Gas and Electricity Shortages Hurting Pakistan

[Riaz Haq]

Hagler Bailly, a global management consulting firm with an office in Islamabad, warned in a 2006 study that Pakistan is going to witness gas shortage starting in 2007, and the imbalance will grow every year to cripple the economy by 2025, when shortage will be 11,092 MMCFD (Million standard cubic feet per day) against total 13,259 MMCFD production. The Hagler Bailly report added that Pakistan's gas shortage would get much worse in the next two decades if it did not manage any alternative sources. It appears that we are seeing the beginning of the crisis that HB predicted back in 2006.

Demand for natural gas in Pakistan increased by almost 10 percent annually from 2000-01 to 2007-08, reaching around 3,200m cubic feet per day (MMCFD) last year, against the total production of 3,774 MMCFD, according to Pakistani official sources. But, during 2008-2009, the demand for natural gas exceeded the available supply, with production of 4528 MMCFD gas against demand for 4731 MMCFD, indicating a shortfall of 203 MMCFD. This winter, Sui Northern Gas sources have reportedly told the media that the company is dealing with a shortfall of 700 MMCFD of gas due to increasing use of heaters and geysers.



The potentially devastating effect of the gas shortage on the nation can be gauged by the fact that Pakistanis heavily depend on gas for their energy needs, much more so than neighboring Indians. With a gas pipeline network stretching around 56,400 km, pipeline density of 1044 km/mmscmd (million metric standard cubic meter per day) and a 31,000 km distribution network to serve its domestic and commercial consumers and nearly 3000 CNG stations, the gas consumption in Pakistan is much higher than its bigger South Asian neighbor.

According to International Association of Natural Gas Vehicles, as of December 2008, Pakistan has the world’s highest number of vehicles running on compressed Natural Gas (CNG). The number is 2 million. Pakistan also has the World’s largest number of CNG refueling stations, 2941 as of July 29, 2009.

Just as the worst electricity crisis of its history is currently gripping the nation, it appears that the gas crisis has begun to rear it ugly head, with recurring reports of low gas pressure, CNG station closures and rationing, and gas "load shedding" for businesses and consumers. The blame game has already started and there appears to be little relief in sight on either the electricity or the gas fronts. One of the reported effects of the gas shortage is delay in the availability of power from the rental power plants which are expected to operate on gas. It appears that the attempt to solve the electricity crisis has made life even more difficult for the people by spawning a gas crisis at the same time.

Citizens and industries in Lahore have been particularly badly hit, resulting in angry protests widely reported in the media. The All Pakistan Textile Mills Association (APTMA), the textile industry group, has claimed that it suffered losses of about Rs 1 billion in December due to lack of smooth gas supply to the industry. Pakistan's CNG industry is also feeling the pinch after rapid growth in the last few years.

A story in Pakistani newspaper the News is alleging that "these expensive rental power plants, which were being installed with tall claims to address the energy crises in the country, were said to have now become one of the major reasons behind a new sorts of energy crises in Pakistan, as their gas requirements are bound to hit other sectors of economy running on gas supplies".

In response to the alarming gas situation, there are reports that Pakistan is finally going ahead with the multi-billion dollar Iran-Pakistan Gas Pipe Line Project and has initiated the process of arranging financing of US $1.245 needed for laying 800 Km long pipe line from Pakistan-Iran border to Nawab Shah. Pakistan will also import 1.05 billion cubic feet of gas per day from Iran at 78 percent of crude oil parity price. Pakistan and Iran have already signed Gas Sales Agreement (GSPA) for importing 750 million cubic feet gas per day which will be used to generate 4500 MW of electricity and would be a cheaper alternative to the presently expensive imported furnace oil used in the existing thermal power houses. Another 250 million cubic feet of Gas per day is also envisaged to the purchased for development projects at Gawadar in Balochistan. Considering the magnitude and strategic nature of the Gas Line Project, the government has adopted a private-public partnership approach for financing the project with debt equity ratio of 70:30 under which the Pakistan government will provide 51 per cent equity. This equity financing would be provided upfront through selected Public Sector Entities like OGDCL, Pakistan Petroleum Limited , Government Holding Private Limited, Employees Old Age Benefits Institution and State Life Insurance Corporation. The debt will be sourced from the market backed by the government guarantees for transportation tariff. Any gap in raising the required debt from the market, the funds will be available by PDSP allocations.

