Pakistan's Insatiable Appetite For Energy
Pakistan's consumption of oil and gas has rapidly grown over the last 5 years, an indication of the nation's accelerating economic growth. Pakistan is among the fastest growing LNG markets, according to Shell 2017 LNG report.
Oil consumption in Pakistan has shot up about 50% from 400,000 barrels per day in 2012 to nearly 600,000 barrels per day in 2017. During the same period, Pakistan's gas consumption has risen from 3.5 billion cubic feet per day to nearly 4 billion cubic feet per day, according to British Petroleum data.
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.
Since the middle of the 18th century, the Industrial Revolution has transformed the world. Energy has become the life-blood of modern economies. Energy-hungry machines are now doing more and more of the work at much higher levels of productivity than humans and animals who did it in pre-industrial era.
Every modern, industrial society in history has gone through a 20-year period where there were extremely large investments in the energy sector, and availability of ample electricity made the transition from a privilege of an urban elite to something every family would have. It seems that Pakistan is beginning to recognize it. If Pakistan wishes to join the industrialized world, it will have to continue to do this by having a comprehensive energy policy and making large investments in the power sector. Failure to do so would condemn Pakistanis to a life of poverty and backwardness.
Pakistan is heavily dependent on energy imports to drive its economy. These energy imports put severe strain on the country's balance of payments and forces it to repeatedly seek IMF bailouts.
Pakistan needs to develop export orientation for its economy and invest more in its export-oriented industries to earn the hard currencies it needs for essential imports including oil and gas. At the same time, Pakistan is stepping up its domestic oil and gas exploration efforts. American energy giant Exxon-Mobil has joined the offshore oil and gas exploration efforts started by Oil and Gas Development Corporation (OGDC), Pakistan Petroleum Limited (PPL) and Italian energy giant ENI.
Related Links:
Haq's Musings
South Asia Investor Review
Pakistan Oil and Gas Exploration
US EIA Estimates of Oil and Gas in Pakistan
Pakistan Among Fastest Growing LNG Markets
Methane Hydrate Release After Balochistan Quake
Thar Coal Development
Why Blackouts and Bailouts in Energy-Rich Pakistan?
Riaz Haq's Youtube Channel
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| Pakistan Oil Consumption in Barrels Per Day. Source: CEIC.com |
Oil consumption in Pakistan has shot up about 50% from 400,000 barrels per day in 2012 to nearly 600,000 barrels per day in 2017. During the same period, Pakistan's gas consumption has risen from 3.5 billion cubic feet per day to nearly 4 billion cubic feet per day, according to British Petroleum data.
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.
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| Pakistan Gas Consumption in Billions of Cubic Feet Per Day. Source: CEIC.com |
Every modern, industrial society in history has gone through a 20-year period where there were extremely large investments in the energy sector, and availability of ample electricity made the transition from a privilege of an urban elite to something every family would have. It seems that Pakistan is beginning to recognize it. If Pakistan wishes to join the industrialized world, it will have to continue to do this by having a comprehensive energy policy and making large investments in the power sector. Failure to do so would condemn Pakistanis to a life of poverty and backwardness.
Pakistan is heavily dependent on energy imports to drive its economy. These energy imports put severe strain on the country's balance of payments and forces it to repeatedly seek IMF bailouts.
Pakistan needs to develop export orientation for its economy and invest more in its export-oriented industries to earn the hard currencies it needs for essential imports including oil and gas. At the same time, Pakistan is stepping up its domestic oil and gas exploration efforts. American energy giant Exxon-Mobil has joined the offshore oil and gas exploration efforts started by Oil and Gas Development Corporation (OGDC), Pakistan Petroleum Limited (PPL) and Italian energy giant ENI.
Related Links:
Haq's Musings
South Asia Investor Review
Pakistan Oil and Gas Exploration
US EIA Estimates of Oil and Gas in Pakistan
Pakistan Among Fastest Growing LNG Markets
Methane Hydrate Release After Balochistan Quake
Thar Coal Development
Why Blackouts and Bailouts in Energy-Rich Pakistan?
Riaz Haq's Youtube Channel
Comments
http://world.bymap.org/NaturalGasConsumption.html
2014 figures Pakistan 207 cubic meters per person vs India 42 cubic meters per person
It's also reflected in the total gas consumption figures for 2017:
Pakistan 3.95 billion cubic feet per day
India 5.25 billion cubic feet per day
https://www.ceicdata.com/en/indicator/india/natural-gas-consumption
https://www.ceicdata.com/en/indicator/pakistan/natural-gas-consumption
1947, reflecting rapid rate of industrialization and a shift from non-commercial to commercial
sources of energy. In terms of oil equivalent, per capita commercial energy consumption
in Pakistan was mere 0.02 Ton of Oil equivalent (TOE) in 1947.
https://sdpi.org/publications/files/IP-Report.pdf
5 In 2012, per capita commercial
energy consumption is estimated
at 0.37 TOE, indicating a
compound growth rate of 6.5% for the
period 1947-2012.
6
Oil and gas resources account for
almost three-quarters ofthe energy consumption
in the country7 and natural
gas due to its convenience and cheapness
has proved over the years as the
best source of energy - partly replacing
coal.
8 Therefore, currently 49.5% of energy
needs are dependent on natural
gas, while Oil Imports account for
30.8%, LP 0.5%, Electricity (Hydro, Nuclear
& Imported) 12.5% and Coal
6.6%,
9 thus indicating the maximum dependence on natural gas
https://oilprice.com/Energy/Natural-Gas/India-Looks-To-Double-Its-Natural-Gas-Usage.html
This week Indian Prime Minister Narendra Modi announced that this administration is working toward establishing a natural gas trading exchange as part of a larger effort to relieve the rapidly developing nation’s reliance on crude oil and its byproducts. A large motivator for the desired shift away from oil is the country’s ever worsening pollution problem.
At a New Delhi ceremony for the laying of a foundation stone for the development of city gas distribution (CGD) networks, Prime Minister Modi said that his government wants to “increase the use of natural gas by 2.5 times by the end of next decade." The plan is already getting underway with the construction of CGD networks in 129 districts auctioned so far.
The CGD networks underway are just one facet of India’s move to develop a transparent natural gas market. The price of gas would be determined on an exchange, with the intention of promoting a significant increase in the use of natural gas in the subcontinent’s total energy mix. The amount of natural gas in the current blend is just 6.5 percent, and Modi’s administration aims to raise the natural gas content to 15 percent between 2028 and 2030.
The Indian government has not yet disclosed the price tag for making this significant switch away from crude and toward natural gas. That being said, analysts have consistently said that using natural gas as fuel for vehicles and households alike is markedly less expensive than LPG, and considerably cleaner than petrol or diesel, a majorly important factor in the smog-choked country with an exponentially expanding middle class. As more people with buying power enter the market with the desire and the means to buy vehicles and power their homes, the importance of clean energy only becomes more dire.
