Pakistan Among Fastest Growing LNG Markets in the World
Pakistan joined the list of LNG importers last year and promptly became one of the world's fastest growing LNG markets, according to Shell 2017 LNG report. The South Asian nation has suffered a crippling energy shortage as demand has risen sharply to over 6 billion cubic feet per day, far outstripping the domestic production of about 4 billion cubic feet per day. Recent LNG imports are beginning to make a dent in Pakistan's ongoing energy crisis and helping to boost economic growth. Current global oversupply and low LNG prices are helping customers get better terms on contracts.
Global LNG Market:
Pakistan, Egypt and Jordan together imported 13.9 million tons of LNG, more than the combined increase of 11.9 million tons by the most populous nations of China and India.
The biggest increase in LNG exports in 2016 came from Australia, where exports increased by 15 MT to a total of 44.3 MT. It was also a significant year for the USA, after 2.9 MT of LNG was delivered from the Sabine Pass terminal in Louisiana. Qatar remained the world’s largest LNG exporting country, accounting for around 30% of global trade of 258 MT by exporting 77.2 MT, according to International Gas Union report 2017.
LNG Demand in Pakistan:
Pakistan has been a big consumer of natural gas since the discovery of Sui gas fields in Balochistan in 1952. Sui now accounts for just 6% of natural gas domestically produced in Pakistan. The rest of the 94% comes from gas fields in other parts of Pakistan. Among the various provinces, Sindh is now the biggest producer of natural gas. Demand has risen sharply to over 6 billion cubic feet per day, far outstripping the domestic production of about 4 billion cubic feet per day.
Pakistan is currently importing 2 million MT (96 billion cubic feet) of LNG and negotiating to secure an additional 3 million MT in long-term contracts by the end of 2017 to supply its new LNG floating terminal due to arrive by December, according to M. Adnan Gilani, chief operating officer with Pakistan LNG Ltd, as reported by Platts.
New supply agreements will increase Pakistan's total LNG contracts total to more than 11 million MT per year, as the country aims to resolve a decade-long energy crisis, driven by growing gas consumption and falling domestic production.
In addition to government-to-government contracts, there are also private and public companies negotiating deals to import LNG. For example, Karachi-based power generator K-Electric is seeking supply for its 900-megawatt, $1-billion Port Qasim Power Station which will start-up in two phases, in mid-2018 and the end of 2019, according to Reuters news agency.
In the longer term, Pakistan aims to allocate a quarter of its LNG purchases to the spot and short-term markets, Pakistan LNG Ltd's Adnan Gilani told Platts. "Initially, our goal is to solve our energy crisis. We have long-term downstream commitments, so we do not mind going to mid-to-long term initially," he said. "Over the course of time, we will be able to cater to our variable non-cyclical demand... and allocate about a quarter of our portfolio to spot and short term. PLL is currently purchasing four cargoes per month on a short-term basis as it awaits the start of new term volumes.
By 2022, Pakistan expects to import 30 million MT (1,440 billion cubic feet) of LNG, according to Adnan Gilani of PLL.
LNG Infrastructure:
There is one LNG terminal currently operational at Port Qasim and 5 more are planned in Pakistan over the next two years to deal with rising volume of LNG imports. New pipelines are planned by South Sui Gas and Northern Sui Gas companies to transmit regasified LNG to various parts of the country to meet demand.
Summary:
Pakistan is among the fastest growing LNG markets, according to Shell 2017 LNG report. The country has suffered a crippling energy shortage in recent years as demand has risen sharply to over 6 billion cubic feet per day, far outstripping the domestic production of about 4 billion cubic feet per day. Recent LNG imports are beginning to make a dent in Pakistan's ongoing energy crisis and helping to boost economic growth. Current global oversupply and low LNG prices are helping customers get better terms on contracts.
 |
| Pakistan Gas Market Forecast. Source: Platts |
Global LNG Market:
Pakistan, Egypt and Jordan together imported 13.9 million tons of LNG, more than the combined increase of 11.9 million tons by the most populous nations of China and India.
The biggest increase in LNG exports in 2016 came from Australia, where exports increased by 15 MT to a total of 44.3 MT. It was also a significant year for the USA, after 2.9 MT of LNG was delivered from the Sabine Pass terminal in Louisiana. Qatar remained the world’s largest LNG exporting country, accounting for around 30% of global trade of 258 MT by exporting 77.2 MT, according to International Gas Union report 2017.
LNG Demand in Pakistan:
Pakistan has been a big consumer of natural gas since the discovery of Sui gas fields in Balochistan in 1952. Sui now accounts for just 6% of natural gas domestically produced in Pakistan. The rest of the 94% comes from gas fields in other parts of Pakistan. Among the various provinces, Sindh is now the biggest producer of natural gas. Demand has risen sharply to over 6 billion cubic feet per day, far outstripping the domestic production of about 4 billion cubic feet per day.
Pakistan is currently importing 2 million MT (96 billion cubic feet) of LNG and negotiating to secure an additional 3 million MT in long-term contracts by the end of 2017 to supply its new LNG floating terminal due to arrive by December, according to M. Adnan Gilani, chief operating officer with Pakistan LNG Ltd, as reported by Platts.
New supply agreements will increase Pakistan's total LNG contracts total to more than 11 million MT per year, as the country aims to resolve a decade-long energy crisis, driven by growing gas consumption and falling domestic production.
In addition to government-to-government contracts, there are also private and public companies negotiating deals to import LNG. For example, Karachi-based power generator K-Electric is seeking supply for its 900-megawatt, $1-billion Port Qasim Power Station which will start-up in two phases, in mid-2018 and the end of 2019, according to Reuters news agency.
In the longer term, Pakistan aims to allocate a quarter of its LNG purchases to the spot and short-term markets, Pakistan LNG Ltd's Adnan Gilani told Platts. "Initially, our goal is to solve our energy crisis. We have long-term downstream commitments, so we do not mind going to mid-to-long term initially," he said. "Over the course of time, we will be able to cater to our variable non-cyclical demand... and allocate about a quarter of our portfolio to spot and short term. PLL is currently purchasing four cargoes per month on a short-term basis as it awaits the start of new term volumes.
By 2022, Pakistan expects to import 30 million MT (1,440 billion cubic feet) of LNG, according to Adnan Gilani of PLL.
LNG Infrastructure:
There is one LNG terminal currently operational at Port Qasim and 5 more are planned in Pakistan over the next two years to deal with rising volume of LNG imports. New pipelines are planned by South Sui Gas and Northern Sui Gas companies to transmit regasified LNG to various parts of the country to meet demand.
Summary:
Pakistan is among the fastest growing LNG markets, according to Shell 2017 LNG report. The country has suffered a crippling energy shortage in recent years as demand has risen sharply to over 6 billion cubic feet per day, far outstripping the domestic production of about 4 billion cubic feet per day. Recent LNG imports are beginning to make a dent in Pakistan's ongoing energy crisis and helping to boost economic growth. Current global oversupply and low LNG prices are helping customers get better terms on contracts.
Related Links:
Comments
https://www.thenews.com.pk/latest/234489-POL-discovers-largest-reserves-of-oil-and-gas
Pakistan Oil fields Limited (POL) had discovered one of the largest oil and gas reserves from its Jhandial well (Punjab) in the last five years.
Jhandial well is located in Ikhlas Block in Northern Potwar, about 83 kilometers Southwest of Islamabad in District Attock, said an official.
POL holds 80% share in the block whereas The Attock Oil Company (AOC) has a 20% share.
The block is located in a prospective but geologically complex area surrounded by a number of significant oil discoveries.
The drilling of the deep exploratory well Jhandial-1 was proposed after acquisition and interpretation of recently acquired 3D seismic data.
The well was drilled to a total depth of 18,497 feet to test the Eocene and Paleocene carbonate reservoirs.
During testing, significant amount of hydrocarbons (oil and gas) were encountered in the Sakessar, Nammal (Eocene) and Patala (Paleocene) formations with flow rates of 21 million cubic feet of gas and 2,520 barrels of oil per day at choke size of 40/64"at well head flowing pressure of 3,768 psi, 19 million cubic feet of gas and 2,160 barrels of oil per day at choke size of 32/64"at well head flowing pressure of 5,364 psi and 16.5million cubic feet of gas and 1,630 barrels of oil per day at choke size of 28/64"at well head flowing pressure of 6,290 psi.
The American Petroleum Institute (API) gravity of the oil is around 40o and the gas has a rich calorific value of 1,161 British Thermal Units per standard cubic feet of gas.
The gas composition analysis indicates that it contains about 86% methane, 7.2% ethane and 2.9% propane. The LPG content of the gas is about 2.5 metric tons per million cubic feet of gas.
