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.

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.

Pakistan Gas Consumption in Billions of Cubic Feet Per Day. Source: CEIC.com

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


Comments

Riaz Haq said…
Pakistan's gas consumption per capita is 5 times as much as India's. That is staggering difference.

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
Riaz Haq said…
The per capita primary commercial energy consumption has increased dramatically since
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
Mayur Salcido said…
Pakistan has severe energy infrastructure bottlenecks. Inefficiencies are built into a system that creates a revolving circular debt problem which will be extremely difficult to change.
Riaz Haq said…
India Looks To Double Its Natural Gas Usage

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.

-------------

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.
Riaz Haq said…
Vopak expands equity in #LNG #infrastructure in #Pakistan. It will acquire a 44 percent stake in total in Elengy Terminal Pakistan Ltd, whose subsidiary owns the South Asian nation's first liquefied natural #gas import facility. #energy | ET EnergyWorld https://energy.economictimes.indiatimes.com/news/oil-and-gas/vopak-expands-equity-in-lng-infrastructure-in-pakistan/66828811

Global independent tank storage company Vopak said on Tuesday it will increase its stake in liquefied natural gas (LNG) infrastructure in Pakistan, as the South Asian country turns to LNG imports to curb energy shortages.

Vopak said it will acquire a 44 percent stake in total in Elengy Terminal Pakistan Ltd, whose subsidiary owns the South Asian nation's first liquefied natural gas (LNG) import facility.

The acquisition will involve separate transactions with International Finance Corp (IFC) and Engro Corp and includes a 29 percent stake the company said it would buy in July, Vopak said in a statement.

The purchase is subject to conditions including regulatory and shareholder approvals, and is expected to close in the first quarter of next year, it said.

Elengy Terminal Pakistan's subsidiary Engro Elengy Terminal owns an LNG facility which is located at Port Qasim in Pakistan, adjacent to the Engro Vopak chemical terminal.

The facility has been in operation since 2015 and is the first LNG import facility in Pakistan.

"Pakistan is a market with more than 200 million people and has a growing energy demand in which the share of gas is expected to increase," Vopak said.

"Gas is mainly used for power supply for the growing population, industrial usage and as feedstock for fertilizers."

Once the transaction is completed, Elengy Terminal Pakistan's shareholders will be Engro and Vopak.

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