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Another major factor of change in India’s energy industry at the moment is the projected decline of the nation’s traditional offshore assets over the next ten years. This will be offset by the planned deepwater and ultra-deepwater projects set for development in the Krishna-Godavari (KG) basin at the Bay of Bengal, but these projects will also be a major boon to Modi’s desired shift toward natural gas. The upcoming projects in the KG basin are, according to oil and gas analyst GlobalData, anticipated to meet the rapidly growing energy demand - natural gas especially - in India, in addition to reducing the nation’s dependence on imports by as much as 10 percent by 2023.
According to Prime Minister Modi, India has already begun the bidding process for what is now the tenth round of CGD, expanding the coverage to 400 districts (a whopping 70 percent of the country's total population) over the next two to three years. In addition, India is pouring 130 billion rupees (nearly $2 billion U.S. dollars) into constructing a pipeline to eastern India. This is a necessary development, as the east is the site of latent gas demand that has not yet been exploited thanks to the non-existent infrastructure (until now). This pipeline network, paired with the liquefied natural gas (LNG) terminals currently being developed on India’s east coast and the massive CGD network project, are expected to work together to significantly increase natural gas consumption in the Indian subcontinent.
https://www.eco-business.com/news/government-unhappy-but-pakistan-to-stay-with-coal/
Out of the 21 energy projects to be completed on a fast track (by 2019) with a cumulative capacity of 10,400 MW, nine are coal power plants, seven wind power plants, three hydropower, and two are HVDC transmission line projects.
Nearly USD 35 billion of the USD 60 billion worth of loans for producing energy from the China Pakistan Economic Corridor (CPEC) will be used to build new power stations, mainly coal-fired.
The projects completed include two mega coal power plants of 1,320 MW each, one in Punjab’s Sahiwal (commercially operating since May 2017) and the other in Karachi’s Port Qasim (Commercially operating since April 2018) using imported bituminous coal with modern supercritical coal-fired units. According to news reports, the country’s National Accountability Bureau has initiated an alleged corruption probe into both the costly projects.
Another one under completion is in the Thar desert in Sindh, about 400 kilometres from the port city of Karachi. It includes mining and setting up two 330 MW power plants at a cost of USD 2 billion. Once completed, it will be the first large power generation project using local coal.
The Sindh Engro Coal Mining Company has finally reached the coal seam in the desert. According to the company’s chief executive officer, Shamsuddin Shaikh, by October the company would have dug down to 162 metres to be able to dig up “useful” lignite coal. At the same time work at the first of the two power plants is 85 per cent complete and commissioning will begin by November-December this year when it will start supplying power to the national grid on an experimental basis. Once the first plant is fired, it will gobble up 3.8 million tons of coal each year.
Other projects in the pipeline include three 1,320 MW coal power plants. The ones at Rahim Yar Khan (in Punjab), and Hub (in Balochistan) to be completed between December 2018 and August 2019 respectively, will use imported coal. The third one, at Thar Block VI (in Sindh), will use indigenous lignite coal.
That does not mean that Pakistan is going to be completely coal-driven. Vaqar Zakaria, managing director of environmental consultancy firm Hagler Bailly Pakistan, put the figure to “just about 10 per cent of current power generation” which is from imported coal. However, he pointed out that coal-based power generation will increase to about 30 per cent of the country’s capacity requirement in the next three years once plants on Thar coal come online, and those at Hub and Jamshoro expand on imported coal.
Zakaria pointed out that the main argument in favour of Thar coal was the “lower reliance on imported fuel”, and to meet the “demand particularly when hydropower drops in winter” although the capital cost was high as the mines also have to be developed. However, he predicted the country will “see a slowdown in capacity addition in Thar in future”.
But projects relying on imported coal were questionable, especially those that are being carried out now, said Zakaria. “The earlier ones were justified [by the government] on the basis of load shedding and early induction of power to fill the demand-supply gap like the one at Port Qasim and Sahiwal plants that are already online; but the ones at Hub and Jamshoro cannot be justified on that basis. It is hard to understand why a project on imported coal was added so late in the game,” he said.
https://www.urdupoint.com/en/pakistan/pakistan-council-of-renewable-energy-technolo-515947.html
Pakistan Council of Renewable Energy Technologies (PCRET), which is working under Ministry of Science and Technology, has installed 562 micro-hydel power plants with total capacity of 9.7 MW during the last five years, electrifying more than 80,000 houses.
An official source from Ministry of Science and Technology told APP that the ministry and its research and development organizations are mandated to develop technologies for socio-economic development of the country.
Technologies have been developed in different sectors like water, renewable energy, electronics, health, Small and Medium sized Enterprises (SMEs), industry, agriculture etc to directly and indirectly benefit a common man.
Listing different technologies developed during the last five years, the official source informed that PCRET has installed 155 small wind turbines in Sindh and Balochistan electrifying 1560 houses and installed 4016 biogas plants.
The council has established 20 KW hybrid system including solar, MHP and wind in collaboration with China for research and training purposes.
PCRET has also designed and stimulated Wind Turbine and solar products including Solar Cooker, Solar Dryer, Solar Water Heater and Solar Desalination.
During the last five years, Pakistan Council of Scientific and Industrial Research (PCSIR) which is also an important department of the ministry has developed Coal Water Slurry Fuel and Reinforced Derived Fuel and solar driven one inch and two inches water pumps. PCSIR has also designed the Solar Powered Reverse Osmosis Plant, the source said.
While National Institute of Electronics (NIE) has developed LED lights, Solar Charge Controller, Automatic Voltage Stabilizer and cascaded multilevel inverter based transformer-less Unified Power Flow Controller, it added.
Saudi Arabia plans to set up a $10 billion oil refinery in Pakistan's deepwater port of Gwadar, the Saudi energy minister said on Saturday, speaking at the Indian Ocean port that is being developed with the help of China.
Pakistan wants to attract investment and other financial support to tackle a soaring current account deficit caused partly by rising oil prices. Last year, Saudi Arabia offered Pakistan a $6 billion package that included help to finance crude imports.
"Saudi Arabia wants to make Pakistan's economic development stable throughestablishing an oil refinery and partnership with Pakistan in the China Pakistan Economic Corridor," Saudi Energy Khalid al-Falih told reporters in Gwadar.
He said Crown Prince Mohammad bin Salman would visit Pakistan in February to sign the agreement. The minister added that Saudi Arabia would also invest in other sectors.
Beijing has pledged $60 billion as part of the China Pakistan Economic Corridor (CPEC) that involves building power stations, major highways, new and upgraded railways and higher capacity ports, to help turn Pakistan into a major overland route linking western China to the world.
"With setting up of an oil refinery in Gwadar, Saudi Arabia will become an important partner in CPEC," Pakistan Petroleum Minister Ghulam Sarwar Khan said.
The Saudi news agency SPA earlier reported that Falih met Pakistan's petroleum minister and Maritime Affairs Minister Ali Zaidi in Gwadar to discuss cooperation in refining, petrochemicals, mining and renewable energy.