The well will be connected to the production line within two weeks and will gradually attain full potential.
Structurally, Jhandial is a thrusted anticline just north of the Dhurnal Oil field. It has a closed area of about 15 square kilometers in the most likely case, with a thick net reservoir column from top of the Chorgali Formation (Eocene) to the base of the Paleocene Formation.
Preliminary initial estimated recoverable reserves of the field are in the range of at least 292 billion standard cubic feet of gas and 23 million barrels of oil.
The Jhandial discovery is expected to contribute to the country's energy sustainability while also having a positive impact on the future of exploratory efforts in the block and surrounding areas.
https://tribune.com.pk/story/1526272/bridging-energy-shortfall-lng-revolutionising-pakistans-energy-sector/
If one looks at Pakistan’s print and electronic media, it would appear that nothing has gone right for the liquefied natural gas (LNG) projects in the country. However, the rest of the world has a completely different view of the matter.
They marvel as to how quickly the government of Pakistan was able to sign contracts at the most economical prices, build LNG terminals and other infrastructure, and actually begin using the gas to alleviate severe energy shortages.
---------
Already some results are becoming evident. The most obvious effect has been on the use of compressed natural gas (CNG) in automobiles. Almost 75% of around 3,200 CNG pumping stations operating in 2012 have restarted their operations, according to the All Pakistan Compressed Natural Gas Association.
Pakistan was amongst the top CNG-user countries with 3.7 million CNG-run vehicles before 2012. Since LNG is at least 30% more economical to use, its availability to automobiles will result in considerable savings for consumers as well as the government. The other advantage is that CNG is a cleaner fuel.
It is not just transport and power sectors that are the major beneficiaries, other sectors benefit as well. Gas is used as raw material in the manufacture of fertilisers and this year Pakistan has become a net exporter rather than an importer of the commodity.
It is time other sectors such as Railways start planning to switch from diesel-run locomotives to LNG. This would save 40-60% of fuel cost.
Our obsolete furnace-oil based power plants should be replaced by more energy-efficient LNG-based plants as is already being done in India. This is expected to save $1.5-2 billion in foreign exchange annually.
With the availability of cheaper fuel, Pakistan’s competitiveness will increase, resulting in revival of exports and the overall economy.
With the completion of the China-Pakistan Economic Corridor (CPEC) early harvest projects, and no energy worries, the incoming government in 2018 would inherit a Pakistan different than what it was only four years ago.
After losing a quarter of its value in five months as the prime minister was ousted over corruption charges and the current-account deficit ballooned, Pakistan’s stock market is starting to look cheap to foreign funds.
The market is definitely oversold and it’s a good time to buy, said Mohammed Ali Hussain, a senior analyst in Dubai at Frontier Investment Management Partners Ltd. The shares have now fallen enough to compensate for the risk of a rupee devaluation and look attractive ..
-----
Beset by political turmoil and an increasingly precarious macroeconomic position, Pakistan has seen $402 million of stocks outflows this year even as the country was restored to emerging-market status by index provider MSCI Inc. But with an economy supported by Chinese President Xi Jinping’s “ One Belt One Road” infrastructure push and average valuations that have fallen to around half the level of Indian shares, sentiment is turning.
Read more at:
//economictimes.indiatimes.com/articleshow/61182075.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
https://www.nytimes.com/reuters/2017/10/30/business/30reuters-pakistan-lng-exxon-mobil.html
Exxon Mobil has pulled out of a major project in Pakistan, in a potential blow to plans to boost imports of liquefied natural gas (LNG) after years of winter shortages.
Differences among the six-member group behind the project in Port Qasim in Karachi mean French oil major Total and Japan's Mitsubishi may also quit and join a rival scheme, government officials and industry sources told Reuters.
A senior Pakistani government official put the chances of success for the project, set to be Pakistan's third and biggest by import capacity, at 10-20 percent due to the disagreements.
A highly-developed pipeline grid, extensive industrial demand and the biggest natural gas-powered vehicle fleet in Asia after China and Iran make Pakistan an easy fit for LNG and official estimates show imports could jump fivefold to 30 million tonnes per annum (mtpa) by 2022.
The new project would include a floating storage and regasification unit (FSRU), where LNG will be converted back into gas for feeding into the country's grid.
Qatar Petroleum [QATPE.UL], the world's biggest LNG producer, Turkish developer Global Energy Infrastructure Limited (GEIL) and Norway's Hoegh LNG, which will provide the FSRU, are the other partners.
While Exxon has pulled out, the U.S. company was now negotiating to join a separate project, Hasil Bizenjo, Pakistan's Maritime Affairs minister in charge of ports, said.
"They are thinking to build a new terminal in Port Qasim," Bizenjo told Reuters in the Pakistan capital Islamabad, adding that Mitsubishi and Total were also in talks about taking stakes in another consortium.
Exxon was pulling out because it had "issues with partners", particularly the developer, GEIL, one energy official said. Exxon's move leaves in doubt a multi-billion dollar deal Qatar has already struck with GEIL for the sale of up to 2.3 million tonnes of LNG annually over 20-years.
Exxon Mobil, Total and GEIL declined to comment, while a Mitsubishi spokesman said that the Japanese company has been continuing its talks with partners over the project.
Qatar Petroleum did not respond to requests for comment.
NEW INVESTORS?
LNG imports have transformed Pakistan's energy map since the country's first import facility was introduced in 2015.
If the second LNG terminal proceeds without glitches the South Asian nation will not suffer winter gas shortages for the first time in more than 10 years, energy officials say, in a likely boost for Prime Minister Shahid Abbasi's ruling party before the next general elections, due in mid-2018.
Government officials and industry sources said talks are underway to bring new players into the project, including Swiss trading house Vitol [VITOLV.UL], which declined to comment.
Rival traders Trafigura and Gunvor are already developing LNG projects in Pakistan, betting the country will account for a rising share of future profits and LNG trade.
Pakistan plans to add its second LNG import terminal by the end of this year, but private companies have proposed building six more largely around Port Qasim.
http://www.gulf-times.com/story/574696/Pakistan-s-private-sector-to-get-new-LNG-terminal
*
Pakistan’s domestic gas production capacity is approximately 4bn cubic feet per day (bcfd), while demand is more than 6bn bcfd, resulting in a growing shortfall of gas which is expected to worsen in the coming years. An estimate said the gap between demand and supply is projected to double by 2020.
A consortium comprising local and foreign business houses is poised to set up Pakistan’s first liquefied natural gas (LNG) terminal that would be dedicated to energy-starved private sector, industry officials said yesterday.
The officials said that the consortium consisting of Fatima Group, Shell Gas BV, Gunvor Group Ltd and Engro Elengy Terminal Ltd would set up the terminal with a capacity to regasify 600mn metric cubic feet per day in ‘near future’. It would enable private buyers to buy RLNG on competitive price.
At present, the two LNG terminals operated by Engro Elengy and Pakistan GasPort Consortium Ltd – with 1.2bn cubic feet per day capacity – are mainly catering to the need of RLNG-based power plants of the government.
The present domestic gas production capacity is approximately 4bn cubic feet per day (bcfd), while demand is more than 6bn bcfd, resulting in a growing shortfall of gas which is expected to worsen in the coming years. An estimate said the gap between demand and supply is projected to double by 2020.
The increasing trend in demand will continue to pose challenge despite initiative taken by the government that led to injecting of RLNG into domestic network in early 2015.
Official said the new consortium has shown commitment to start work on LNG terminal in view of the government’s encouraging policies.
“This initiative will boost imports of much-needed LNG for the energy-starved private sector,” an official said.
Officials said the new LNG partnership will help in further reinforcing energy security of the country by reducing demand supply gap with provision of one of the cheapest fuels on competitive terms.
An independent private LNG market will encourage competition as private buyers and sellers will truly create a viable energy market, they added. Gas shortages resulted in extreme stress to economy during the last decade. The industrial and commercial sectors have especially been bearing the brunt of chronic energy shortages.
The shortfall directly affected as many as 500,000 households, while it also caused shutdown of industries or slowdown in production, causing unemployment, according to an estimate. Particularly, export-oriented sectors are badly hurt by energy and power crisis that led to loss of export revenue.
More than 2,500 megawatts of power projects were brought online or switched from expensive liquid fuels with the injection of imported RLNG, while 750 plus compressed natural gas stations commenced operation in the Punjab alone, creating a new hope of survival for $4.5bn industry.
Furthermore, the revival of more than 500 industrial units mainly comprising of export-oriented textile could be made possible due to LNG supplies.
Similarly, the robust fertiliser industry that was plagued by non-availability of natural gas could only be revived after RLNG supplies. Consequently, the fertiliser industry has witnessed an increase of 1mn tonnes in production.
