Research Analyst
Sep 3 - 9, 2012

Energy has become one of the most important topics of the 21st century. The world is now looking at natural gas to supply more energy and fuel needs in the new century. Natural gas has the advantage of burning cleaner and more efficiently than other forms of fossil fuels. However, natural gas, like other fossil fuels, is not a renewable resource.


2001-02 824,604 7.4
2002-03 872,264 5.8
2003-04 1,051,418 20.5
2004-05 1,161,043 10.4
2005-05 1,223,385 5.4
2006-07 1,221,994 -0.1
2007-08 1,275,212 4.4
2008-09 1,269,433 -0.5
2009-10 1,277,821 0.66
2010-11 1,240,671 -2.91
Avg. 10 years - 5.1
2010-11 939,950 -
2011-12 957,275 1.8

In Pakistan, natural gas is used in general industry to prepare consumer items, to produce cement, it is used in transport sector and most importantly to manufacture fertilizer to boost the agricultural sector. Currently 27 private and public sector companies are engaged in oil and gas exploration & production activities. Historically, indigenous natural gas is one of the types of fuel used by thermal power plants while the other type of fuel being imported is furnace oil. With the significant increase in international prices of furnace oil, initially the power sector retained the lion's share in the allocation of natural gas. However, the gas companies did not sign long-term agreements with the public sector utilities and subsequently, the allocation of gas to the public sector plants were allocated on as-and-when available basis. This pattern continued for a considerable period up to the mid eighties. However, with the passage of time, natural gas became a scarce resource because of major use in the domestic, fertilizer and transport sectors. Thus the allocation of natural gas for the power sector has declined significantly.

Pakistan's economy has been growing at an average growth rate of almost 3 per cent for the last four years and demand of energy both at production and consumer end is increasing rapidly. Knowing that, there is a strong relationship between economic growth and energy demand & supply. Pakistan's total energy consumption stood at 38.8 million tonnes of oil equivalent in 2010-11. The relative importance of the various sources of energy consumption of Liquid Petroleum Gas (LPG), electricity and coal has been broadly similar since 2005-06. The share of gas consumption stood at the highest equal to 43.2 per cent of the total energy mix of the country, followed by oil (29.0%). The major consumption source of natural gas witnessed an increase in share by almost 4 percentage points during 2010-11 compared to 2005-06. This is due to the substitution effect to a cheaper source from an expensive source. Since oil is the more expensive fuel because of Pakistan's imports at the high international prices the share of oil consumption declined by 3.0 percentage points during the period last fiscal year. The consumption of petroleum products showed a continuous declining trend since 2001-02. However due to positive changes in years 2004-05, 2007-08 and 2009-10, the overall average for last ten years became positive 1.1 per cent per annum.

The longer term trend suggests that composition of annual energy consumption is shifting from petroleum products to other energy sources due to volatile prices of oil. Thus consumption of gas, electricity and coal has increased at an average of 5.1 per cent, 4.8 per cent and 7.7 per cent per annum for last ten years.

Furthermore, the consumption of increasing natural gas is rapidly. During December ended 2011, the balance recoverable natural gas reserves have been estimated at 24.001 trillion cubic feet (TCF). The average production of natural gas during July- March 2011-12 was 4236.06 million cubic feet per day (mmcfd) as against 4050.64 (mmcfd) during the corresponding period of last year, showing an increase of 4.57 per cent.

While, the sufficient coal reserves and natural resources are available to generate cheap electricity and gas for meeting growing demand of the consumers of this region. There is serious need to focus on exploiting the natural resources for producing cheap electricity and gas. It was estimated that the Thar coal project will become operational in December 2013 and the project would bring prosperity in the country. Unluckily, the country doesn't have enough funds and financial resources to construct big dams or water reservoirs to generate enough electrify. It does not have the wherewithal and technical know-how to harness the fossil fuels. The country can import oil and gas not for the production of electricity but for transportation etc. The gas that the country produces domestically or import should be exclusively utilized for the industry and for the manufacturing sector. The government can save a big chunk of budgetary allocations by using solid waste to generate electricity and gas that can help in overcome the persistent energy crisis in the country. It was revealed that in year 2009 about four billion tons solid waste was produced across the world.


To mitigate the gas shortage, government has designed different policies not only for exploration of new local gas reserves but also for import of gas. No doubt, the government is making all possible efforts to address the challenges of rising energy demand.