It said Falih would finalise arrangements ahead of signing memorandums of understanding.
Since the government of Prime Minister Imran Khan came to power in August, Pakistan has secured economic assistance packages from Saudi Arabia, the United Arab Emirates and China.
In November, Pakistan extended talks with the International Monetary Fund as it seeks its 13th bailout since the late 1980s to deal with a looming balance of payments crisis.
The Pakistani prime minister's office had said on Thursday that Islamabad expected to sign investment agreements with Saudi Arabia and the UAE in coming weeks.
https://www.bloomberg.com/news/articles/2019-01-14/oil-wildcats-to-watch-for-signs-of-asia-drilling-drop-reversal
“Explorers are getting a little bit more ambitious in this part of the world,” Andrew Harwood, the consultancy’s Asia-Pacific upstream research director, said in an interview in Singapore. “These are huge companies with global portfolios; they’re not spending the money to drill unless they have a reason to be excited.”
Wood Mackenzie expects mergers and acquisition spending in the region to total about $8 billion in 2019 after growing 60 percent to $8.7 billion 2018. Activity will be focused around divestments in Southeast Asia by companies that want to focus spending on U.S. shale.
Here’s a closer look at the three Asia-Pacific prospects Wood Mackenzie is paying the most attention to:
Pakistan
A group including Eni SpA and Exxon Mobil Corp. will start drilling the Kekra-1 well this month in deepwater south of Pakistan. The country’s onshore natural gas production has been declining after years of under-investment, leading to the start of liquefied natural gas imports in recent years. Growing demand for the fuel has made the drillers more confident that they’ll be able to sell any gas from a sizable development, Harwood said.
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Pakistan: ExxonMobil Begins Drilling off Karachi Coast
https://worldview.stratfor.com/situation-report/pakistan-exxonmobil-begins-drilling-karachi-coast
What Happened: ExxonMobil has begun drilling for oil and gas 143 miles off the coast of Karachi in the Arabian Sea, Daily Pakistan reported Jan. 10.
Why It Matters: The operations mark the first time an energy company is conducting offshore exploration along Pakistan's coast. An ExxonMobil executive has said the company has been considering launching operations in the region because of Pakistan's growing energy demand.
Background: Only 15 percent of Pakistan's energy consumption is met by domestic production. High energy prices have significantly inflated the country's import bill and contributed to draining its foreign exchange reserves.
Ghulam Sarwar Khan, Federal Minister for Petroleum met Mr. Irtiza Syed, CEO, EXXON Mobil on Wednesday at his office.
Irtiza briefed minister about progress at Indus G Block.
According to a press release issued by the petroleum ministry, Ghulam Sarwar Khan said 2019 will be good year for all of us. Exxon Mobil has started spud in.
The well’s diameter is 18 to 24 inches. Right now they are at depth of 1900 feet, hence its ultra-deep exploration. It will give its first good news in March or April.
Exxon Mobil has given the target depth of 5500 feet. In March, Exxon Mobil will send a specimen to Houston for examination.
Similarly ENI will send the specimen to Milan in March. From April to May there will be a reasonable idea that this well contains oil or gas.
The discovery is anticipated to yield gas flows which can be as big as Sui field, with estimated reserves of 3 to 8 trillion cubic feet (TCF), or 25-40 percent of Pakistan’s total gas reserves.
Pakistan Exploration and Production (E&P) companies along with international partners have ventured into offshore territory of underexplored but promising Indus G Block for deep sea drilling endeavor.
The operator of the block, ENI has chartered, Saipem, a rig ship to drill the exploration well , located 230 kms South West of Karachi. ENI is an Italian company working in Pakistan since 2000.
This endeavor is a joint venture (JV) formed by ENI, Exxon Mobil, OGDCL and PPL to spud Kekra I exploration well in Indus G Block.
The exploration cost is estimated at 75 million dollars. Right now more than 200 people are working at the ship. After exploration, employment will be generated. If it will be a successful discovery, then for next 25 to 30 years, Pakistan can use this gas.
After its success, Exxon Mobil will spud in more wells. Till 2021 to 2022, a facility will be made here. Ghulam Sarwar Khan also invited Exxon Mobil for on shore exploration. He said that he will make ways easy for international investment.
For this purpose duties and taxes have been waived off on import of drilling equipment. During meeting, Stephen, Vice President, Exxon Mobil was also present.
While the overall imports declined slightly during the first 10 months of the current fiscal year, the country’s oil import bill went up by four per cent year-on-year to $11.899 billion, Pakistan Bureau of Statistics reported.
The import bill of three sectors—agriculture, textile and oil posted positive growth, while imports from almost all other groups including machinery-related items contracted during the months under review.
The PBS data for July-April period showed the overall import bill during the 10-month period declined by 7.88pc year-on-year to $45.47bn.
Product-wise data showed that petroleum group imports rose 4.1pc, to $11.89bn during the period, with the largest surge coming from crude oil, up 14.3pc.
The cost of petroleum products’ imports dipped 14.38pc during the 10 months, whereas a 13.87pc decline was recorded in terms of the total quantity imported; bringing the total down to 7.42 million tonnes.
On the other hand, Liquefied Natural Gas (LNG) imports soared by 46.06pc, while that of liquefied petroleum gas plunged 5.2pc.
The data for the period shows a changing trend in the imports, with machinery-related imports registering a marginal decline, and oil imports — including LNG — bill increasing in large part due to the rise in global oil prices.
Machinery imports, for July-April FY19, plunged by 21.06pc to $7.49bn, from $9.49bn last year led by shrinking textile- related imports and power generating machinery at 7.46pc and 52.03pc, respectively.
However, mobile phone imports also dipped by 6.86pc while those of construction machinery declined 34.67pc. Transport group, another major contributor to the cumulative trade deficit, also witnessed a steep fall of 34.89pc during the period under review. The months saw a dip in imports of almost all transport-related items. Food imports — the second leading contributor to the total import tally — shrank 9.85pc during the period under review.
The country’s food imports dropped by 9.85pc to $4.7bn in the first 10 months of the current fiscal year, as compared to the imports of $5.216bn recorded during the same period last year.
Product wise details show import of palm oil witnessed a sharp decrease of 10.99pc; pulses 2.3pc; milk, cream and milk food 10pc; spices 5.5pc; soybean oil 34.3pc; sugar 25.46pc; and other miscellaneous food commodities 9.41pc. The import bill of tea recorded a nominal increase of 0.61pc during the period under review.
Textile exports inch up: Textile and clothing exports proceeds posted a negative growth of 0.02pc YoY to $11.12bn during the 10 months whereas cumulative textile proceeds during the period under review also posted marginal decline of 0.11pc YoY to $19.16bn.
Product-wise details show that exports of ready-made garments went up by 3.21pc, knitwear up 8.76pc, bed wear 2.4pc, whereas towel exports declined 1.39pc, while that of cotton cloth declined by 2.7pc in value.