As the nation's attention turns to the gravity of the worsening gas energy crisis, the growing supply-demand gap for electricity is still unaddressed. The government's attempts to fill the gap with rental power have raised many questions and drawn serious corruption charges from the opposition parties and the media. Analysts at Center for Research and Security Studies are asking why have some private power producers completely shut down? And why are other private power producers operating well below their full capacity? It is being alleged that the reasons for buying rental power to fill the electricity gap rather than pay the outstanding dues of the independent power producers (IPPs) to fully utilize exiting installed capacity have to do with the kickbacks offered by the rental power operators. According to Reuters, Finance Minister Shaukat Tarin almost resigned after failing to persuade the cabinet against renting, an option he considered expensive and inefficient.

There have been widespread complaints in Islamabad, including by Mr. Tarin, that the government had solutions to improve the power output but was refusing to implement them in order to benefit a handful of power plant operators, such as those supplying rental power, while the IPPs are not being paid for supplying power from currently underutilized installed capacity. Requests for information by Transparency International Pakistan regarding rental power contracts have been ignored by the Ministry of Water and Power. There are widespread corruption allegations against President Asif Ali Zardari personally who has allegedly influenced the award of the 783 MW rental power contracts to a former governor of Oklahoma and his Pakistani partner.

The failures of the last and the current governments in tackling the growing energy crisis in Pakistan are shameful. Inaction at this point would be criminal. The Iran-Pakistan gas pipeline project has to be accelerated to avoid significant further harm to the country. At the same time, the shortages of electricity and gas need to be managed actively and fairly to minimize the impact on the consumers and the businesses to help the economy recover from the current slump. The issue of unpaid electricity bills and the rampant power theft should be confronted head-on to restore investor confidence in long-term energy projects in the country. Since the federal government is the biggest dead beat, followed by the four provincial governments, FATA, the KESC and the KW&SB, it is an opportunity for the current leadership in Islamabad to lead by example by paying off their outstanding utility bills.

Related Links:

Pakistan's Electricity Crisis

Pakistan's Gas Pipeline and Distribution Network

Pakistan's Energy Statistics

China Signs Power Plant Deals in Pakistan

Pakistan Pursues Hydroelectric Projects

Water Scarcity in Pakistan

Energy from Thorium

Comparing US and Pakistani Tax Evasion

Zardari Corruption Probe

Pakistan's Oil and Gas Report 2010

Circular Electricity Debt Problem

International CNG Vehicles Association

[Riaz Haq]

MANILA, Feb. 27 (UPI) -- The Asian Development Bank said Friday it was supporting efforts to help Pakistan build its first liquefied natural gas terminal with a $30 million loan.

Pakistani company Engro Corp. will get funding from the ADB to build the regasification terminal at a port near Karachi. The plant will be able to convert as much as 3 million tons of LNG per year to gas for use in state power plants.

ADB investment specialist Mohammed Azim Hashimi said the loan would help Pakistan build a cleaner, more efficient and more diverse power sector.

"Pakistan urgently needs to utilize its existing power generation capacity fully, while reducing its reliance on costly imported diesel fuel for electricity generation," he said in a statement.

The Engro facility was approved for fast-track development earlier this week.

Pakistan's aging infrastructure means the country lacks a reliable power sector. The ADB in the past has lent its support to a multilateral natural gas pipeline that would strength from Turkmenistan.

The pipeline would draw from the Galkynysh natural gas field in Turkmenistan, one of the largest in the world.

