DANGER OF SEVERE GAS SHORTAGE LOOMS LARGE
Oct 24 - 30, 2011
Pakistan is currently facing gas shortage of 1.5 to 2 billion cubic feet (BCF) which, during the coming winter, would reach three BCF. There is a gas shortage of around 1400 mmcfd during summer and 1500 mmcfd in winter while the current primary energy demand and supply gap is approximately 22 million tons oil equivalent (mtoe), which is expected to increase to 71 mtoe by 2020, if alternate options are not capitalized.
The sui-northern gas pipelines (SNGPL) and sui-southern gas company (SSGC) have filed a petition with the oil and gas regulatory authority (Ogra), seeking increase in gas tariff of up to Rs54 per mmbtu for second half of the current financial year.
According to an Ogra official, SNGPL has requested for an increase of gas tariff by Rs54.42 per mmbtu, and SSGC for an increase of Rs21.95 per mmbtu for the second half of the current financial year, starting from January 1, 2012. Both gas utilities have based their plea on the fact that they are facing severe revenue shortfall. SNGPL is facing shortfall of Rs30.4 billion, and SSGC claims it is facing shortfall of Rs8.36 billion.
It may be noted that on September 21, SSGC was allowed to increase gas tariff by Rs12.64 per mmbtu while SNGPL was allowed to raise gas tariff by Rs5.46 per mmbtu.
The SNGPL has shown a shortfall in revenue of Rs8.4 billion and SSGC's final revenue shortfall is Rs6.25 billion.
Critics believe that in view of shortage of gas and inability of SNGPL and SSGC to ensue smooth gas supply to its consumers, further hike in gas tariff seems unjustified. The first liquefied natural gas (LNG) terminal project for import of 400-500 million cubic feet (mmcf) LNG will help overcome energy shortage, they said adding, "With the growing demand of energy, the country desperately needs to import electricity and gas in order to provide electricity and other facilities to the people on cheaper rates."
According to them, the private sector needs to play its role to overcome the energy needs of the country. After completion of LNG project, the country would be able to produce 500 mmcfd LNG, which would help reduce the cost and shortage of energy.
As per the agreement, signed between overseas private investment corporation (OPIC)-an American company- and Pakistan Gasport limited (PGP), the project will start its work by January 2012, and its completion period is one year. The main sponsor of the project is Joint Venture Limited (JJVL), which is also a nominee this year for the prestigious Platts Energy Awards.
Sources in the SNGPL said there would be a gradual but severe gas shortage in upcoming winter and the current shortfall is expected to increase from 390 mmcf in October to 500 mmcf in November, 550 mmcf in December and could touch its historic peak of 840 mmcf in January 2012.
According to them, massive gas load shedding awaits industrial consumers in Punjab this winter, as province faces a severe gas deficit at present.
The authorities in SNGPL is advocating for accomplishment of LNG project to help overcome the shortfall. The government is working on all new avenues including Pak-Iran gas pipeline, LNG and gas explorations to meet gas demand, the sources added.
It may be mentioned that presently there is a load management of three days in Punjab whereas it is not the case with other provinces. The Punjab government has raised strong reservations over discrimination in gas supply to Punjab.
According to the President LCCI, Irfan Qaiser Sheikh, if any incentives were being offered to the private companies, it must be publicized so that private sector could be encouraged to divert its investment to this important sector. In order to meet fast increasing energy demands, Pakistan needs to import gas from neighboring countries.
He said that LCCI has serious reservations against the handling of complaints reported to SNGPL. Therefore, first preference should be given to the complaints of industrial consumers so that the industry, which is already facing numerous challenges, should not suffer unduly.
The Managing Director SNGPL Arif Hameed said that the SNGPL is going to launch LPG air mix for Kotlakhpat industrial area on experimental basis and after its success, the project would be spreading to other areas as well.
About Pakistan-Iran gas pipeline project, the MD made it clear that it would not be fulfilling all our needs. Definitely, we would have to rely on LNG to overcome the shortfall. He said that to ensure supply of gas to existing consumers a moratorium has been placed on industrial connection for one year while new housing societies would be asked to make LPG or other arrangements. He said that work on all new avenues including Pak-Iran gas pipeline, LNG, and gas explorations is in full swing to cater to 3400mmcf demand in next three to four years.
Experts said that Pakistan is presently facing a serious energy crisis. Despite strong economic growth during the past decade and consequent rising demand for energy, no worthwhile steps have been taken to install new capacity for generation of the required energy sources.
They said the country needs energy resources from all sources to meet the demand so that wheel of economy could move on. Shortage of energy is badly affecting industry, commerce, and daily life of people. All possible measures need to be adopted, i.e., to conserve energy at all levels, and use all available sources to enhance production of energy.
Liquefied natural gas may beat nuclear energy and fuel-cell technology as more and more industries are looking for cleaner and cheaper alternatives to heavy-fuel oil. 'LNG is the best alternative from an environmental and financial point of view and nuclear power would remain socially unacceptable, while fuel-cell technology wasn't yet advanced enough.
It may be recalled that shipbuilders have begun developing LNG engines as the international maritime organization draws up regulations to lower carbon and sulphur emissions. Shipping emits about three per cent of the world's carbon each year, equivalent to one billion tonnes, LNG cuts carbon emissions from shipping by about 25 per cent, sulphur oxides by almost 100 per cent and nitrogen oxides by 85 per cent.
LNG is natural gas chilled to minus 162 degrees, turning it into liquid for shipping by tankers.
Daewoo shipbuilding and marine engineering, the world's second-biggest builder of drill ships, and MAN SE are developing an engine fuelled by LNG to be used in vessels to carry as many as 14,000 six-metre containers. The shipyard expects to complete the project early this year.