The slow growth in textile and clothing exports comes despite government’s support in the form of cash subsidies, special export packages and multiple rupee depreciation during the last year.
Among primary commodities, cotton yarn exports declined by 15.78pc, yarn other than cotton by 0.29pc whereas made-up articles — excluding towels — increased by 1.15pc, tents, canvas and tarpaulin up by 1.41pc with proceeds from raw cotton dipping by 67.2pc during the period under review.
Source: Dawn
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://www.dawn.com/news/1508944
In an interview with the publication, UAE Ambassador to Pakistan Hamad Obaid Ibrahim Salem Al-Zaabi said: "We are going to launch very soon one of the biggest investments in a refinery project in Hub. It is going to be a $5 billion investment between Mubadala Petroleum Company of Abu Dhabi, Pak Arab Refinery Limited (Parco) and OMV [OMV Pakistan Exploration Gesellschaft]."
According to Arab News, Al-Zaabi said the project was a result of "extensive discussions" between Mubadala Petroleum, Pakistan's petroleum ministry as well as Parco and OMV.
"This project will show the strength of UAE-Pakistan relations and how the UAE is focusing on investment in and future of Pakistan," he was quoted as saying, adding that the two nations were moving forward on new projects and investment.
The UAE ambassador said that the two governments were "finalising the minute details of this refinery project".
"Many meetings have taken place regarding this project," he added, sharing that a UAE delegation, headed by the chief executive officer of Mubadala Petroleum, had met with the Board of Investment (BoI) chairman and the petroleum minister during a visit to Pakistan a few months ago.
"They have discussed this project in detail. We are going to launch it very soon," Al-Zaabi 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.
https://energypedia.info/wiki/Pakistan_Energy_Situation
The government is supporting the use of LPG for cooking resulting in rapid investment in production, storage and establishment of auto stations of LPG. During the FY 2016, an approximate investment of PKR 2.38 billion has been made in the LPG supply infrastructure whereas total investment in the sector until Feb 2016 is estimated at about PKR 22.33 billion. During the FY 2016, the regulatory body OGRA has issued 12 licenses for operational marketing of storage and filling plants, 37 licenses for construction of LPG storage and filling plants, 20 licenses for Construction of LPG auto-refuelling stations and one license for storage and refuelling of LPG was issued. Further, one license for construction of production and storage of LPG facility is also issued by OGRA which shall result in improving supply and distribution of LPG as well as create job opportunities in the sector.[4]
Cities like Karachi are facing severe power shortages. Consumers are subject to power cuts, ranging from two to eight hours every day, as power producers claim to be short of gas and furnace oil supplies, Khan said.
"According to our estimates, the current shortfall of gas for power generation in Karachi and other major cities in Pakistan would range between 200 MMcf/d to 300 MMcf/d", he added.
Khan said industrial power demand has picked up sharply as the lockdown, which was imposed some time back in a bid to fight the spread of the coronavirus, ended.
"The private sector has the ability to secure prompt supplies of molecules [LNG], whereas the government has to follow a set procedure of tendering that can take a minimum of 45 days to 60 days," Khan said.
He said the government has asked power projects to produce electricity on diesel due to a shortage of gas in the country. If private companies were allowed to secure LNG on a prompt basis, they could pass on significant cost benefits to end consumers.
"In today's market, power generation on diesel would cost Pakistani Rupees 18/unit while we would be able to produce electricity at about 60% less – Rupees 8/unit to be specific," Khan said.
Pakistan currently has two operational LNG terminals – Elengy Terminal, having a capacity of 600 MMcf/d, and Gasport Pakistan Ltd., also having a capacity of 600 MMcf/d. The government currently pays $500,000/d in capacity charges on a use-it-or-lose-it basis.
"Construction of more terminals would allow for greater competition but in my personal opinion, the country needs one or two additional terminals. The objective should be to support development of larger terminal capacity for current operational needs and future demand growth", Khan said.
With Pakistan turning to be one of the fastest growing LNG markets since it first started importing in 2015, with imports rising to 8.4 million mt in 2019 from 6.8 million mt in 2018, analysts say there is an urgent need to speed up import capacity expansions, which have been planned to absorb incremental inflows.
S&P Global Platts Analytics forecasts LNG imports to rise to 9.3 million mt in 2021, if Pakistan can bring in another FSRU relatively quickly. Imports are expected to exceed 17 million mt by 2025.
Pakistan has discovered new deposits of oil and gas in the Kohat district of Khyber-Pakhtunkhwa province.
The discovery was reported by state-owned firm, Pakistan Oilfields Ltd. (POL), at the exploratory well in Tal Block, Mamikhel South-01. Tal Block is considered one of the largest hydrocarbon producing blocks in the country.
“Well test has shown 3,240 barrels of condensate per day, 16.12 mmscf (million standard cubic feet) of gas per day, and 48 barrels of water per day,” POL announced in a notification on Pakistan Stock Exchange (PSX). “Actual production may differ significantly from the test results.”
POL holds 21 per cent stake in the Tal Block while Pakistan Petroleum Ltd. (PPL) and Oil and Gas Development Company (OGDC) each own 28 per cent.
MOL Pakistan, a fully owned subsidiary of Hungarian multinational oil and gas exploration firm MOL Group and which has about 8.4 per cent in the Tal Block also shared the news of “significant” gas and condensate reserves in Pakistan.
“I am delighted to announce that we have made another discovery in Pakistan,” Berislav Gaso, MOL Group’s exploration and production Executive Vice-President, said. “This new discovery has de-risked an exploration play in deeper reservoir in the Tal Block, leading to new upside opportunities. The Mamikhel South-1 discovery will also help to improve the energy security of the country from indigenous resources.”
PROMISE OF MUCH MORE
The Mamikhel South-1 exploratory well in the Tal Block, achieved a flow rate of 6,516 barrels of oil equivalent per day during testing, the company said. This marks MOL’s 13th discovery in Pakistan and the 10th discovery in the Tal Block. MOL is one of the key LPG and gas producers in Pakistan.
The current discovery comprises about 15 per cent and 5 per cent of Tal Block’s present total oil and gas production respectively, reports suggest. Mamikhel South is soon expected to be added to production due to its proximity to another field.
Experts have welcomed the news of recent discovery, but also called for the exploitation of unconventional oil and gas assets - such as shale oil and shale gas - as well as inviting foreign companies to boost the country’s oil and gas sector.
Pakistan relies on imports for about 80 per cent of its energy requirements, spending nearly $13 billion a year on crude oil and gas. The country’s total oil production stands at 89,000 barrels per day (bpd) and 3,936 million cubic feet per day (mmcfd). Demand is increasing by 8 per cent a year.
Project, to be ready in 2028, expected to meet water, energy needs in Gilgit-Baltistan region
A new mega project in northern Pakistan is expected to meet both water and energy needs of the region, according to officials and experts.