LNG is one of the most rapidly expanding energy commodities globally due to its obvious economic and environmental advantages. Global LNG trade reached an all-time high of 260mn tonnes in 2016.
The sector’s 10-year compound annual growth rate stands at 5%. The world’s regasification capacity stood at 820mn
http://tass.com/economy/990860
Russia sees good opportunities for trade and economic cooperation with Pakistan, primarily in energy, Russian Foreign Minister Sergey Lavrov said on Tuesday, opening talks with his Pakistani counterpart Khawaja Muhammad Asif on Tuesday.
"We have good opportunities in trade and economic cooperation, investment cooperation, most notably in energy, given that the significant part of this sector in your country was created with the assistance of our specialists," Lavrov said.
"One of priority areas of our cooperation is anti-terror fight," Lavrov said. "We expect to continue providing assistance in enhancing your country’s potential to fight terrorism," he stressed.
The Pakistani foreign minister said he saw opportunities for bilateral cooperation in military, technical and banking sectors. He congratulated Lavrov on the 70th anniversary of establishing diplomatic ties between Pakistan and Russia, voicing hope to step up cooperation.
Moscow and Islamabad will establish a commission on military cooperation, he said.
"A commission on military cooperation is being formed," Lavrov said. "We have confirmed Russia’s readiness to continue boosting Pakistan’s counterterrorism capacity, which is in the entire region’s interests," the Russian top diplomat added.
"Last year, we handed four Mil Mi-35M combat and cargo helicopters over to our partners," he went on to say. "I am sure that they have been in demand as far as counterterrorism operations go, as our colleagues told us today," the Russian foreign minister noted.
Russia and Pakistan will continue the practice of organizing Druzhba (Friendship) joint tactical drills. "We have decided to continue the practice of organization of joint tactical exercises Druzhba to drill skills of counter-terrorist organizations in mountainous conditions," he said. "Such drills were conducted last autumn in Russia’s Karachay-Cherkessia."
More:
http://tass.com/economy/990860
https://www.hellenicshippingnews.com/pakistani-government-seeks-to-reduce-supplies-as-demand-for-lng-fades/
---
As a consequence, the LNG throughput handled by PLL from Gasport Terminal would be reduced from 300 million cubic feet per day (mmcfd) to 200mmcfd while PSO would reduce supply from Engro Elengy Terminal from 600mmcfd to 500mmcfd.
---
All the three LNG projects were required to achieve commercial operation date (COD) on combined cycle by December 2017 under revised schedule instead of original schedule of June-August 2017, but are yet to reach that stage, he said. One of the plants may achieve COD on March 7, he added.
He said the LNG off-takers were either not ready or a few others had lower requirement for LNG while pipelines and storages were fully packed and hence the only option left was to reduce throughput from both terminals.
---
The meeting was attended by Minister for Power Sardar Awais Ahmed Khan Leghari, Finance Adviser Miftah Ismail, Special Assistant to the PM Barrister Zafarullah Khan, federal secretaries senior officials of divisions concerned. The meeting was also “briefed on demand and supply situation and the power generation projections from March till October 2018”.
Interestingly, the LNG supply jack up was particularly based on power plants’ requirement. The Central Power Purchase Agency (CPPA) and National Transmission & Despatch Company (NTDC) have been giving gas demand of up to 900mmcfd, but actual consumption in the sector has been less than 500mmcfd.
For February, the power sector has been committing LNG offtake of 700mmcfd, but the supply remained less than 400mmcfd and some quantities were diverted to the domestic sector besides the industry.
Under revised schedules, the Petroleum Ministry official said the two LNG projects of the federal government namely Haveli Bahadar Shah and Balloki and Qaid-i-Azam Power Plant (Bhikki plan) of Punjab government have confirmed combined cycle commissioning in early March (all three having 1,200MW).
The three plants were to get firm supply of RLNG from December/January for combined cycle testing but they have so far failed to scale up supplies due to repeated technical failures.
In fact, the three were to start single cycle operations over one year ago for which two LNG terminals were set up and LNG import arrangements were put in place at the expense of millions of dollars of the taxpayer money. The plants were to make ‘take or pay’ payments to LNG importers under back-to-back agreements in case of non-consumption of RLNG even in single cycle phase.
However, the stakeholders in the supply chain have refrained from ‘take or pay’ settlement under orders of the PM Office to spread the losses across the chain instead of cost build up in LNG power plants to avoid Nandipur Power project-like cost escalations. The cost, therefore, shift to PSO, LNG companies and Sui gas companies besides the consumer at large. LNG terminal operators like Elengy and Gasport are qualified to claim full payments that increases the processing cost because of lower utilisation factor.
Interestingly, chief executive of Qaid-i-Azam LNG project Ahad Cheema was picked up by National Accountability Bureau (NAB) in a different case when his first plant at Bhikki was in final stage of testing and he had been entrusted to undertake fourth LNG project of 1,200MW at Trimmu when it had become clear that enough generation capacity had been contracted.
In the meanwhile, a number of low-cost generation project based on coal and hydropower have come on line like coal-based project at Sahiwal contributing 1,300MW, Port Qasim coal plant 600MW and expected to go up to 1,300MW soon. Additional nuclear power capacity of around 800MW is likely to be commissioned this summer while Tarbela-4th extension will give enhanced supplies in summer, followed by Neelum-Jehulm.
https://www.bloomberg.com/news/articles/2018-03-16/exxon-mobil-partnering-with-pakistan-for-its-third-lng-terminal
Exxon Mobil Corp. is working with a group of Pakistan’s large businesses on a proposal to build and supply the country’s third import terminal for liquefied natural gas, according to the nation’s minister for maritime affairs.
Exxon has partnered with Pakistani consortium Energas to develop the import terminal, the minister, Mir Hasil Khan Bizenjo, said by phone Friday, without providing further details. An Exxon spokesman in Singapore wasn’t immediately able to comment.
According to a presentation the companies made to the country’s regulators Thursday, a copy of which was obtained by Bloomberg, the group plans to start building a $150 million offshore terminal at Port Qasim near Karachi in May, pending government approvals. Exxon and Qatar would supply LNG to the terminal, which is expected to be completed by the end of 2019, according to the presentation.
With a population of more than 200 million and an economy growing above 5 percent, Pakistan has the largest appetite for LNG among emerging markets, according to Bloomberg New Energy Finance. The nation’s domestic gas production has remained stable for more than a decade despite growing demand.
The terminal will have throughput capacity of 750 million cubic feet a day of gas, or about 5.6 million tons a year of LNG, according to the presentation. Exxon and Energas already have customers for about 300 million cubic feet a day of gas including power plants, it said.
Energas is a consortium of large Pakistani businesses looking to secure long-term gas supply on preferential terms, including Yunus Brothers Group, which owns Lucky Cement Ltd., and Sapphire Group.
Pakistan said it saved more than $600 million over the first 10 years of a natural gas supply deal by pitting some of the world’s biggest sellers against each other.
A report from the state’s oil marketing company presented two weeks ago to a senate committee, and reviewed by Bloomberg News, details how the 2016 deal came together with Qatar, the world’s largest supplier of liquefied natural gas. It also sheds a rare light on such high-stakes energy deals, which are almost exclusively settled behind closed doors and stay hidden from public scrutiny.
The maneuvering by Pakistan came after two years of negotiations hit an impasse as Qatar refused to lower its offer price for LNG. So Pakistan sought leverage on the open market in late 2015, publicly seeking 120 cargoes in two large tenders, which brought in bids from suppliers including Royal Dutch Shell Plc and BP Plc.
While negotiations with Qatargas Operating Co. were under way, the tender was “issued to fetch maximum number of bidders and best price option,” the presentation said. “The strategy helped bring down prices with Qatargas and saved $610 million."
Pakistan then informed Qatar about the lowest bid, from Switzerland-based Gunvor Group Ltd., which the Middle East supplier agreed to match. Pakistan still purchased some LNG from Gunvor, awarding it the first tender. But the volumes it sought from the second tender ended up in the final Qatar deal, bulking it up by 25 percent.
The head of a senate committee now scrutinizing the deal, Mohsin Aziz, confirmed the details of the presentation in an interview last week. Pakistan State Oil Co. and Qatargas officials didn’t respond to requests for comment. Gunvor and BP declined to comment. Shell said it looks forward to future LNG options in Pakistan, without directly commenting on the tender.
The deal with Qatar, which was eventually settled for 3.75 million metric tons annually over 15 years, marked Pakistan’s emergence as an LNG buyer. The country turned to imports after its own declining production forced some factories to shut and caused blackouts. Imports have grown rapidly since early 2016, with Pakistan the seventh-largest LNG buyer globally in August, according to Bloomberg vessel-tracking data.