The ADB describes the status of the power sector in Pakistan as "crippling." With the LNG facility, the bank said the Pakistan government would save about $1 billion per year on its fuel import bills. Cleaner burning natural gas, meanwhile, would help avoid 2 million tons of greenhouse gas emissions per year.

Read more: http://www.upi.com/Business_News/Energy-Resources/2015/02/27/Pakist...

[Riaz Haq]

LNG imports to help resolve electricity crisis:

Addressing the meeting, Shahbaz Sharif said that all out efforts are being made to decrease the energy crisis. He said that besides traditional sources, energy projects are being executed through renewable methods. He said that a planning has been made for setting up energy projects through LNG in the province.

The chief minister said that the Punjab government has decided to set up an LNG power plant near Sheikhupura and more than 1,000-megawatt electricity would be generated from this plant. The Federal Cabinet has given approval to set up energy projects through LNG at three different places in Punjab and a total of 3,600 megawatts of electricity will be generated from these projects, he added.

Shahbaz Sharif thanked Prime Minister Nawaz Sharif and Federal Minister for Petroleum Shahid Khaqan Abbasi for granting approval to the provision of 200 MMCFD LNG to Punjab. He expressed the hope that a number of energy projects will be generating electricity during the next three years and the people will be provided relief from the current energy crisis. He said that every moment of the nation is precious and the energy projects will be executed transparently and speedily.

The Chief Minister directed that concerned departments should immediately take necessary steps for LNG power plants and work should be started for laying pipelines and up-gradation of transmission lines at the earliest. He said that energy projects of LNG would be completed on fast track. Shahbaz Sharif said that 100-megawatt solar project has been completed in a record period of six months at Quaid-e-Azam Solar Park, Bahawalpur. He said that it is the first and biggest solar project in the history of the country which, Punjab government, has set up from its own resources.

The chief minister disclosed that Prime Minister Nawaz Sharif would soon inaugurate the project. He said that work is continuing on the project and energy is being generated through indigenous coal with the cooperation of China in Salt Range. He said that all our resources would be provided to ensure speedy completion of energy projects. Muhammad Asif and Shahid Khaqan Abbasi assured every possible cooperation to the Chief Minister Punjab for the early completion of energy projects.

http://www.pakistantoday.com.pk/2015/03/01/city/lahore/shahbaz-dete...

[Riaz Haq]

#Energy deal: #Moscow to lend $2b for #Karachi-#Lahore LNG pipeline. #Russia #Pakistan http://tribune.com.pk/story/871822/energy-deal-moscow-to-lend-2b-fo... …

Currently, Pakistan is working on two pipelines to transport re-gassified LNG from Karachi to the northern parts of the country. The first is a pipeline that will connect the Gwadar Port to the main natural gas pipeline hub in Nawabshah. The second will lay a direct pipeline from Karachi to Lahore.

The government has signed an initial deal with China to award a $3 billion LNG terminal and pipeline project to a Chinese contractor in a similar financing-for-guaranteed-contract arrangement.

Islamabad had initially offered Moscow and Beijing a similar arrangement for the Iran-Pakistan pipeline, but American and European sanctions against Tehran scuttled that project – at least for now.

An LNG import terminal, owned and operated by the Engro Corporation, an industrial conglomerate, is already up and running, though there is, as yet, no agreement to import natural gas from Qatar, the third-largest natural gas producer in the world and closest to Pakistan. There is also no infrastructure yet that would allow that natural gas to be transported upcountry.

“We are negotiating an LNG supply deal with Qatar which will be finalised soon,” Abbasi said.

Pakistan’s existing pipeline network has the capacity to transport 320 million cubic feet of gas per day (mmcfd) in re-gassified LNG. Consumption in Punjab and Khyber-Pakhtunkhwa, as well as upper Sindh, however, exceeds 3,000 mmcfd, which is why the new pipelines are badly needed.

In order to finance the payback of the loans needed to construct the pipelines, the Oil and Gas Regulatory Authority (Ogra) has allowed the state-owned gas utilities, Sui Northern Gas Pipelines (SNGP) and Sui Southern Gas Company (SSGC), to start charging consumers more for their gas bills every month. SNGP and SSGC are expected to invest $750 million and $300 million respectively to finance the LNG pipeline.