Work on the construction of Diamer Bhasha Dam near Chilas, a city in the Diamer district in the Gilgit-Baltistan region, has started.
"Diamer Bhasha Dam is set to change the destiny of Pakistan by addressing its energy and irrigation problems," Faisal Vawda, Pakistan's federal minister for water resources, said. "It's Pakistan's lifeline."
The dam's reservoir will be 272 meters in height, and it is said to be the tallest roller compact concrete dam in the world.
Roller compacted concrete is a special blend of concrete that has the same ingredients as conventional concrete but in different ratios, and with a partial substitution of fly ash for Portland cement. This reduces thermal loads on the dam and reduces chances of thermal cracking.
The dam has a proposed spillway with 14 gates and five outlets for flushing out silt. The diversion system comprises two tunnels and a diversion canal. It will also include the construction of powerhouses.
Asim Saleem Bajwa, chairman of China-Pakistan Economic Corridor Authority, said the dam will generate 4,500 megawatt of hydroelectric power.
It was a historic moment as Prime Minister Imran Khan kicked off the construction work on Diamer Bhasha Dam, he said. "Around 16,000 jobs will be created during the construction of the dam."
Imran Khan officially launched the construction work on Wednesday, with Pakistan's Chief of Army Staff Qamar Bajwa by his side.
The biggest
"Diamer Bhasha Dam will be the biggest dam in Pakistan's history," the prime minister said while addressing the public during the launch. "The dam will benefit the country both economically and environmentally, especially the people of Gilgit-Baltistan," he said.
The multibillion-dollar project is estimated to be completed in 2028. It is a multipurpose project that will be used for water storage, flood mitigation, irrigation and power generation.
"This is no ordinary project. There is a reason why both Pakistan's prime minister and the army chief were present at the site for the project launch. It will have an impact on Pakistan's economy, security and politics," said Ahmed Quraishi, a senior fellow at Project Pakistan 21, an independent research organization based in national capital Islamabad.
Feather in the cap
It is another feather in the cap for the Chinese engineers who are known for undertaking challenging international projects, he said.
The project is being jointly constructed by Power China and Pakistan's Frontier Works Organization.
The Water and Power Development Authority of Pakistan approved the award of civil works for construction of the dam and the 21-MW Tangir Hydropower Project to the joint venture partners.
The two companies signed a contract in June with a local company for the construction of the diversion system, main dam and access bridge as well as the hydropower project.
"We are grateful to our all-weather friend China for its support in the construction of the mega project," said Faisal Vawda, the water resources minister.
Quraishi said the technical specifications of the project suggest it will be something that engineers worldwide will be studying due to the region's terrain. "China's experience in the dam construction is unparalleled," he said.
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.
Pakistan's oil product imports over July 2020-April 2021 surged 26% year on year to 11.371 million mt, Pakistan Bureau of Statistics data showed.
"Due to rising industrial activity and normalization of consumerism [after COVID-19 lockdowns], we expect petroleum sales to remain on higher ground," Topline Securities analyst Shankar Talreja told S&P Global Platts.
Rising industrial activity was boosting diesel sales, while gasoline sales were strong amid an easing of COVID-19 lockdown measures, said senior investment analyst Shahrukh Saleem at AKD Securities, a Karachi-based brokerage house.
Retail prices low
The main driver of continued growth in motor fuel demand will be low retail tax rates on gasoline and diesel, which have kept prices for oil products in Pakistan low by international standards, market sources said.
Taxes on the retail pump prices of diesel and gasoline were lowered in fiscal 2020-21 to Pakistan Rupees 8.86/liter and Rupees 4.47/liter respectively from Rupees 30/liter for each earlier.
As a result, tax revenue from petroleum product sales fell to Rupees 369 billion over July 2020-March 2021 from the Rupees 460 billion forecast before the tax cut, and the average pump price of motor fuels rose just 8% over June 2020-May 2021, significantly trailing the sharp spike in motor fuel prices elsewhere in Asia over the same period
The price of FOB Singapore 92 RON gasoline, the most liquid gasoline benchmark in Asia, more than doubled from $36.36/b in June 2020 to $74.69/ mt in May 2021, Platts data showed
"The government is expected to continue providing stimulus to different sectors to support growth," Saleem said. "We expect the consumption of petroleum products to increase by 7% during the next fiscal year where retail fuels are expected to take the lead, increasing by 10%," he added.
Lending support
Pakistan's motor fuel demand will also receive support indirectly from expansionary economic policies and higher automobile ownership.
The government has set an economic growth target for fiscal 2021-22 of 3.94%, sharply higher than the contraction of 0.4% reported in fiscal 2020-21.
"The government is expected to continue providing stimulus to different sectors to support growth," Saleem said.
"With the increase in automobile sales and expansion in economic activities, we expect demand for petroleum products to remain high," said Yousuf Saeed, head of research at Darson Securities.
"The sales of petrol were up due to tremendous growth in auto and two wheeler sales, by 54% [to 151,951 units ] and 34% [to 1.587 million units] respectively in the 10 months of the fiscal year from July 2020 to April 2021," said Fahad Rauf, head of sales at Ismail Iqbal Securities in Karachi.
https://www.ft.com/content/88cfe78b-517f-41d9-97d1-9f7f540f517c
Saudi Arabia has decided to shift a proposed $10bn oil refinery to Karachi from Gwadar, the centre stage of the Belt and Road Initiative in Pakistan, further supporting the impression that the port city is losing its importance as a mega-investment hub. On June 2, Tabish Gauhar, the special assistant to Pakistan’s prime minister on power and petroleum, said that Saudi Arabia would not build the refinery at Gwadar but would construct it along with a petrochemical complex somewhere near Karachi. He added that in the next five years another refinery with a capacity of more than 200,000 barrels a day could be built in Pakistan. Saudi Arabia signed a memorandum of understanding to invest $10bn in an oil refinery and petrochemical complex at Gwadar in February 2019, during a visit by Crown Prince Mohammad Bin Salman to Pakistan. At the time, Islamabad was struggling with declining foreign exchange reserves.
The decision to shift the project to Karachi highlights the infrastructural deficiencies in Gwadar.
A Pakistani official in the petroleum sector told Nikkei Asia on condition of anonymity that a mega oil refinery in Gwadar was never feasible. “Gwadar can only be a feasible location of an oil refinery if a 600km oil pipeline is built connecting it with Karachi, the centre of oil supply of the country,” the official said. There is currently an oil pipeline from Karachi to the north of Pakistan, but not to the east.
“Without a pipeline, the transport of refined oil from Gwadar [via road in oil tankers] to consumption centres in the country will be very expensive,” the official said. He added that at the current pace of development he did not see Gwadar’s infrastructure issues being resolved in the next 15 years.
The official also hinted that Pakistan’s negotiations with Russia for investment in the energy sector might have been a factor in the Saudi decision. In February 2019, a Russian delegation, headed by Gazprom deputy chair Vitaly A Markelov, agreed to invest $14bn in different energy projects including pipelines. So far these pledges have not materialised, but Moscow’s undertaking provided Pakistan with an alternative to the Saudis, which probably irritated Riyadh.