The Middle East was a bright spot for global liquefied natural gas demand in 2015. Now imports have plummeted so much that it could take a decade to recover.
Last year’s 37 percent slump and the prolonged negative outlook is in contrast to the region’s two-year LNG demand surge that outpaced global growth, according to BloombergNEF and ship-broker Poten & Partners Inc. data. The Middle East is now expected to make up less than 4 percent of global imports for at least eight years.
There are only five importers -- Egypt, Kuwait, Jordan, the United Arab Emirates and Israel -- of LNG in the Middle East. Bahrain is expected to join the group this year.
Why are LNG imports falling?
Gas finds in Egypt and the U.A.E. reduced the need for the liquefied fuel, and Jordan increased cheaper pipeline imports. “Domestic gas resources have been the main reason for LNG imports being subdued,” said Fauziah Marzuki, a senior associate at BNEF. Locally produced “gas will always be preferred over imports, within certain cost parameters of course.”
Which countries are leading the decline?
Egypt, the region’s biggest LNG importer in 2016 and 2017, will halt purchases this year and may resume exports thanks to surging domestic supplies from the giant Zohr field. Jordan will rely more on pipeline imports from Egypt, trimming its need for LNG. Bahrain, the only country that will add import capabilities in 2019, isn’t expected to reach meaningful volumes until 2022, according to BNEF forecasts.
Fizzling Gas
Liquefied natural gas imports in the Middle East had a record drop in 2018
What does this mean for Qatari exports?
Qatar, the world’s biggest LNG exporter, has boosted its position in the Middle East’s shrinking market since 2016. The exit of Egypt from the scene will likely erode that status. Almost half of Egypt’s imports came from Qatar last year. Still, the region isn’t a major market for Qatar and growth in Asia will more than offset declines in the Middle East.
How will this impact global markets?
Imports of LNG in the Middle East are dwarfed by Asia. Supply of the fuel -- driven by the U.S., Qatar and Australia -- is expected to rise almost 18 percent by 2030, and demand will grow more than double that rate. Even Kuwait, the region’s biggest importer, barely registers in global terms. Its imports are even less than the smaller markets in Asia such as Thailand, Bangladesh and Pakistan.
LNG Minnow
Middle Eastern countries to comprise just 3 percent of global demand in 2019
SINGAPORE: Pakistan's demand for liquefied natural gas (LNG) could more than triple in the next three to five years, the chief executive of Pakistan LNG said on Wednesday.
Last year, Pakistan imported nearly 7 tonnes of LNG, data from Refinitiv Eikon shows. This year, that could grow to as high as 15 million tonnes and to up to 25 million to 30 million tonnes over the next three to five years, said Adnan Gilani, managing director and chief executive of Pakistan LNG.
Pakistan LNG is a state-owned company that buys LNG from the international market to supply to the domestic market.
Both of the country's existing LNG terminals are currently nearly fully utilised. Another two are expected to announce a final investment decision this year.
Pakistan's two import terminals have a regas capacity of 1.2 billion to 1.3 billion cubic feet of gas per day, or about 9 million to 10 million tonnes of LNG a year, according to Gilani's presentation at the LNGA 2019 conference in Singapore.
Pakistan is expected to negotiate a few more long-term contracts to import LNG into the country, Gilani said.
Pakistan is facing a serious energy crisis with repeated blackouts and gas supply outages that led to the sacking of the heads of two of its main gas distribution utilities in January.
March 6, 2019 at 10:16 AM Delete
Qatar has emerged as the front-runner for a long-term gas supply deal to Pakistan, a senior Pakistani official said on Friday, with the cabinet of Prime Minister Imran Khan set to decide in the coming weeks on an agreement.
Pakistan, with 208 million people, is running out of domestic gas and has turned to liquefied natural gas (LNG) imports to alleviate chronic energy shortages that have hindered its economy and led to a decade of electricity blackouts.
Qatar is already Pakistan’s biggest gas supplier after signing a 15-year agreement to export up to 3.75 million tonnes of LNG a year to the South Asian country. That 2016 deal supplied Pakistan’s first LNG terminal.
Emerging as one of the world’s fastest growing LNG markets, Pakistan is looking to secure a long-term supply contracts for its second LNG terminal, which can receive 600 million cubic feet per day (mmcfd) of natural gas.
Pakistan has already signed a five-year import deal with commodity trader Gunvor and a 15-year agreement with Italy’s Eni, but is seeking long-term agreements for about 400 mmcfd.
Pakistan has been negotiating with eight countries with whom it has signed inter-governmental agreements in recent years, including Qatar, Russia, Turkey, Italy, Oman, Azerbaijan, Malaysia, and Indonesia. A Saudi Arabian delegation representing state-owned Saudi Aramco has also shown interest in a gas deal.
The senior Pakistani official told Reuters that state-run Qatargas put forward the lowest bid for a long-term LNG supply contract that would have a price review after five or 10 years.
“Qatar has offered the lowest price,” said the official, declining to say the amount of LNG or the price offered by Qatar.
Pakistan’s cabinet is in the next week or two expected to decide if it will proceed with a government-to-government deal, when it will also decide on the size, he said.
Cash-strapped Pakistan is most likely to go with the cheapest supplier, in this case Qatar, officials have said. However, the government may choose more expensive rates to bolster its relations with a chosen country.
Khan’s cabinet could also choose to put out an open tender for long-term agreements, said the senior official. However, some energy officials believe direct government-to-government deals could offer better rates than tendering.
The Pakistani official added that Saudi Aramco may sign a long-term supply deal with Pakistan, potentially also providing some of the 400 mmcfd available at the second terminal. (Reporting by Drazen Jorgic; editing by Christian Schmollinger)
Khaleeq Kiani Updated April 27, 2019
https://www.dawn.com/news/1478633
Gas shortage to increase by 157pc next fiscal year
Khaleeq Kiani Updated April 27, 2019 Facebook Count
With an addition of 700,000 consumers last year, Pakistan’s gas shortfall is estimated to jump by 157 per cent to 3.7 billion cubic feet per day (bcfd) in fiscal year 2019-20 — almost equal to total gas supplies at present.
The estimates have been made by the Oil and Gas Regulatory Authority (Ogra) that put the gas shortfall increasing almost continuously every year to 6.6bcfd by FY2028.
In its flagship “State of the Industry Report 2017-18”, the authority noted that the (natural gas) demand-supply gap during FY2017-18 was 1,447mmcfd and that this gap was expected to rise to 3,720mmcfd by FY2019-20. The regulator put the total gas demand at about 6.9bcfd in fiscal year 2019-20 compared to total supplies of about 3.2bcfd.
It said the demand would increase to 7.7bcfd by 2024 but domestic supplies would fall substantially to 2.3bcfd, leaving a shortfall at 5.5bcfd. The shortfall would practically be about 3.6bcfd in FY2024 as the gap would be partially met by about 1.9bcfd of imported LNG.
The domestic gas production would continue to decline from about 3.3bcfd at present to less than1.6bcfd by 2028 while the gas demand would keep going up to reach 8.3bcfd by that year. Ogra estimated that despite the induction of all the import options, including LNG, Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-Pakistan (IP) pipelines, the total supplies would decline to 3.7bcfd by 2028, creating a net shortfall of about 4.6bcfd, more than total supplies at present.
The regulator said the gap was rising because of higher consumption in almost all the major sectors particularly power, domestic, fertiliser, captive power and industry as the supplies were not keeping pace with higher demand.
Both the gas utility companies added around 0.7 million domestic, commercial and industrial consumers, in their respective systems, during fiscal year 2017-18. Consumer addition is increasing the gap between demand and supplies, day by day. Especially in winter, the gas demand further increased and as a result the government is being forced to curtail supplies to various sectors.
Despite this, the natural gas is a major contributing fuel in the country’s energy mix. Its share in the primary energy mix is around 48pc.
There is a significant rise in demand and consumption of gas by residential and domestic consumers owing to price differential vis-a-vis other competing fuels, i.e. liquefied petroleum gas (LPG), fire wood and coal. The LPG presently accounts for about 1.3pc of the total primary energy supply in the country.
The current size of LPG market is around 1.3 million tonnes per year. The LPG consumption has increased by 5.88pc in 2017-18 compared to the previous year.
LPG consumption during FY2017-18, stood at around 3,508 tons per day. Local production catered for around 58pc, the rest was imported.
The share of re-gasified LNG in the overall gas supply increased to 23pc in FY 2017-18. The total gas consumers were more than 9.2m by the end of FY2017-18, including 6.3m in the SNGPL network and 2.9m in the SSGCL network.