[Riaz Haq]

#Pakistan banks on bonanza from #Irandeal. #Nawazsharif Advisor Tariq Fatemi talks in #Washington

http://www.washingtontimes.com/news/2015/jul/24/pakistan-banks-bona... … via @washtimes

The lifting of economic sanctions on Iran will open “massive trade” opportunities for Pakistan and could effectively transform the energy markets of South Asia by paving the way for a long-awaited gas pipeline across the Iran-Pakistan border, a top Pakistani diplomat said Friday, expressing his nation’s deep hope that the Obama administration’s nuclear deal with Tehran goes into effect as soon as possible.

Syed Tariq Fatemi, special assistant to Pakistani Prime Minister Nawaz Sharif, said his country is being “mindful” not to take action until U.N. sanctions officially lifted, but he asserted that Islamabad is already in constant communication with Iranian authorities about the prospects for the stalled pipeline, as well as other avenues for growing commercial ties between the two nations who share a 560-mile border.

In a wide-ranging chat with reporters at the Pakistani Embassy in Washington, Mr. Fatemi said that after a decade of internal turmoil, Pakistan is on a path toward stability and democratic transformation — and increased trade is essential to the goal of weening the nation’s economy off of handouts from the U.S. and other international powers.

Pakistan’s hopes are just one sign of the wide-ranging implications of the nuclear deal negotiated by the Obama administration and five international partners with Iran, which may quickly lead to an end to punishing economic and financial restrictions on the Iranian economy.

“An end to sanctions will open up new opportunities for Pakistan to enhance its commercial and economic ties with Iran,” Mr. Fatemi said. “We have a long border and we could have massive trade with that country should this issue of sanctions no longer be hovering over us.”

The “Iran-Pakistan Gas Pipeline Project,” he said, could ease crippling power shortages that plague Pakistan, where blackouts combined with an intense heat wave killed more than 1,000 people during recent months.

But Mr. Fatemi said the prospective pipeline would “not only benefit Pakistan in terms of providing us with a valuable source of energy, we also believe that such a pipeline could encourage cooperation amongst the countries of the region that would really strengthen peace and stability.”

“Iran’s coming into out into the mainstream of international politics will [also] be a positive development,” said Mr. Fatemi, who played down the idea that closer ties between Islamabad and Tehran might anger Arab powers in the Middle East who have expressed discontent over the Iran nuclear deal.

[Riaz Haq]

LNG spot price now is $8 per mmBTU. It could fall to $6 soon. 

Private importers in Pakistan can import on spot price if contract price is higher. 

http://www.cnbc.com/2015/08/31/asian-lng-price-to-plunge-as-local-d...

Meanwhile, a Chinese company has the contract to build an LNG pipeline from Gwadar which will connect to Iran as well.

http://www.dawn.com/news/1209970

#India's Petronet #LNG breaks #Qatar contract to gain from low spot prices ..36% lower at $8 per mmBTU 

http://www.livemint.com/Companies/Lk2NOm5DvuqeqxTCcKD19J/Petronet-L... …

[Riaz Haq]

Minister for Finance Senator Ishaq Dar on Sunday said that the government would be able to overcome the energy crisis by early 2018 by adding 10,000 megawatts more electricity to the national grid.

“Currently we are facing a shortfall of about 5,000 MW of electricity whereas energy projects of 24,000 MW are under process and some of them will start generating 10,000MW by the end of year 2017 or early 2018,” he said while addressing a ceremony organized by Old Hailians Association here.

The remaining projects of 14,000MW, he said, would start adding electricity to the system by 2020 which would help boost economic activity and industrialisation in the country.

The minister said two mega hydro power projects, Dasu and Diamir Bhasha dams, were also in progress, which would not only help overcome the energy crisis but also store water for irrigation purpose.