Arif Rafiq, president of Vizier Consulting, a New York-based political risk firm, told Nikkei that a Saudi-commissioned feasibility study on a refinery and petrochemicals complex in Gwadar advised against it. “Saudi interest has shifted closer to Karachi, which makes sense, given its proximity to areas of high demand and existing logistics networks,” he added.
Rafiq, who is also a non-resident scholar at the Middle East Institute in Washington, considers this decision by the Saudis as a setback for Gwadar, the crown jewel of the China-Pakistan Economic Corridor, the $50bn Pakistan component of the Belt and Road.
The Saudi decision “is a setback for Pakistan’s plans for Gwadar to emerge as an energy and industrial hub. Pakistan has struggled to find a viable economic growth strategy for Gwadar,” he said. Any progress in Gwadar in the coming decade or two will be slow and incremental, he added.
Local politicians consider the shifting of the oil refinery a huge loss for economic development in Gwadar. Aslam Bhootani, the National Assembly of Pakistan member representing Gwadar, said the move is a loss not only for Gwadar but for all of the southwestern province of Balochistan. He said he would urge the Petroleum Ministry of Pakistan to ask the Saudis to reconsider their decision.
The decision has shattered the image of Gwadar as an up-and-coming major commercial hub. In February 2020, the Gwadar Smart Port City Masterplan was unveiled, forecasting that the city’s economy would surpass $30bn by 2050 and add 1.2m jobs. Local officials started calling Gwadar the future “Singapore of Pakistan”.
https://www.parco.com.pk/our-business/transportation/pipeline-network/
PARCO’s cross-country network of pipelines, including those of its subsidiary – PAPCO, starts from Karachi and goes up to Machhike near Lahore, covering over 2000 kilometres. These pipelines have played a major contribution in protecting the environment of our country and reducing congestion on the roads by substituting thousands of tank lorries. As this silent river of fluid energy flowing underground, much of the noise, fatalities and pollution on the surface, thefts and contamination of the product have become a thing of the past.
KARACHI-MAHMOODKOT (KMK) PIPELINE
The 870-km Karachi-Mahmoodkot (KMK) Pipeline, commissioned in 1981, transports crude from Karachi to Mahmoodkot near Multan for its Mid Country Refinery. Its initial annual pumping capacity of 2.9 million tons has been upgraded and KMK is now capable of pumping up to 6 million tons per year.
MAHMOODKOT- FAISALABAD–MACHHIKE (MFM) PIPELINE
PARCO commissioned 362-km Mahmoodkot- Faisalabad–Machhike (MFM) Pipeline, in 1997 to transport refined products like diesel and kerosene to Faisalabad and Machhike near Lahore. MFM has designed pumping capacity of approximately 3.7 million tons per year.
WHITE OIL PIPELINE
The US$ 480 million, White Oil Pipeline is the mega infrastructure project owned by Pak Arab Pipeline Company Limited (PAPCO). After conversion of PARCO’s existing pipeline network for Crude Oil transportation, the White Oil Pipeline (WOP) is catering to transport diesel to the central regions of Pakistan; which account for almost 60% of the total Petroleum consumption in the country.
For the implementation of the 786 km White Oil Pipeline Project (WOPP) from Karachi to Mahmoodkot, a joint venture company, Pak-Arab Pipeline Company Ltd. (PAPCO) was created. PARCO holds a 51% majority share in PAPCO while Shell, PSO and TOTAL PARCO Marketing Limited hold 26%, 12% and 11% shares in equity respectively. The 26” dia White Oil Pipeline is designed for a capacity of 12 million tons per year, starting with 5 million tons in the initial years.
KORANGI-PORT QASIM LINK (KPLP) PIPELINE
The 22-km Korangi-Port Qasim Link (KPLP) Pipeline was laid by PAPCO, linking PARCO’s Korangi station with PAPCO’s Port Qasim station was commissioned in 2006. This tactical link has connected both the Karachi ports (Keamari & Port Qasim) with PARCO & PAPCO pipeline systems, providing flexibility in pipeline operations to receive crude as well as product from either port.
PARCO’s Pipeline System includes a network of highly sophisticated Telecommunication facilities and a comprehensive Supervisory Control And Data Acquisition (SCADA) System.
PARCO’s pipeline network is a critical and efficient life support system for the Central and Northern areas of the country. In addition to its strategic nature, it is contributing to the national exchequer not only through payment of attractive dividends, taxes and import duties but also by delivering major savings in freight expenses.
distribution of natural gas.
https://www.adb.org/sites/default/files/linked-documents/48307-001-ssa.pdf
Its natural gas pipeline system is about 145,633 kilometers (km) long,
of which 134,489 km are distribution pipelines and 11,144 km are high-pressure transmission
lines (footnote 5). Transmission and distribution of natural gas in the northern and central
regions of Pakistan is undertaken by Sui Northern Gas Pipelines Limited (SNGPL)6 while
Sui Southern Gas Company Limited (SSGC) covers the southern region of Pakistan where the
project is located (footnote 6).
https://www.worldoil.com/news/2021/1/4/pakistan-s-new-pipeline-with-russia-to-increase-lng-import-capacity
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.
A formal financing framework agreement on the arrangement would be signed early next week here, informed sources told Dawn. The funds would be utilised under Annual Financing Plan of roughly $1.5bn each. This trade financing arrangement is in addition to about $531 million already signed by Ministry of Economic Affairs with Saudi Fund for Development (SFD) for project financing of Mohmand dam, a couple of coal based projects besides a few hydropower projects including two in Azad Kashmir.
The ITFC’s financing would be utilised over three years (2021-23) by Pak-Arab Refinery Ltd (Parco), Pakistan State Oil (PSO) and Pakistan LNG Ltd (PLL) for import of crude oil, refined petroleum products and LNG and help augment the country’s foreign currency reserves and provide resources to meet the oil import bill.
Pakistan’s oil import bill has amounted to about $10bn in first 11 months of the current fiscal year but has been rising in recent months because of increasing trend in the international oil prices. In first 11 months, Pakistan has imported about $2.5bn each worth of LNG and crude oil besides $4.5bn worth of refined petroleum products.
ITFC is a member of the Islamic Development Bank Group and provides trade financing to member countries after putting together funds from financial institutions in the Middle East. The sources said Pakistan had last year signed a $1.1bn trade financing facility for the current year but could not be fully utilised due to lower international oil prices, depressed demand in Pakistan and limitations of the refineries in availing Arabian Crude.
The sources said the financing cost for the upcoming financing facility would be lower than the existing one given substantial surplus liquidity of the banks in the United Arab Emirates and Saudi Arabia because of constrained business activities in the wake of ongoing Covid-19 wave. The existing facility envisaged 2.3pc plus London Inter-Bank Offered Rate (Libor).