The power sector was the main consumer of natural gas during FY 2017-18, consuming 37pc, followed by domestic sector 20pc, fertiliser 17pc, captive power 10pc, industrial sector 9pc, transport 5pc, and commercial sector having 2pc share.
Punjab had the highest 50pc consumption, followed by Sindh 39pc, Khyber Pakhtunkhwa 9pc and Balochistan 2pc. Natural gas supplies during the year stood at 4.357bcfd, of which Sindh supplied 50pc, whereas Khyber Pakhtunkhwa, Balochistan and Punjab supplied 12, 11 and 4pc respectively. The remaining 23pc of gas was imported in the form LNG.
BY DR FARID A MALIK
Pakistan is finally on the world Coal Map. On July 08, 2019 power generated from Thar Coal entered the national grid; electricity is now being produced by combustion of the local Lignite. At 175 billion tons this is one of the largest coal deposits of the world. The coalfield is spread over 9,000 square kilometers. It was discovered in 1996 by a joint investigation of Geological Survey of Pakistan (GSP) and United States Geological Survey (USGS). It is an important milestone, now that power can be generated by using indigenous fuel. Currently I am working on building an energy system based on this coal by using 21st century technologies.
In 1952 another important event took place when natural gas was discovered at Sui. With 12 trillion cubic feet (TCF) this was the largest deposit of its time. The Government of Pakistan (GoP) established a joint venture company called Pakistan Petroleum Limited (PPL) that pumps out gas from this resource. Two public sector companies distribute gas across the country. Sui Northern Gas Pipelines Limited (SNGPL) brings gas upcountry to Punjab and KP while Sui Southern Gas Company (SSGC) covers Sindh and Balochistan. The pipeline is spread over 20,000 kilometers, it is a state of the art system designed and built by local expertise. For fifty years (1952 to 2002) the energy needs of the nation were catered for by this source. Unfortunately due to misuse and mismanagement the resource has been depleted before its time. It is down to 2TCF now. Gas is being imported from Qatar to meet the shortfall of about 2000 mmcfd. The price of this imported gas at $11.4 per mmbtu is unaffordable. In the US this gas is sold at $3 per mmbtu.
Sui Gas was the energy gift of the founding fathers of Pakistan while Thar is our contribution to the coming generations which will long be cherished and utilised
There is enough coal at Thar to cater for the energy needs of the nation for two centuries. This resource can power Pakistan to prosperity. Mining of coal was the major challenge which has been overcome by a joint venture company formed by ENGRO and Government of Sindh (GoS) called SECMC (Sindh Engro Coal Mining Company). Coal is mined and then delivered at site to a power generation company called ENGRO Powergen Thar.
As Chairman Pakistan Science Foundation (PSF), I started working on the development of Thar Coal in 2004. In August 2018, after 14 years I stood at the bottom of the mine to touch the black gold for the first time. It was a dream come true. Sui Gas was the energy gift of the founding fathers of Pakistan while Thar is our contribution to the coming generations which will long be cherished and utilised.
No nation can prosper without covering its energy needs. Imported fuel cannot ensure sustainability. Rising costs of power and gas have substantially increased the cost of production rendering our exports non-competitive. The fuel advantage that we once had no longer exists. The black gold at Thar can revive the much needed competitiveness. Coal is being mined in Block II by SECMC while a Chinese consortium has started to dig in Block I. Thar Coal Energy Board (TCEB) has thus far demarcated 14 blocks for exploration.
Imported Liquefied Natural Gas (LNG) costs about 40% higher than Synthetic Natural Gas (SNG) produced from Thar Coal. Above ground gasification after mining is an established technology. There are several plants in Germany, South Africa, China and the US where coal is being used to produce multiple products that include; gas, fertilizer, diesel and chemicals. Pakistan can benefit from this know how that already exists.
Eni and PetroChina’s Singapore unit were joined by the trading arm of Azeri state oil company SOCAR and commodities trader Trafigura in placing offers, the sources said.
Pakistan LNG, the state-owned company that issued the tender, declined to name any bidders.
“The technical bids for our long-term LNG supply tender were received and opened yesterday. Evaluations are underway,” it said.
SOCAR Trading SA confirmed it had bid. Trafigura said it does not comment on tenders. A spokesperson noted Trafigura was a stakeholder in the terminal due to receive the tendered LNG.
“Trafigura owns 150 (million cubic feet a day) of LNG import capacity in that facility, which is key to its plan to supply LNG and gas to Pakistan’s private sector,” the spokesperson said.
https://worldview.stratfor.com/article/pakistan-strives-switch-natural-gas-energy-khan-karachi
Pakistan will continue to shift its economy from oil to natural gas, a cleaner and less expensive option.
The government's wide-ranging campaign against graft, and other problems like debt and energy bottlenecks, will likely complicate future Pakistani LNG terminal projects.
Nevertheless, its energy transition will drive demand for increased LNG imports, creating investment opportunities.
As it looks to quench its economy's growing thirst for energy, Pakistan has turned to several multinational companies for an ambitious expansion of its liquefied natural gas terminals on the Arabian Sea. On Sept. 20, Petroleum Minister Omar Ayub Khan said Pakistan had chosen ExxonMobil, Trafigura, Royal Dutch Shell, Gunvor Group and Tabeer Energy to build five LNG facilities. Ayub's announcement touches upon a broader plan to boost the country's LNG processing capacity while shifting its economic reliance away from oil. With a shortfall in domestic production expected to persist even as power demand climbs, Pakistan's appetite for natural gas for electricity generation will drive ever-more LNG imports over the next few years. And though some might hesitate to invest in Pakistani LNG lest local partners run afoul of a far-reaching (and allegedly politically motivated) anti-corruption campaign, the growth of the country's LNG demand creates major opportunities for international energy companies looking to capitalize on one of Asia's fastest-growing markets.
Natural gas is Pakistan's most important source of energy. The country's energy consumption last year met the equivalent of 85 million metric tons of oil in total; natural gas accounted for the biggest share at 44 percent, outpacing oil and coal combined. Natural gas is a critical input in Pakistan's economy for numerous industries, including the power generation, commercial, fertilizer and transport sectors, among others. For Prime Minister Imran Khan's government, using more natural gas serves a broader purpose as well: lessening the country's reliance on furnace oil, a more expensive energy source per unit that inflates the import bill, especially when dollar-denominated oil prices rise (of course, LNG is also denominated in dollars, but its price per unit is generally cheaper). And given the country's slow climb out from its latest balance of payments crisis — which exacerbated the rising energy bill, forcing Islamabad to seek a $6 billion loan from the International Monetary Fund (IMF) in July — the government has a strong incentive to ease its dependence on oil.
Despite the clearly growing importance of natural gas to Pakistan's economy, supply is failing to keep pace. Through the fiscal year ending in June 2020, the country's petroleum regulator has forecast a shortfall of 104.7 million cubic meters (mmcm), or 3.7 billion cubic feet, per day — more double last year's deficit. The addition of 700,000 consumers to the overall consumer base of 9.6 million over the past year partly accounts for an uptick in demand, which increases during winter. But the shortfall — estimated at an equivalent 2,000 megawatts of electricity — sheds light on fundamental problems in the energy sector involving distribution, transmission and circular debt. A reliance on burning more expensive furnace oil to drive generators forces the government to offer subsidies to power companies. However, the failure of the cash-strapped government to actually pay these subsidies creates a cascading effect throughout the power supply chain as each customer is unable to pay its suppliers, leading to load-shedding, which greatly limits business activity.
PetroChina, one of the largest buyers of liquefied natural gas (LNG) in the key LNG demand growth market, has offered the lowest bid in an LNG tender in Pakistan, in a sign that the Asian market continues to be oversupplied even after the winter heating season began.
According to the documents from the latest Pakistan LNG tender, PetroChina International Singapore offered the lowest bid at a price slope—that is a percentage of the Brent oil contract—of 8.594 percent, for a delivery window on February 16-17. PetroChina beat commodity traders Gunvor and Trafigura and the trading arm of SOCAR to the lowest bid in the Pakistani tender.
It’s not certain if Pakistan will award this tender, because it sometimes chooses not to buy. But the fact that China is offering LNG so cheaply points to the persistent LNG glut on the Asian markets.
According to Bloomberg, this was at least the second time in which PetroChina has offered the lowest bid in an LNG tender in Pakistan.
This year, Asian spot LNG prices are at their lowest ever for this time of the season.
Last week was the first week since October in which spot LNG prices in Asia increased week on week. Asian LNG spot prices for delivery in January rose to US $5.65 per million British thermal units (MMBtu) last week, up by 15 cents from the previous week, trading sources told Reuters.
Still, prices were at their lowest for this time of the year, because of ample LNG supply and tepid demand growth with milder weather earlier in the heating season.
