S.Kamal Hayder Kazmi,
Research Analyst
Sep 6 - 12, 2010

Natural gas will provide a growing share of the world's energy by 2030. Affordable and abundant, natural gas can help provide the energy needed for economic and social progress and because it burns cleaner than oil and much cleaner than coal, natural gas is a powerful tool for reducing the environmental impact of energy use.

In Pakistan, the supply of gas has exhibited an increase of 1.6 per cent during July-March 2009-10. The increase in supply owes to higher production of 1.6 per cent in natural gas during the period under review. Due to this increase in availability of natural gas, the overall consumption of gas remained higher during the period. Furthermore, the sector wise consumption of gas suggests that the household, commercial, fertiliser and transport sector witnessed positive growth in consumption of gas during 2008-09.


Electricity 15.3%
Oil 29%
Gas 43.7%
LPG 1.5%
coal 10.4%

More recently, with the exception of cement and power sectors, many major sectors have witnessed positive growth rates during July-March FY10. The consumption of gas by industry has witnessed a significant increase of 5.3 per cent during July-March 2009-10 especially after it declined by 1.1 per cent during 2008-09. The increase in industrial consumption owes to rise in domestic demand for manufacturing production during the period. The maximum decline of 72.7 per cent has been witnessed in cement sector's gas consumption on the back of contraction in its external demand during the period along with the switch over to coal for production. Decline in power sector's gas consumption is based on the inter-corporate circular debt reason. On the other hand, gas consumption in the transport sector increased due to shift from imported fuel oil to relatively cheaper source of gas during July-March 2009-10.

However, the average production of natural gas during July-March 2009-10 was 4,048.76 million cubic feet per day (mmcfd) as against 3,986.53 (mmcfd) during the corresponding period of last year, showing an increase of 1.56 per cent.

Natural gas is used in general industry to prepare consumer items, produce cement and generate electricity. In the form of CNG, it is used in transport sector and most importantly to manufacture fertiliser.

Currently, 28 private and public sector companies are engaged in oil and gas exploration and production activities.

Moreover, the Liquefied Petroleum Gas (LPG) contributes about 0.7 per cent of the country's total energy supply mix. The main objective to enhance the use of LPG is to stop deforestation in the areas where the supply of natural gas is technically not viable. As a result of government's investor friendly policies, LPG supplies have gradually increased. The cornerstone of LPG Policy is to ensure enhanced availability of LPG at a competitive price to end consumer. LPG marketing companies have imported around 62,920.3 MT of LPG during July-March 2009-10.

In an effort to reduce dependency on other fuels as well as to improve the environment in the country, the use of CNG in vehicles is encouraged. Due to existing price differential between CNG and Petrol, vehicles are converted to CNG and approximately two million vehicles are using CNG in the country. The number of CNG stations is ever increasing with an increase in the vehicle conversion rate. Resultantly, there are about 3,116 established CNG stations operational in the country. With an investment of over Rs70 billion, Pakistan at present is the largest CNG user country in the world.

Today, the government is encouraging LNG import by the private sector. Accordingly, Pakistan Mashal LNG Project (PMLP) was conceived to cater for the energy need of the country as envisioned in the 25 year National Energy Security Plan and identified in the Energy Gap Coverage Strategy. PMLP is to be set up on an integrated basis whereby a private sector project developer will manage the entire supply chain including procurement and shipping of 3.5 million tonnes per annum LNG, construction and operation of an onshore LNG receiving terminal, and delivery of 500 MMCFD re-gasified LNG to the SSGC's system in Karachi.

During March 2010, Pakistan has signed a $7.5 billion deal with oil-rich Iran paving the way for laying the much-delayed natural gas pipeline that was originally envisaged to extend up to India.

The 900-km pipeline is expected to mitigate the crippling energy crisis in Pakistan which has seriously hit the country's industry. The signing of the pacts is an historic achievement and a milestone towards meeting the energy needs of Pakistan. The pact also addresses the issue of transportation tariff, which will be worked out in line with international practices.


High international oil price is expected to strengthen the top line of the gas sector particularly in the second half of the current financial year when wellhead gas prices are expected to be revised upward. Pakistan's need for energy is rampant. The country has been facing severe energy crisis for last two years. A land base gas pipeline to fulfill energy needs is many times cheaper than other available sources to import energy in Pakistan.