The source said the two sides may cover the agricultural commodities as well including DAP fertiliser in addition to existing pipeline of crude, oil products and liquefied natural gas. The sources said the ITFC had also committed in April 2018 a similar financing line for Pakistan for 2018-20 but utilisation finally could not cross $3bn as private refineries were unable to import crude under the facility as it was mostly limited to Parco and to some extent PSO.
Before 2018, the ITFC’s financing was available only to Pak-Arab Refinery which was expanded to Pakistan State Oil in 2018. Last year, PLL was also included in the arrangement for the first time. ITFC had a limited portfolio of about a billion dollars of its own and normally arranged funds from other private financial institutions. Some of the other major recipients of the ITFC’s trade facility have been Indonesia, Egypt and Bangladesh.
The facility is expected to provide relief in oil and gas import bill and ease pressure on foreign exchange reserves. Under the facility, funds do not come into Pakistan’s account but ease pressure on foreign exchange reserves. These funds would be used for financing of letters of credit for oil and LNG imports by PSO, Parco and PLL.
Pakistan plans to secure adequate supply of middle distillates to supplement its improving economy but expectations of tight Chinese motor fuel exports for the second half of 2021 may prompt the South Asian nation to raise imports from other main supply sources in the Middle East, according to oil product trading sources and market analysts based in Karachi.
Pakistan's domestic oil consumption in fiscal year 2021 (July 2020-June 2021) totaled 19.45 million mt, an increase of 19% from the 16.36 million mt consumed over the same period the previous year as an improvement in domestic economic activity led to a strong uptick in gasoil and gasoline demand, data by the country's Oil Companies Advisory Council showed.
The uptick in gasoil demand was evidenced by the 18% year-on-year jump in diesel sales over FY 2021 to 7.699 million mt, in contrast with 6.546 million mt consumed in FY 2020, the data showed.
Easing COVID-19 restrictions during the last fiscal year increased industrial activity, boosting overall demand for petroleum products, which helped the economy to grow 3.94% after two years, Shahrukh Saleem, research analyst at Karachi-based ALD Securities, said.
Moreover, diesel sales also increased on the back of a stimulus package in the farming sector, with subsidies given to the sector to aid in the increase in agricultural output, another industry source said.
In addition to gasoil demand, Pakistan also recorded a sharp year-on-year growth in gasoline consumption -- the result of a recovering automobile sector.
According to data from the OCAC, Pakistan's petrol sales recorded an increase of 13% to 8.237 million mt in FY 2020.
"Lower interest rates enticed consumers to borrow funds to buy cars on installments," Tahir Abbas, head of research at Arif Habib Securities, said.
In FY 2021, domestic car sales rose to 181,397 units, from 111,632 units a year earlier, data from Pakistan's Automotive Assemblers Association showed.
Middle distillate supply sources
The improvement in Pakistan's gasoil and gasoline demand helped to absorb barrels from the regional market, with traders saying that this may have a knock-on effect of shoring up prices should this upward trend be sustained.
Pakistan imported around 800,000 mt of gasoline from China in H1 2021, almost double the 437,000 mt received in H2 2020, latest data from China's General Administration of Customs showed.
This is especially so given that regional supply balances are tightening, with several sources noting that deep cuts to oil product export volumes from North Asian producers, in particular China, have resulted in a tight outlook for the rest of 2021.
China's middle distillate exports are expected to fall over the coming months as Beijing looks to limit oil product export permits in an effort to cut emissions to meet the country's carbon zero target, while reserving enough barrels for domestic consumers.
Beijing is likely to allocate about 7.5 million-9.5 million mt of quotas for exporting gasoline, gasoil and jet fuel in the final round of allocation for this year, S&P Global Platts reported earlier. If the allocation hits 9.5 million mt, the total allocation would work out to 39 million mt for 2021, about 14.7% lower from the actual export level of 45.75 million mt in 2020, Platts calculations showed.
Reflecting the tight supply outlook, the physical FOB Singapore 10 ppm sulfur gasoil crack spread against front-month cash Dubai averaged $6.96/b over July, sharply higher than the $5.17/b average in January.
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.
Pakistan emerged as the top destination for China's gasoline outflows in September, surpassing the traditional destination of Singapore, data released by the General Administration of Customs showed on Oct. 20.
Total exports to Pakistan rose to 242,000 mt, surging 227.5% from August, and also up 126% on the year.
Thanks to the sharp increase in September, total exports to Pakistan were at 926,000 mt over the first nine months of the year, soaring 765.8% on the year, the sharpest jump among all the top 10 destinations. Exports to Indonesia also increased sharply by about 140.9% year on year to 838,000 mt.
Pakistan's oil products consumption rose 24% on the year to 5.863 million mt over July-September due to a rebound in industrial and transportation activity and an increase in demand for fuel oil following a rise in LNG prices.
The country's oil demand is poised for robust growth as a central bank stimulus package and healthy farm sector growth underpin a broader economic recovery and boost vehicle sales, according to analysts.
"We are eyeing growth of 4%-5% in diesel sales and 12%-15% in petrol sales this year, given the recovery in economic activity," said Atif Zafar, chief economist and director research at Topline Securities, a Karachi-based brokerage house. "The higher liquidity has resulted in an increase in car sales, which in turn will also result in higher petrol sales," Zafar added.
Meanwhile, September outflows to Singapore jumped 495.8% on the month to 209,000 mt, but still down 60.7% on the year.
Despite an year-on-year decline, Singapore still took about 39.5% of China's total gasoline outflows during January-September, compared with 52% during the same period last year.
China's September gasoline exports have recovered from a 30-month low of 568,406 mt in August to 920,000 mt in September, up 61.9% on the month.
The outlook for gasoline demand remains bullish in Asia and the Middle East, as economic activity started to pick up in September, with sources noting movement of cargoes towards end-users in Pakistan.
"The strength in Asian gasoline is apparent in cargoes flowing out of China and various parts of Asia to meet the prompt demand in Southeast Asian countries," said a Singapore-based source.
"We are starting to see slow improvements... spot tenders in Pakistan and cargoes are heading there," another Singapore-based source said in September.
"PSO [Pakistan State Oil] has also issued buy tenders for 92 RON gasoline for October and November this month," the source added.
Gasoil
China also revived its gasoil exports last month with the new quota allocated in early August.
As a result, Australia returned as the second top recipient of China's gasoil in September, with 118,000 mt exported, compared with zero in August.
In September, Australia's appetite for gasoil improved following easing of some pandemic-related restrictions amid progress in the country's vaccination program.
"Australia's demand has been quite supported due to mining demand, especially given how high coal prices are now. But of course, the easing of restrictions will help in the recovery of gasoil demand," said a Singapore-based trader.
Bangladesh also increased its gasoil imports from China in September, with around 113,000 mt arriving last month, up 75.5% from August.
