Published Date: Oct 30, 2013
LNG imports delay aggravates energy crisis
The need to import Liquefied Natural Gas (LNG) into the country, to reduce the energy deficit and make gas available for homes, power generation, CNG sector and other industries was highlighted by stakeholders here. Pakistan, they said has been trying to finalise the LNG import project for over two years now. Former Prime Minister, Syed Yousuf Raza Gilani, had directed the Ministry of Petroleum to expedite the import of LNG to overcome the shortage of more than two billion cubic feet, to provide enough relief to domestic and industrial consumers.
The relevant ministry said that it had been working on two strategies to immediately import LNG. One was import of LNG by government, and the other through the private sector for which Ogra (Oil
and Gas Regulatory Authority) had issued licences. But imports have not
yet started. LNG imports are more crucial than ever as the Petroleum Minister has already warned that the 1.5bcf shortfall in Punjab is so wide that it will lead to cuts for all categories of consumers. While the Petroleum Minister hinted that every stakeholder will receive some gas, decisions are yet to be taken on this front. However, it seems likely that manufacturing units, fertilisers and the transport sector will face the brunt of cuts as domestic users have always held top priority.
Additionally, affordability concerns have been raised in a report by the Sustainable Development Policy Institute (SDPI). The Petroleum Minister has expressed concern about the affordability of Iranian oil by stating that negotiations would continue but the issue is
expected to remain unresolved until the petroleum ministers of Iran and
Pakistan meet to discuss the matter. Stakeholders said that LNG imports
are more crucial than ever but we have now come to the point where the LNG world questions Pakistan ‘s seriousness in efforts and plans. Pakistan cancelled tender for LNG import terminal multiple times after it descended into recrimination and suggestions of corruption. Qatar is reported to have asked Government of Pakistan to develop the import infrastructure before finalising GSA of LNG.
The fast track tender is to be followed by a larger terminal Request for Proposal RFP next year. So far the information is that the process has been judiciously followed and all rules have been adhered to
transparently, with bidders being given sufficient time to prepare bids
after seeking clarifications. The LNG import is essential as it will substantially reduce the generation costs of thermal power plants by replacing furnace oil and would also improve the efficiency of combined cycle thermal generation plants. Moreover, new LNG based power projects have 58 percent, or better, efficiency than furnace oil based projects.
Encouragingly, they said the PML-N led government has a clear strategy for the next 10 years. The Government of Pakistan has made a framework for the import of LNG to meet energy needs of the country and is now working on short-term, medium-term and long-term plans to resolve
the crisis; LNG import is a short-term solution. Of the imported fuels,
LNG is of a lower price, compared to furnace oil.
Stakeholders emphasised that the Government of Pakistan should plan for import of at least 600-800MMSCFD in the short run to meet the power demand. LNG based generation would be lower than the KW/hr cost on
diesel as well as that on furnace oil. This will lead to a saving of over USD 1.5 billion per year as LNG starts to offset Residual Fuel Oil (RFO) and diesel. It could further increase if the imported gas portfolio was to include lower priced purchases of LNG expected post 2020. It is to the credit of the current government that they have taken
the initiative to work in earnest to develop multiple solutions to resolve the energy shortage. We have many promising initiatives at our disposal and the leadership genuinely desires to resolve matters in the best interest of the country and therefore the end to our long energy struggles is believably in sight, they hopefully said.