PTI Chairman Imran Khan insists that Khyber Pakhtunkhwa (KPK) province is brimming with a plenty of natural gas.
In a recent meeting with a small group of journalists Khan complained that because of the reluctance of the federal government to issue exploration licenses to companies interested in tapping what they believe to be assured gas potential in the KPK, the province was being denied access to cleaner and cheaper fuel as well as a highly lucrative avenue of income.
One has been hearing complaints of similar though not identical nature from the other two smaller provinces as well for a decade or so.
These complaints, if genuine, belie the claim one has been hearing since the 1980s that Pakistan’s gas reserves were nearing exhaustion and therefore we ought to line up alternative arrangements.
But lobbies, politically and financially more powerful than those who believed the smaller provinces’ complaints to be genuine, seemed to have succeeded in selling the idea that Pakistan is genuinely running out of gas and therefore it urgently needed to make alternative arrangements.
And since the 1980s we have been hearing about some of these alternative arrangements like the Iran-Pakistan gas pipeline, the Turkmenistan-Afghanistan-Pakistan-India Pipeline project and Liquefied Natural Gas (LNG) import from Qatar.
While the Iran and Turkmenistan pipelines have remained until now no more than pipe-dreams the LNG import alternative appears to have met with a grand success. At a recent briefing Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi had placed current supply of gas at 4BCFD against the current demand of 6BCFD.
The expected supply from the still to be completed Iran-Pakistan pipeline is no more than 0.25 to 0.75 BCFD by June 2018 while that of the Tapi is 1.325 BCFD by January 2020. Therefore, in his opinion LNG is the only short to medium term solution to what he called Pakistan’s energy crisis. He termed this option as sustainable, flexible and scalable.
The target of 2 BCFD LNG-based gas in the system would be available, he said, by mid-2018 as according to him$2 billion has already been invested in terminals and pipelines and an enabling regulatory environment created. A 4000MW of LNG-based power plant would be ready by mid-2017, he maintained.
But there are still many voices in the country though not as vocal as the LNG lobby, yet loud enough to prompt some of the natural sceptics to probe the matter a bit deeper.
And while discussing this aspect with those who know the subject I came across Shahidur Rehman’s yet to be published book ( and yet to be titled) on Pakistan’s state of energy, particularly the chapter titled: Is Pakistan running out of gas? A veteran journalist Shahid has been associated for more than three decades with the Japanese news-agency Koyodo.
He has already written two very well researched and highly readable books on Pakistan.
Shahid’s findings really belie the claim that Pakistan’s gas reserves were nearing exhaustion. In a highly revealing passage in the chapter on gas, the World Bank’s Energy Expert Richard Spencer (A face-book conversation on May21, 2015) is quoted as saying:
“At current rate of consumption, Pakistan’s gas will last 27 years. But this is a snapshot that is constantly changing as new reserves are discovered and enter production and as gas consumption pattern changes. With the right incentives and policies in place, Pakistan is not about to run out of gas.”
When asked as to why Pakistan could not offer the same well-head price to domestic gas producers which it would give to imported natural gas and liquefied natural gas Spencer clearly implied that Pakistan can and if it offered a remunerative gas well head price to local gas producers it could hope to be self-sufficient in gas production.
Quoting from the Economic Survey (2013-14), Shahid says Pakistan’s known gas reserves to-date were estimated at 55.6 trillion cubic feet, of which 30.9 trillion cubic feet have been exhausted but 24.7 trillion cubic feet still remain.
Thus even today, Pakistan possesses almost as much gas as it has consumed in the last six decades. But all of this residual gas is being produced by the three smaller provinces whereas the major consumer, Punjab, produces very little gas.
Punjab is producing 189 MMCFPD gas, accounting for five percent of the total national production against the provincial consumption of 1691 MMCFPD.
Sindh produces an estimated 2804 MMCFPD against consumption of 916 MMCFPD. Balochistan’s production stood at 656 MMCFPD against consumption of 266 MMCFPD. And KPK’s production of 371 MMCFPD is greater than its consumption of 271 MMCFPD.
Known gas reserves of Sindh were estimated at 23trillion cubic feet; of which nearly 8.5 trillion cubic feet have been consumed but 15.2 trillion cubic feet gas still remains which means that more than half of Sindh’s reserves are still available to be tapped.
Gas production has stagnated for the last five years at 4 billion cubic feet per day but there are reasons to believe that actual gas production is much higher. The reason for not recording the actual production is said to be inherent in the 18th amendment which makes gas-oil producing provinces equal and joint partner in production from their provinces.
Also because some powerful lobbies that want to see the OGDCL privatised at the earliest do not favour new fields to come into production as that would entail sharing the profits with the province where the discovery has been made plus this would enhance the market value of OGDCL making it less attractive for those who have been looking forward to buying it at a throwaway price.
For decades, Saudi Arabia’s Aramco, Kuwait’s National Oil Company and Abu Dhabi National Oil Company have had long-term contracts for supply of crude and petroleum products to Pakistan. They would not like to see these imports decline due to increase in domestic oil production.
Similarly those powerful lobbies that have been promoting gas import from Iran, Turkmenistan and Qatar too would not like to see Pakistan’s own indigenous production going up negating their claim of gas reserves getting exhausted.
Moreover the culture of corruption had interfered with the development of over one dozen dormant gas-fields as the minions in the ministry of natural resources and petroleum would not let any movement on this front until their palms are greased.
Balochistan, Sindh and KPK are surplus in gas but Punjab is using 8.5 times more than it produces. In the wake of 18th amendment, provinces started demanding implementation of the constitutional provisions in letter and spirit to conserve their own gas for their own use.
Immediately after the passage of the 18th amendment Punjab accepted the fact that there was no escape from the inevitable and Punjab Chief Minister Shahbaz Sharif launched hectic efforts to make Punjab province energy independent.
The bid by SNGPL in 2010-11 to import LNG and construct South-North pipeline is said to be a part of the same effort. And since LNG cannot be supplied directly from the terminals in the South, it has been decided to swap with SSGC supplying to SNGPL from its own domestic stock to be replenished by the imported LNG.
One fails to understand the logic of wasting so much of foreign exchange on import of LNG from Qatar only to end up in a swap when Punjab can have the same from the three smaller provinces if only the federal government were to help accelerate the E&P activities of OGDCL in the provinces where gas seems to be in abundance.