Accordingly, total exports to Bangladesh surged 67.9% on the year over January-September, up 67.9%, the sharpest growth among the top five recipients -- with four in Asia and the fifth being Australia in Oceania.
@ArifHabibLtd
During CY21, industry recorded highest ever MoGas sales of 8.6mn tons. Moreover, total industry sales surged by 19% YoY to 20.8mn tons during CY21.
https://twitter.com/ArifHabibLtd/status/1478004863250440193?s=20
@ArifHabibLtd
Total (oil) industry sales (in Pakistan) surged by 19% YoY to 20.8mn tons during CY21.
https://twitter.com/ArifHabibLtd/status/1478004887761952770?s=20
https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/011620-low-prices-to-whet-pakistans-lng-appetite-infrastructure-poses-challenges
"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.
"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.
Work on the third phase of the Thar Coal Block II mine expansion is set to begin this year at an estimated cost of $93 million, according to the Sindh Engro Coal Mining Company (SECMC), a public-private enterprise operating the mine since 2019 in the southeastern district of Tharparkar. The second phase of expansion is underway with the help of China Machinery Engineering Corp. and Chinese bank loans, in addition to local financing. The series of expansions will scale up the annual production of lignite from 3.8 million tons to 12.2 million tons by 2023.
The output from the second phase of expansion will feed two 330 MW coal-fired power plants being built under the $50 billion China Pakistan Economic Corridor projects, part of Chinese President Xi Jinping's flagship Belt and Road Initiative. The power plants are expected to come on line this year.
Lignite is brown coal with low calorific value due to high moisture and low carbon content.
The expansion of the Thar coalfields is aimed at curbing coal imports to ease a staggering current-account deficit made worse by soaring international commodity prices and shipping costs. Pakistan's current-account deficit ballooned to an unprecedented $9.09 billion between July and December last year, as imports continued to outstrip exports during the post-COVID economic recovery. Pakistan had to seek a $3 billion loan and a deferred payment facility on the import of petroleum products from Saudi Arabia last year to stabilize forex reserves.
In recent years, high volatility in international oil prices, soaring LNG prices and dwindling local gas reserves have spurred public-private spending, particularly Chinese investment, in Pakistan's coal power sector. Until now, four coal-fired power plants with 4.62 GW of total installed capacity have joined the grid, while another three plants with an aggregate capacity of 1.98 GW are expected to come online over the next two years -- all under CPEC. In addition, growing demand from cement factories banking on a global construction boom has tripled coal consumption over the last five years to 21.5 million tons per annum.
Consequently, the share of coal in Pakistan's import bill for the year ended June 2021 shot to 24% from over 2% in previous years, according to data from the Pakistan Bureau of Statistics. Currently, only the power plant at Thar Coal Block II is running on indigenous coal.
A spike in coal power generation is in line with global trends, where countries including China, the U.S. and India have turned to coal to meet heightened demand following the lifting of COVID-19 restrictions.
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Authorities contend that the expansion of Thar Coal Block II will reduce the price of indigenous coal from $60 to $27 per ton -- making it the country's cheapest power source and leading to annual savings of $420 million. Pakistan is currently importing coal at around $200 per ton.
"We are compelled to use this cheap source of energy because we cannot keep using dollars to run power plants running on expensive furnace oil and RLNG (re-gasified liquefied natural gas)," Sindh Provincial Energy Minister Imtiaz Shaikh told Nikkei Asia. "We would like to mix 20% Thar coal [in power plants running] with imported coal. Then we will move towards converting coal to liquid and coal to gas."
The cost of operating thermal plants has become punishing due to expensive fuel and the cost of diverting scarce freshwater, which leads to underutilization of the plants, said Omar Cheema, director of London-based renewable energy consultancy Vivantive.
https://pakobserver.net/10707-km-pipelines-being-laid-to-reinforce-gas-transmission-network/
The two state-owned companies, SNGPL and SSGC, are in process of laying almost 10,707-kilometer pipelines to reinforce gas transmission networks in their operational areas across the country during the current fiscal year.
The Sui Northern Gas Pipelines Limited (SNGPL) would place 9,605 kilometers and Sui Southern Gas Company (SSGC) 1,102 transmission and distribution pipelines in their respective areas during 2022-23 aimed at improving the efficiency of the commodity supply to domestic, industrial, and commercial consumers.
The companies would collectively spend funds amounting to Rs 113.899 billion on the upgradation of the gas transmission and distribution system. “The SNGP and SSGC have planned to invest Rs 27,669 million on transmission projects, Rs 77,484 million on distribution projects, and Rs 8,746 million on other projects bringing the total investment of Rs 113,899 million during the fiscal year 2022-23,” according to an official document available with APP.
The available statistics indicated that Pakistan has an extensive gas network with more than 13,513 KM transmission, 155,679 KM distribution, and 41,231 KM service gas pipelines for cater to the requirement of millions of consumers.
The companies are also executing at least three strategic projects to supply gas to two Special Economic Zones (SEZs) and an industrial park in their respective areas to boost industrial production.—APP
https://www.naturalgasworld.com/pakistan-floats-two-tenders-for-spot-lng-cargoes-105642
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The federal government issued two tenders seeking spot liquefied natural gas (LNG) cargoes for the first time in nearly a year on Tuesday, while also announcing a deal that will see Azerbaijan provide the country with one LNG cargo per month.
https://www.dawn.com/news/1759531
Dependent on gas for power generation and running short of foreign exchange to pay for imports, the country has struggled to procure spot cargoes of LNG after global prices spiked last year following Russia’s invasion of Ukraine, leaving it to face widespread power outages.
But Asian spot LNG prices this year have eased from record highs of $70 per million British thermal units (mmBtu) hit in August, and are now trading below $10.
Pakistan LNG, a government subsidiary that procures LNG from the international market, has one tender seeking six cargoes on a delivered-ex-ship (DES) basis to Port Qasim in Karachi in October and December, according to the tenders posted online.
The delivery windows are October 5-6, 20-21 and 31, and December 7-8, 13-14 and 24-25. The tender will close on June 20.
Pakistan LNG’s second tender seeks three cargoes, also on DES basis to Port Qasim, for delivery windows of January 3-4, 28-29 and February 23-24. The second tender closes on July 14.
Pakistan LNG last issued a tender seeking 10 spot cargoes in July 2022, but received no offers.
Separately on Tuesday, Minister of State for Petroleum Musadik Malik told a news conference that Azerbaijan will supply an LNG cargo every month to Pakistan at a “cheaper price”.
He did not share details on the supply deal, but said that a contract had already been signed with Azerbaijan and that it will “start soon”.
Pakistan has two long-term supply deals with Qatar, one signed in 2016 for 3.75 million metric tons of LNG a year, and another signed in 2021 for 3m metric tons a year.
It also has an annual portfolio contract with ENI for 0.75m metric tons a year.
In 2022, Pakistan’s imports of LNG slowed to 6.93m metric tons for the year, down from 8.23m metric tons in 2021, according to data from data analytics group Kpler.