While the lower LNG prices create some demand in India, for example, overall demand in Asia this winter is certainly not growing at the record-breaking pace of the past three years. The reason—supply is more than enough, as new volumes continue to come out of the U.S., Australia, and to an extent, Russia.
Last month, a Singaporean buyer of a U.S. cargo of LNG canceled the loading, as both Asia and Europe are facing an LNG glut. Some other customers of U.S. LNG cargoes are also reportedly considering paying for those cargoes but not loading them, traders have told Reuters.
By Tsvetana Paraskova for Oilprice.com
https://twitter.com/haqsmusings/status/1224492778370945024?s=20
Platts Analytics expects modest growth in inflows in 2020
JKM has fallen more than 40% since the beginning of 2019
No new regasification capacity to be commissioned this year
Pakistan may take advantage of low spot prices and boost LNG imports in 2020 to meet the country's growing demand for fuels amid declining output at home, but infrastructure constraints mean the South Asian country will only post a modest growth in inflows, analysts told S&P Global Platts.
With Pakistan turning out to be one of the fastest growing LNG markets since it first started importing in 2015 -- imports rose to 8.4 million mt in 2019 from 6.8 million mt in 2018 -- there was an urgent need to speed up import capacity expansions, which have been planned in order to absorb incremental inflows, they added.
"Pakistan represents a market that could take advantage of the low spot price environment and import more LNG to feed its growing natural gas demand. However, imports are close to capacity and have limited ability to grow significantly," said Jeff Moore, manager, Asian LNG Analytics, at Platts Analytics.
He added that Platts Analytics expects only a modest growth in imports in 2020 from 2019 levels.
"The underlying driver for LNG consumption growth in Pakistan has been a declining base of domestic production along with new import infrastructure, as the country has brought in two FSRUs, both at Port Qasim," Moore said.
The benchmark for spot Asian LNG prices, JKM, has fallen more than 40% from the beginning of 2019 to about $5.20/MMBtu by the end of the year due to a wave of new supply from Australia and the US, and slowing demand growth in China.
Meanwhile, the DES West India assessment, which is a relatively better reflection of prices in the Indian subcontinent, was lower by more than 41% from the beginning of last year at $4.80/MMBtu toward the end of 2019.
The spot Brent slope, which is obtained by dividing the Brent crude oil price by the spot LNG price, also declined last year, prompting Pakistan LNG Ltd. to issue fresh tenders to seek cargoes at lower Brent slope prices. The average spot Brent slope also dropped, to 8.70% in 2019 from 13.70% in 2018, Platts data showed.
"Although Pakistan represents an important market with an appetite to increase imports given the expectation for low JKM prices this year, the scope to grow imports sharply is limited in 2020," Moore said.
New wave of capacity expansion
Platts Analytics forecasts LNG imports to pick up to 12.4 million mt in 2021 if Pakistan can bring in another floating storage and regasification unit relatively quickly, and imports are expected to exceed 17 million mt by 2025. This will help underpin growing gas demand as well as offset declining production.
Pakistan is now moving toward the next phase of LNG import capacity expansion with government approvals for five new terminals, while also taking steps to further liberalize its natural gas sector through third-party access to distribution infrastructure.
According to government officials, the private sector has recently been allowed to set up five more LNG terminals, in addition to the two FSRU-based import facilities in operation.
"The broad trend is that Pakistan's gas demand in the next couple of years will be driven by the power sector," said James Waddell, senior global gas analyst at Energy Aspects.
https://propakistani.pk/2020/02/07/ppl-finds-largest-gas-reserves-in-pakistan-since-sui/
Pakistan Petroleum Limited (PPL) has found huge gas reserves in Margand block at Kalat, Balochistan.
According to details, PPL owns 100% of the drilling rights of the block and had been drilling at Margand X-1 block since 30 June 2019.
Last year, PPL carried out a Modular Dynamics Testing (MDT) at a depth of 4,500 meters at the block. MDT proved the presence of large gas reserves.
PPL further conducted a Drill Stem Test (DST) which revealed that these gas reserves might potentially exceed 1 trillion cubic feet.
For comparison, Sui has estimated reserves of 2 trillion cubic feet with a daily output capacity of about 604 million cubic feet.
DST of only Margand X-1 suggests that the entire block has the potential to supply 10.7 million cubic feet of gas per day (mmcfd) at a choke size of 64/64 inches and flowing wellhead pressure of 516 pounds per square inch (psi).
This is the first significant discovery of gas reserves in Balochistan since 2000. Companies such as British Petroleum, Petronas, and Niko Resources had tried to tap unexplored reserves since then. However, all companies failed to discover reserves this large and pulled out of the country.
Furthermore, little to no attention was given during the tenures of previous successive governments to exploit the domestic wealth of minerals and fulfill the energy needs of the country.
Instead, questionable contracts like rental power plants and LNG power plants were signed, which the NAB has been investigating.
Pakistan can save more than $900 million on the import bill if Margand gas reserves replace LNG, which costs domestic consumers 100% more than Sui gas, according to an ex-PPL board director.
Battered by security threats, government corruption and unreliable energy for decades, Pakistan has struggled to unleash its economic potential. But with new leadership attempting to launch the country onto the world stage, Pakistani leaders say they’re looking for a little help from Houston.
Pakistan’s U.S Ambassador, Asad Majeed Khan, said in an interview that the energy capital of the world contains two key ingredients his country is looking for to jump start its economy: reliable energy and Pakistani Americans.
“Of course, it impresses me that we have a substantial community of Pakistani Americans (in Houston),” said Kahn, who visited the city last week for a conference hosted by the American Pakistan Foundation. “But what is important is that they are all contributing to the economy of Houston and are influential and successful.”
Houston has the third largest population of Pakistanis in the U.S., according to Pew Research Center, following New York and Washington D.C. Pakistanis living abroad are important to the country’s ability to attract foreign investment, Khan said, but Pakistan may have something to offer Houston, too. Pakistan is emerging as a potentially huge market for U.S. energy exports, particularly liquefied natural gas, as it attempts to stabilize and secure its economic future.
“The convenience of its use, its environmentally friendly use, and also the rates, I think make LNG an attractive option for Pakistan,” Khan said. “There is huge demand.”
Market for natural gas
LNG prices are particularly low these days due to abundant supplies and slipping demand, in part a result of mild winters in much of the world and the impact of the coronavirus on the Chinese economy. Large supplies of gas in Texas shale deposits and increasing demand for cheap, cleaner burning fuels spurred Houston-area companies to look abroad for customers.
A few years ago, Cheniere Energy of Houston became the first company in the continental United States to export LNG.
Pakistan needs cheap, reliable energy that can easily integrate with existing pipelines, storage terminals and other infrastructure. Because the country has depleted much of its compressed natural gas reserves, and sanctions on Iran have reduced natural gas imports, the country is beginning to import LNG from the United States.
“As they are trying to become a more politically stable country looking for economic progress, they are going to need a lot more energy,” said Ramanan Krishnamoorti, chief energy officer at the University of Houston. “LNG might be that real game changer for them.”
Pakistani Prime Minister Imran Khan faces a steep climb, though. Around 52 million Pakistanis did not have access to electricity in 2017, and more than half of the population uses biomass, including wood and animal waste, for cooking due to natural gas and electricity shortages. Natural gas accounted for 21 percent of the nation’s total energy consumption in 2017, according to the International Energy Agency, but biofuels and waste accounted for 37 percent.
https://tribune.com.pk/story/2263143/a-good-sized-gas-discovery-in-kalat
The hefty energy imports cost the country an approximate $15-16 billion annually, which puts great pressure on the foreign exchange reserves.
But the days of burning precious foreign exchange to fuel wheels of economy may have come to an end with this latest discovery.
In an interview, PPL Managing Director Moin Raza Khan told The Express Tribune, “Last year in December, we made a good-sized discovery in the Kalat Plateau in the deeper part of Balochistan. Our gas column is huge, slight less than 1km.”
As per initial estimates, the size of gas reserves is around one trillion cubic feet.
Explaining what constitutes a good discovery, Arif Habib Limited (AHL) Head of Research Tahir Abbas told The Express Tribune, “Our local gas production is around 3.7 bcf; so any discovery with a size of 10% of our total annual production [or more] would be a slightly big discovery.”
“When we drill more appraisal wells, we can give an exact figure but based on the map that we have prepared and based on the column of gas that has come, the volume is close to one trillion cubic feet,” the PPL MD added.
Sharing details, he said that the column had around 55% of hydrocarbons and though they would have to set up a lot of plants, he was of the view that “this discovery has opened a new petroleum play in the country”.