“Diamir Bhasha Dam will have the capacity of 1.3 trillion cubic feet water,” he added. Ishaq Dar said the government was also working on civil nuclear energy projects, which would add 1,000MW electricity to the system in next seven years. He said that before the year 2013, the country was on the verge of becoming a defaulter as the foreign exchange reserves had gone down to below $8billion and no international monetary institution was ready to lend money to it.

However, the Pakistan Muslim League-Nawaz (PML-N) after coming to power, worked hard to bring the country out of the financial crisis, he added.

“Within a short span of two years, the country has made immense progress as the energy crisis has considerably eased, forex reserves have touched $20 billion mark, a record in the country’s history, fiscal deficit has come down from 8.8 percent to 5 percent, and inflation rate has reduced from above 10 percent to record 1.3 percent.”

Moreover, the minister said, the tax to GDP ratio had also increased from 9 percent to 11 percent and revenue growth rate also surged from 3 percent to 15 percent. Now the world renowned fiscal institutions were praising Pakistan for its amazing economic development and had rated its economy as stable, he added.

Dar said if Pakistan continued its journey on the road to progress which it had witnessed during previous two years, it would become the world’s 18th major economy in 17 years.

He said that the PML-N was strictly implementing its manifesto announced during the 2013 general election, in which it had vowed to steer the country out of four crises.

“The country was facing 4 E challenges ( Economy, Energy, Education and Extremism) at the time the PML-N government came into power, which have now been overcome due to its prudent policies,” he added.

http://www.thenews.com.pk/Todays-News-2-345147-10000MW-to-be-added-...

[Riaz Haq]

#Russia Agrees to Build #Pakistan Gas Line to Tap #China Funds http://bloom.bg/1NfnZmI via @business

Russia agreed to build and possibly run a planned natural gas link in Pakistan as President Vladimir Putin seeks to bolster the country’s influence in the Middle East and Asia.
The countries signed an intergovernmental agreement for a pipeline that would connect liquefied natural gas terminals in southern Pakistan and its energy-hungry north, with construction to be completed by late 2017, Pakistan’s Petroleum Ministry said in a statement Friday. The line will reach its project capacity by early 2020, Russia’s Energy Ministry said in a separate statement. A unit of Russia’s Rostec State Corp. will manage the project and invite foreign investors, including China, to participate.
Putin is seeking allies in Asia and the Middle East in an effort to break out of international isolation caused by the Ukrainian crisis, while Russia’s military build up in Syria has contributed to tensions, especially with the U.S. The deal with Pakistan comes after more than a decade of talks about gas-pipeline projects.
“Construction of the North-South pipeline brings trade and economic cooperation of Russia and Pakistan to a new level,” Russian Energy Minister Alexander Novak said in the statement. He and his Pakistani counterpart Shahid Khaqan Abbasi signed the accord in Islamabad in the presence of Prime Minister Nawaz Sharif, according to the statement.
Russia is studying funding from Russian and Chinese development banks for the link, the ministry in Moscow said without elaborating. A project company, set up by potential investors, will own and run the 1,100 kilometer (684 mile) pipeline over 25 years, according to the statement.
The link would ship as much as 12.4 billion cubic meters of gas per year, which is about 30 percent of Pakistan’s current consumption.

[Riaz Haq]

Global #LNG surplus pushing producers, importers to spot market. Demand from #Jordan, #Egypt, #Pakistan http://reut.rs/1MYP9vr via @Reuters

* 130 mln T a year of capacity due online by 2020

* LNG supply began to exceed demand in 2014 -EY

* Prompt spot market still just 5 pct of trades in 2014 -BG

SINGAPORE, Oct 30 (Reuters) - Producers and importers of liquefied natural gas (LNG) are preparing to trade the fuel more actively on a spot basis as a looming supply surplus threatens to overwhelm decades-old bilateral contracts and pressure prices lower.

With the advent of 130 million tonnes of LNG capacity in Australia and North America by 2020, producers such as Woodside Petroleum and Chevron, and traditional buyers such as Japanese utilities, have expanded trading teams to handle excess cargo flows and navigate a more open market.

