Survey 2008-09, Pakistan has recoverable gas reserves of 29.671 trillion cubic feet. Presently 26 private and public sector companies are involved in oil and gas exploration and production activities.

During the last two years, Pakistan's cumulative per-day production of natural gas has been averaged around 3,975 million cubic feet. Simple arithmetic suggests that the reserves at this rate are going to last for another 20 years. With the fast growing demand for gas, especially after the de-dieselization of country's transport system, these reserves can at best be expected to suffice for 15 years or even less. According to the latest estimates, CIA World Fact book places Pakistan's gas reserves at 885.3 billion cubic meters. Through conversion of this estimate to cubic feet (one cubic meter equaling 35.315 cubic feet) total reserves would appear to stand at 31.264 trillion cubic feet.

CIA WORLD FACTBOOK ESTIMATES FOR PAKISTAN

YEAR

RESERVES IN BILLION CUBIC METER

RANK AMONG WORLD COUNTRIES

DATE WHEN ESTIMATES MADE

CONSUMPTION IN BILLION CUBIC
METER

RANK AMONG WORLD COUNTRIES

DATE WHEN ESTIMATES MADE

2004

695.6

29

2002

23.4

22

2001

2005

695.6

29

2004

23.4

23

2001

2006

759.7

29

2005

23.8

25

2003

2007

759.7

28

2005

27.4

24

2004

2008

792.8

28

2008

30.8

25

2007

2009

792.8

28

2008

30.8

25

2007

2010

885.3

26

2009

37.5

21

2008

The redeeming aspect of CIA World Factbook estimates is that the country's reserves are following an uptrend. But equally disturbing is the fact that consumption level has suddenly shot up in 2010. And this is understandable in the wake of mass conversion of transport system from diesel/petrol to gas during the recent years. Government's failure to develop an economical and viable mass transport system has forced the people to acquire personal means of transport even at the cost of cuts on other consumptions. They fully benefited from access to cheap consumer credit during the middle-years of the current decade. This in fact was a sort of social uplift that no one should grudge. However, mass transit systems result in economies of scale while individual transport system at large induces wasteful energy consumption.

The pressure on Pakistan's stock of natural gas comes from many directions. The hikes in world oil prices compel the power Gencos to shift the gear from oil-based production to gas-based power generation. The power shortage forces the business and households to use generators that are mostly gas-operated. The environment-related objectives of the government as well as the commuters' cost considerations result in growing demand for gas on a continual basis. These obvious shifts in the energy economy demand much higher investment in the natural gas sector than what we have been witnessing for a number of years.

Governments have been wasting time in fairy-tale gas projects like IPI, import from Central Asian countries etc. It was criminal wastage of time and money to conceive such idiotic projects. Afghanistan having occupied the centre place in the Great Game, who was going to allow the transmission of this all-important source of energy? To include the name of India in the infamous IPI project was the political blunder of the decade. Was it really difficult to see through the Indian ploy? Even a student of international relations could have told that this was meant to sabotage the Iran-Pakistan deal. Pakistan should have snubbed the Indian offer. India has benefited doubly from its folly. It not only sabotaged the actual project but also passed on a covert threat to US big bosses who hastened to cool India down by offering concessionary nuclear power assistance in return for withdrawing from the IPI project. Signing of the $7.6 billion deal doesn't mean that the project will be really implemented. The gravity of the US concern and its resolve to block this project hardly leaves any chance for Pakistan, rhetoric and a few anti-US demonstrations notwithstanding. Moreover, the $9 per MMBTU double the domestic gas price import of gas from Iran could only be used for power generation. It's not going to be a huge economic breakthrough by any means.

There is something basically wrong with Pakistan's decades-old policy mechanism. The country keeps entangling its in the external issues: political, economic etc, which could well be avoided in favor of internal capacity-building projects. Pakistan unnecessarily indulged in the war-efforts of Afghanistan and in consequence imported terrorism which is now eating into the country's economic and human resource base. And now, instead of developing national energy resources the government is looking somewhere else to solve energy security problem. Why depend on the gas import program that is going to take four years to be materialised. Why not to use these four years in developing coal resources to release pressure from oil and gas consumption. Why not conceive new hydro power projects and complete the ongoing ones in earnest. Why not accelerate the development of gas sector by putting in extra investment that it needs.

The LNG import can be a stopgap solution. Pakistan can use it as a buffer till such time it is able to considerably broaden energy base through domestic resource mobilisation. Before putting dependence on external energy resource, Pakistan should do a bit of stock-taking. China and India, by virtue of their huge population, shall continue to be the biggest bidders for the regional energy supplies. Dependence on external energy flows despite a sound domestic energy base will be simply suicidal.