“We are going to drill another well soon, probably in the next six or seven months. But because of the location of the field, it is difficult to develop it at the pace we would have desired.”
Raza said that this was not just a single discovery but there were many other structures as well. “The hydrocarbon habitat has been confirmed,” he said, adding that once the gas discovery was made, chances of success increased.
“PPL’s Margand findings are a landmark discovery. There will be a string of discoveries after this in this region.”
Slowdown in discoveries
Pakistan’s gas production has stagnated at around four billion cubic feet per day (bcfd) against an unconstrained demand for over 6 bcfd. To meet the shortfall, the government initiated LNG imports.
Natural gas is the country’s main source of fuel, accounting for most of the energy consumption but most of it still remains untapped. In fact, over the years gas production has been declining due to insufficient investment and regulatory challenges.
“In Pakistan, so far we have discovered gas equivalent to 10.8 billion barrels of oil and in case of oil we have discovered around 1.5 billion barrels,” said Raza.
Sharing the current situation, the AHL head of research said that Pakistan’s gas reserves as of December 2019 stood at 20,884 bcf, which means “we have just 16 years of gas reserves available”.
Abbas said that since “we have not had any major discovery in the past 15 to 20 years, there has been a slowdown in gas production”. Tal block was the last major discovery in 2002, he added.
“We have a significantly lower reserves replacement ratio because we have not made any major discovery in the past 15 to 20 years.”
Echoing similar remarks, Raza said that over the years many discoveries have been made, such as Uch, Mari, Kandhkot and Adhi to name a few, and are still being made but the size of those discoveries is decreasing.
After the discovery of Sui gas field, exploration activities kicked off in full swing and from 1952 to 1960, 4.9 billion barrels of oil equivalent gas had been discovered, he added.
“So, about 45% of the gas discovered in Pakistan was already found within 10 years after the Sui discovery.”
After 1960, the curve somewhat flattened but further exploration activities started and “we kept adding to the overall reserves”.
Earlier, it was planned that the entire project will be executed with Russian funding, but after Supreme Court decision on the GIDC, the government of Pakistan has decided to provide maximum funding to the project. Now it has been decided that Pakistan’s share in the equity will increase to 76 percent while the Russian share will be 24 percent, said the source. Similarly, initially it was proposed that the pipeline of 1,100 kilometres was to be laid with a diameter of 42 inches with capacity to transport 1.2 billion cubic feet RLNG per day, however now Pakistan wants to increase of the pipeline to 1.6 bcfd with a diameter of either 52 inches or 56 inches.
The Russian delegation comprised of representatives from Ministry of Energy of Russian Federation, Embassy of Russian Federation in Pakistan and other Russian companies and corporations. The Pakistani side included representation from Ministry of Energy (Petroleum Division) of Pakistan, Ministry of Foreign Affairs, and Law and Justice Division and Inter State Gas Systems (Private) Limited. The talks were also attended by Minister for Energy and Special Assistant to Prime Minister on Petroleum.
--------
Pakistan and Russia have agreed to increase Islamabad’s share in the equity of North South Gas Pipeline (NSGP) (renamed to Pakistan Stream Gas Pipeline) to 76 percent while Moscow will fund 24 percent.
Similarly, it has also been agreed to rename the project from North South Gas Pipeline Project to Pakistan Stream Gas Pipeline (PSGP) Project.
The final approval to the proposed amendments in the inter-governmental agreement (IGA) on North South Gas Pipeline (NSGP) will be given in the 8th session of Pakistan-Russia JCC on NSGP project in December, official source told The Nation.
The Ministry of Energy (Petroleum Division) of Pakistan and Ministry of Energy of the Russian Federation held first Russia-Pakistan Technical Committee meeting from 16th to 18th November 2020 here on mutual cooperation for the development of North South Gas Pipeline Project.
Both sides agreed to sign a protocol for amendment in the Inter-Governmental Agreement (IGA) earlier signed in 2015 between both the governments to reflect the revised implementation structure of the project after requisite approvals from respective governments. The parties agreed in principle to implement the project through a special purpose company to be incorporated in Pakistan by Pakistan and Russian parties, wherein Pakistan will have the majority shareholding.
Pakistan will start building a 1,100 kilometer (684 miles) pipeline in July with Russia that will allow the South Asian nation to operate more liquefied natural gas terminals.
The South Asian nation will have a majority share of 51% to 74% in the project, while Russia will own the remainder, Nadeem Babar, petroleum adviser to the prime minister, said in an interview on Dec. 14. Pakistan’s gas distribution companies Sui Southern Gas Co. and Sui Northern Gas Pipelines Ltd., which have started acquiring land for the pipeline, will be a part of the project, while a Russian consortium will lead construction.
Pakistan has become one of the top emerging markets for the super-chilled fuel in recent years as domestic gas production has plateaued, forcing the nation to import cargoes. The nation has also auctioned a record 20 oil and gas blocks to encourage exploration activity, with bids expected by mid-January, said Babar.
Pakistan, which imported its first cargo five years ago, currently has two LNG terminals. It’s running the two terminals at capacity to meet peak winter demand, with 12 cargoes secured for December and 11 for January, Babar said. Two more LNG terminals, Energas and Mitsubishi’s Tabeer Energy, are expected to start in the next few years.
Pakistan has LNG deals for 700 million cubic feet a day and Prime Minister Imran Khan’s government will decide if the nation needs another medium-term LNG contract for five years after reviewing demand from power generators, the biggest consumers of the fuel, in the next three months, said Babar.
The nation has also decided that it will only import cleaner Euro-5 diesel from January after doing the same for gasoline earlier this year. Besides imports, Pakistan also plans to add 150 million cubic feet a day of domestic gas output this month, including 50 mmcfd from the Mari gas field, Babar said.
Special Assistant to Prime Minister (SAPM) on Petroleum Nadeem Babar said on Friday that Pakistan would save an amount of around $3 billion in the import of Liquefied Natural Gas (LNG) under a 10-year agreement signed with Qatar at 10.2pc of the Brent, which would be effective from January 2022.
“Today we have signed a very important agreement with Qatar. Our earlier agreement [signed by the PML-N government] with Qatar was of 13.37pc of the Brent, under which an average five cargoes arrive every month. But, we [the PTI government] gave inked the deal at 10.2pc of the Brent,” he said while sharing with media details of the agreement, which was signed in the presence of Prime Minister Imran Khan at the PM House.
This contract, he said, was “almost 31pc lower” as compared to the previous agreement signed by the Pakistan Muslim League-Nawaz (PML-N) government.
“It is a 10-year agreement and the price can be renegotiated after a period of four years,” he informed, adding that the existing agreement was of 15 years, under which the price was fixed for a period of 10 years.
https://www.energyvoice.com/oilandgas/asia/lng/303016/qatar-pakistan-lng-markets/
The deal will run for 10 years, QP said, starting in 2022 and running to the end of 2031. The company signed the agreement with Pakistan State Oil Company (PSO).
The companies signed the sale and purchase agreement (SPA) in Islamabad. QP president and CEO Saad Sherida Al-Kaabi and PSO managing director and CEO Syed Taha struck the deal. Also attending the ceremony was Pakistani Prime Minister Imran Khan and Qatari ambassador to Pakistan Sheikh Saoud bin Abdulrahman Al Thani.
Al-Kaabi welcomed the deal, saying QP would “continue our contributions towards meeting Pakistan’s increasing energy demand”, describing the market as strategically important.
“This agreement further extends Qatar’s long standing LNG supply relationship with Pakistan and highlights our commitment to meeting Pakistan’s LNG requirements. We are confident that the exceptional reliability of our LNG supplies will provide PSO with the required flexibility and supply security to fuel Pakistan’s impressive growth.”
Pakistan has the potential to be “one of the world’s fastest growing LNG markets”, Al-Kaabi said. The country has two import terminals, both using floating storage and regasification units (FSRUs).
Rising demand
The country’s special assistant on petroleum Nadeem Babar said Pakistan would engage with Qatar further on petrochemical supplies.
The official said the new contract had been reached at lower prices and would save Pakistan $3 billion over 10 years, according to Dispatch News Desk.
Qatargas signed a 3.75mn tpy deal with PSO in 2016. This was to start that year and run for 15 years.
Pakistan began importing LNG in 2015. Demand tends to peak in summer months as temperatures increase.
The International Islamic Trade Finance Corp. (ITFC) agreed to provide $1.1 billion in financing to Pakistani this week. The cash will go to helping cover imports of “essential commodities such as crude oil, refined petroleum products, LNG and urea”, it said.
LNG spot prices fell in 2020 amid lower demand. They then spiked in January this year as a combination of factors triggered a supply crunch. This price spike – reaching close to $40 per mmBtu – helps make the case for longer-term contracts.