Australia, with investments of almost $200 billion in new production, is on track to overtake Qatar as the world's biggest LNG exporter before the end of the decade.

In North America, U.S. company Cheniere Energy plans to export its first LNG cargo in January, and Canada is also planning to start exports in the next few years.

"Buyers will be able to have their choice ... (of) very large supply sources that can deliver pretty much at a moment's notice," Cheniere Chief Executive Charif Souki said this week at a conference in Singapore.

Excess supply, along with rising demand, is key to establishing a liquid commodity market as in tight conditions producers and consumers tend to enter long-term fixed supply agreements rather than trade openly.

And while new demand is popping up in countries such as Jordan, Dubai, Egypt and Pakistan, it is unlikely to be enough to offset the slower-than-expected consumption growth in China and the falling demand in top importers Japan and South Korea.

Some major players in the industry disagree, though, on how quickly a robust spot market will develop.

Last year, less than 5 percent of total volumes were sold on a prompt delivery spot basis, said Ann Collins, vice president for LNG at BG Group, at Gastech on Thursday.

"A rapid tilt towards a commoditization of LNG seems unlikely in the near term," she said.

Still, Ernst and Young (EY) says liquefaction capacity has more than doubled since 2000 and exceeded demand last year.

This surplus, along with slow-growth demand, will keep prices under pressure until the end of the decade, consultancy Wood Mackenzie said in statement this week.

BUYERS TO SELLERS

Japanese power utilities - traditionally strictly buyers of LNG for gas-fired generators - are selling to each other or reselling to emerging smaller local buyers, even as nuclear reactors restart and the country's overall electricity demand falls with a shrinking population.

Japan's JERA Co, a joint venture set up by Tokyo Electric Power and Chubu Electric Power, will renew only a minimum of the long-term contracts that supply 80 percent of its gas, and instead meet its needs via mid-term and short-term contracts or spot purchases.

Australia's Woodside, one of the biggest producers of LNG, has traditionally sold its volumes on contracts that last 20 years or more, yet now says it needs more LNG tankers to deal with rising spot and short-term sales.

"We're becoming more sophisticated in our marketing and trading activities," Chief Executive Peter Coleman told reporters at the industry meeting this week in Singapore.

Chevron, which up to now has also dealt mostly in long-term supply agreements, has established an LNG trading desk in Singapore to handle output - mainly from its Australian projects - that is not committed to buyers.

Commodity trading houses are also getting ready for the increase in supply, with Glencore planning to double its trading team as it mounts a challenge to rivals Trafigura and Vitol to become the top merchant LNG trader.

[Riaz Haq]

New #LNG supply glut will test global gas floor price: #Europe Spot Price Hits New Low of $4 per mmBTU. #Pakistan http://www.hellenicshippingnews.com/new-lng-supply-will-test-global-gas-floor-price-global-coal-prices-will-be-key-to-potential-us-lng-shut-

In a report prepared for Gastech 2015, Wood Mackenzie outlines the key levers which will determine the global gas floor price as the market absorbs a wave of LNG. With 130 million tonnes per year (mmpta) of additional LNG supply set to reach market over the next five years, coincident with faltering China demand, Wood Mackenzie asserts that new local floors for spot prices will be tested, unlocking new demand and curtailing supply, with global pricing implications.

Mr Noel Tomnay, Head of Global Gas & LNG research for Wood Mackenzie sets the scene: “The last LNG oversupply between 2008-10 came about when Qatar ramped up its LNG output and the market had to absorb 50 mmtpa of new LNG, at a time when demand growth had slowed. As a result, gas spot prices in Europe traded under US$4 per million British Thermal Unit ($/mmbtu) through the summer of 2009 and with no market in Asia, those prices were still enough to attract LNG cargoes to Europe, including from Australia.”

“The LNG market is facing another oversupply which is likely to be deeper and will persist for some years. Prices in Asia will be lower than in Europe, and at their worst, between 2017-19, while prices in Europe will not reach a low point until 2020. The key question the industry is wrestling with is: how low will prices go?” Mr Tomnay asks.

Wood Mackenzie’s report , titled ‘Global gas prices – what will set the floor?’ asserts that China’s market policies will be key. While more new LNG markets will emerge with lower gas prices, particularly if oil prices climb, more liberalised market conditions in China could enable it to absorb a lot more LNG, mitigating the impact of the LNG oversupply on price. This includes improved regasification infrastructure access, reductions in regulated gas prices and allowing the curtailment of high cost indigenous gas. Mr Tomnay elaborates: “It is likely that output from some high cost gas will be curtailed but protectionist measures will restrict China’s willingness to fully replace indigenous gas with lower priced LNG, dampening the potential supply response.”

New demand for gas and LNG could be created through the displacement of coal in power generation, a theme which will be central to Mr Tomnay’s presentation at Gastech 2015’s Market Outlook session on Wednesday. The gas price at which coal will be displaced, a soft floor for gas prices, will be determined, in part, by the price of coal. “Assuming higher ARA coal prices in Europe of US$70/tonne and Japanese coal prices of US$80/t (CFR), a floor price for gas in Europe and Asia should be maintained at prices above US$5.00/mmbtu. This should be sufficiently high to avoid US LNG being shut-in,” Mr Tomnay explains.
However, lower coal prices, possibly a consequence of reduced demand through displacement by gas, risks pulling both gas and coal prices down further Wood Mackenzie says. “At prevailing ARA coal prices of US$50/t and Japanese coal prices of US$60/t CFR, a floor price for gas in Europe and Asia could go down to prices at which many US LNG exports fail to cover cash costs, around US$4/mmbtu. This would force US LNG exporters to consider shutting-in for periods, a move which would depress US gas prices,” Tomnay adds.

Lastly Mr Tomnay explains why the behaviour of major suppliers, most notably Russia, will be key: “We could see major suppliers withdraw gas from the market, thereby supporting LNG spot prices. It was Gazprom’s withdrawal of 20 bcm per annum of pipe gas from Europe between 2008-10, equivalent to 15 mmtpa of LNG, that prevented spot prices from remaining low. At periods of severe oversupply, Russian gas supply behaviour will again be key to gas price formation in Europe – and this time in Asia and even the US too.”
Source: Wood Mackenzie

[Riaz Haq]

#Pakistan pursues multi-pronged strategy to meet energy needs: #LNG, #Iran pipeline, #TAPI. Gas demand up to 6 bcfd

http://tribune.com.pk/story/1017385/overcoming-shortfall-govt-pursu... …

Spurred by the gas demand growing to over six billion cubic feet per day (cfd) and depleting hydrocarbon resources, the government has adopted a multi-pronged strategy to ease Pakistan’s energy crisis.

It is importing liquefied natural gas (LNG) in addition to pursuing long-term projects such as the Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipelines.

According to an official source, previous governments too unsuccessfully tried to import LNG. They failed because they adopted an approach where the supplier was supposed to develop an LNG terminal.

“But the present government succeeded in providing the country with its first LNG-based gas within 20 months of coming to power,” he added.

The government pursued a transparent process for developing a terminal and Engro Elengy built the SSGC LNG regasification terminal in a record time – the contract was signed on April 2014 and first gas flow was ensured in March this year.

The source said the government needed to sign five more contracts to import LNG, as currently LNG caters to 20% of the country’s needs. The government plans to build one terminal at Port Qasim and another at Gwadar port to handle over two billion cfd of LNG

On the IP project, the government has done work on its part and is awaiting only relaxation or removal of international sanctions on Iran.

The government has also recently broken ground on the Tapi project, which had lingered on for the last 25 years. According to the official, the first gas flow from Tapi is expected in December 2019.

The government has also awarded several exploration licenses to discover more hydrocarbon resources and augment domestic production which is currently stagnant at four billion cfd.