QP also recently signed a deal with Vitol to supply 1.25mn tpy of LNG to Bangladesh.
While Pakistan’s dependence on overseas shipments of the fuel have ballooned since imports began in 2015, insufficient infrastructure has made it difficult to deliver the fuel to more remote parts of the country. The government and Russia are planning a domestic pipeline that connects Pakistan’s southern LNG terminals to the energy-hungry north, but the project has been delayed several years and won’t begin construction until later this year.
Door-to-door deliveries of LNG via trucks has increasingly allowed importers to leapfrog infrastructure bottlenecks and has helped boost demand for the fuel globally. The network could help places like the land-locked Punjab prefecture, where major industries such as fertilizer, textile, cement, face gas shortages.
LNG Easy, which operates in Myanmar, Singapore and Malaysia, will begin transporting LNG from Pakistan’s ports from August. PetroChina Co. will be the main LNG supplier, although the company has also signed purchase agreements with Trafigura and Malaysia’s Petroliam Nasional Berhad and is in talks with QatarGas to buy LNG fixed to the price of crude oil, said Hamid.
The company sees additional growth opportunities across South and Southeast Asia, in countries including Bangladesh, Vietnam and the Philippines, according to its website.
Pakistan and Russia have signed an agreement for the construction of about 1,100-km gas pipeline from Port Qasim in Karachi to Lahore at an estimated cost of USD 2.5-3 billion by the end of 2023, according to a media report on Friday.
The Heads of Terms (HoTs) of shareholders' agreement was signed on Thursday after four days of talks, the Dawn News reported. The two sides also signed minutes of the third meeting of the Russia-Pakistan Joint Technical Committee (JTC) for implementation of the Pakstream Gas Pipeline Project commonly known as North-South Gas project.
The two sides agreed over 74:26 per cent shareholding in the special purpose vehicle (SPV) for the project. This envisages both put option' and call option' to Russian side which means its entities can move out of the project if it is not found feasible or increase its shareholding to 49 per cent if it is able to provide attractive financing arrangements acceptable to Pakistan. In any case, Pakistani entities will maintain majority shareholding.
The Russian side will arrange funding for foreign exchange components through suppliers' credit or typical project financing to cover imported items like steel, consultancies, pipelines and related products and materials not available in Pakistan. The concession agreement for the pipeline will remain effective for 25-30 years. The pipeline size was agreed at 56-inch diameter to cater for next 30-40 years of energy needs in the country that will ensure 700-800 million cubic feet per day (mmfcd) of free gas flow which can go up to 2,000mmcfd with compressors.
The next steps will be the signing shareholders' agreement, financial agreement, gas transportation agreement and lenders agreement during which time the Russian side will complete the front end engineering design (FEED) and the Pakistani side will arrange dollar financing of local currency component against Rs321bn worth of Gas Infrastructure Development Cess.
The two sides committed to expeditiously implement the project to meet the emerging energy security scenario of Pakistan to ensure investment commitments by coming LNG terminals, the Pakistani daily reported.
At the signing ceremony in Islamabad, Pakistani side was led by Petroleum Division Secretary Arshad Mahmood while Deputy Director of Department of Foreign Economic Cooperation and Fuel Markets Development of Russian Ministry of Energy Alexander Tolparov led the visiting team.
Nation’s gamble that spot prices would fall fails to pay off
Global supply crunch has boosted rates from Europe to the U.S.
Cash-strapped Pakistan’s bet that liquefied natural gas prices would go down has failed, forcing the South Asian nation to pay more than ever for the power plant fuel or risk blackouts.
Pakistan LNG this week bought four cargoes for September delivery at around $15 per million British thermal units, the highest since the nation began imports in 2015, according to people with knowledge of the matter. The importer scrapped a tender for September cargoes that closed earlier this month in a gamble that prices would fall.
The era of cheap natural gas is over, giving way to an age of far more costly energy that will create ripple effects across the global economy.
Natural gas, used to generate electricity and heat homes, was abundant and cheap during much of the last decade amid a boom in supply from the U.S. to Australia. That came crashing to a halt this year as demand drastically outpaced new supply. European gas rates reached a record this week, while deliveries of the liquefied fuel to Asia are near an all-time high for this time of year.
With few other options, the world is expected to depend more on cleaner-burning gas as a replacement to coal to help achieve near-term green goals. But as producers curb investments into new supply amid calls from climate-conscious investors and governments, it is becoming apparent that expensive energy is here to stay.
Already, there are signs around the world that supplies will fall short:
Beyond a massive expansion in Qatar, few new LNG export projects have been cleared since the start of 2020.
End-users have been less willing to take equity stakes in upstream projects or sign long-term supply deals due to uncertainty surrounding government-led efforts to reduce emissions.
U.S. shale drillers aren’t immediately responding with additional production, as they’re under pressure from investors to curb spending and avoid creating another glut, while key pipeline projects struggle to move forward.
“No matter how you look at it, gas will be the transition fuel for decades to come as major economies are committed to reach carbon emission targets,” said Chris Weafer, chief executive officer of Moscow-based Macro-Advisory Ltd. “The price of gas is more likely to stay elevated over the medium-term and to rise over the longer-term.”
Strong Consumption
By 2024, demand is forecast to jump 7% from pre-Covid-19 levels, according to the International Energy Agency. Looking further out, the appetite for liquefied natural gas is expected to grow by 3.4% a year through 2035, outpacing other fossil fuels, according to an analysis by McKinsey & Co.
Surging natural gas prices means it will be costlier to power factories or produce petrochemicals, rattling every corner of the global economy and fueling inflation fears. For consumers, it will bring higher monthly energy and gas utility bills. It will cost more to power a washing machine, take a hot shower and cook dinner.
It’s especially bad news for poorer nations like Pakistan and Bangladesh that reworked entire energy policies on the premise that the fuel’s price would be lower for longer.
European natural gas rates have surged more than 1,000% from a record low in May 2020 due to the pandemic, while Asian LNG rates have jumped about six-fold in the last year. Even prices in the U.S., where the shale revolution has significantly boosted production of the fuel, have rallied to the highest level for this time of year in a decade.
While there are several one-off factors that have pushed gas prices higher, such as supply disruptions, the global economic rebound and a lull in new LNG export plants, there is a growing consensus that the world is facing a structural shift, driven by the energy transition.
A decade ago, the IEA declared that the world may be entering a “golden age” of natural gas demand growth due to historic expansion of low-cost supply. Indeed, between 2009 and 2020, global gas consumption surged by 30% as utilities and industries took advantage of booming output.
Bangladesh’s state-run Petrobangla plans to stop buying spot LNG cargoes for the rest of the year after a quadrupling of prices over the past year to a seasonal high. Pakistan has repeatedly canceled and reissued LNG purchase tenders in an effort to get better offer prices, without avail.
The evolution marks a stark turnaround after developing Asia helped drive a surge in trading of the super-chilled fuel and built LNG import strategies on the premise that spot shipments would be abundant and cheap. Unlike richer counterparts in the region that can pass on this year’s historic price rally to end-users, some governments may need to rethink LNG procurement strategies and reduce exposure to the volatile spot market, switch to dirtier fuels such as coal or oil or even curb electricity production.
“With spot prices so high and with relatively low development, these countries may not be able to afford the current sky-high prices for gas on the global market,” said Ron Smith, senior oil and gas analyst at BCS Global Markets. A return of power rationing this winter “seems quite possible” for Bangladesh and Pakistan.
Nations in South Asia have the most potential to take advantage of cheaper fuel oil to offset the rise in spot LNG prices through this winter, said Felix Booth, head of LNG at energy-intelligence company Vortexa.
https://finance.yahoo.com/news/1-pakistan-lng-gets-single-155843872.html?soc_src=social-sh&soc_trk=tw&tsrc=twtr
ISLAMABAD, June 23 (Reuters) - Pakistan LNG Ltd (PLL) received a single bid from Qatar Energy at $39.80/mmbtu for an LNG import tender seeking a cargo in the July 30-31 window, an industry source said on Thursday.
The source said no bids were received for three other deliveries sought in July, which was later confirmed by documents uploaded on PLL's website.
The source added that PLL had decided not to pick up the costly bid.
A spokesman for Pakistan's power ministry, under which PLL operates, did not immediately respond to a Reuters request for comment.
Pakistan had sought four cargoes from international suppliers during the windows of July 3-4, 8-9, 25-26 and 30-31.
Pakistan unsuccessfully tapped the spot market earlier this month for an extra July cargo, with two tenders not returning valid bids.
In recent years Pakistan has increased reliance on LNG for electricity generation, but is facing widespread power outages as procurement of the chilled fuel remains unreliable and expensive.