Comment by Riaz Haq on January 16, 2019 at 10:38am

At Kekra I, 143 miles from #Karachi coast, gas flows can be as big as Sui field at 3 to 8 trillion cubic feet (TCF), or 25-40 percent of #Pakistan’s total #gas reserves.Well diameter is 18 to 24 inches. Current depth of 1900 feet. Good news by April. https://www.thenews.com.pk/latest/419865-kekra-i-gas-flows-can-be-a...

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.

Comment by Riaz Haq on January 16, 2019 at 10:46am

Will rising demand, new exploration activity and a refresh of government policy bring renewed confidence in Asia-Pacific’s upstream industry in 2019? Wood Mackenzie’s research director Andrew Harwood shares his thoughts.

https://www.hellenicshippingnews.com/will-asia-pacifics-og-sector-j...

Big exploration slowly returning
The need to fill new and old gas infrastructure will see the drilling of exciting offshore prospects across Australia, Brunei, Malaysia,Myanmar, Pakistan and Papua New Guinea. Some will be frontier deepwater exploration. But access to gas demand centres will be the primary driver of which prospects make the grade.

Our top three wells to watch in 2019 involve some of the world’s most successful exploration companies – hopes are high for sustained success:

• Offshore Pakistan, ExxonMobil and Eni will spud the ultra-deepwater Kekra-1 well in early 2019, targeting a carbonate play that could be a game-changer for the country’s burgeoning gas market.

• Repsol’s Rencong-1X well, offshore North Sumatra, Indonesia, is generating strong interest from potential farm-in partners. We expect a deal to be done before the well spuds in Q3 2019.

• In Papua New Guinea, Total’s Mailu-1 well is targeting a giant oil prospect in over 2000 metres of water, potentially opening a new ultra-deep offshore play in the Papuan Basin.

From a licensing perspective, several countries are set to launch new bid rounds in 2019. But only those offering a fair balance of risk and reward will be successful in attracting new investment. Despite recent fiscal revisions in India and Indonesia, we expect lacklustre interest in their latest acreage offerings, and investor appetite is likely to be limited for other 2019 licensing opportunities in the Philippines, Bangladesh and Myanmar.

M&A maintains momentum
M&A spend grew over 60% to US$8.7 billion in 2018 compared to 2017. We expect 2019 to be flat with around US$8 billion of potential deals in the pipeline.

We expect to see divestments in Southeast Asia by primarily US-focused players, such as Hess, ConocoPhillips and Chevron, seeking to redeploy capital towards lower-cost, higher-return opportunities elsewhere.

With a steady supply of international oil companies (IOC) assets potentially becoming available, and the region’s national oil companies (NOCs) on the hunt for new partners to share financial and technical commitments, there should be no shortage of acquisition opportunities in 2019.

Deal activity in Australia is also likely to continue at a brisk pace, as LNG operators position themselves for the next wave of investment, and local producers look to take advantage of a tightening domestic gas market.

Asia-Pacific O&G Outlook 2019
Join the Asia Pacific oil and gas research team as they gaze into their crystal ball and run down some of their top themes and events to look for in 2019.

Fewer project sanctions
Contrary to global trends, 2019 looks a relatively low-key year for new project sanctions in Asia-Pacific. PetroVietnam’s Block B gas development and ConocoPhillips’s Barossa are the largest projects targeting FID over the next 12 months, but both are in danger of being pushed into 2020.

As attention in Australia’s LNG sector turns towards backfilling the existing Pluto and North West Shelf infrastructure, collaboration among operators is becoming a genuine option. Woodside’s Scarborough and Browse are the most likely medium-term candidates to provide new feedgas. But Chevron’s Clio-Acme development may leapfrog both with a surprise 2019 FID if commercial arrangements for third-party access to LNG infrastructure can be finalised. If so, it would be quite a turnaround for an industry not known for playing together in the past.

Comment by Riaz Haq on April 25, 2019 at 7:22am

#Pakistan #energy #imports up 3.8% in nine months (July 2018-March 2019) of current fiscal year , led by liquefied natural gas (#LNG) , higher by 49.3% and crude oil up 15.19%. Cost of #petroleum product dipped 15.33% during the nine-month period. https://www.hellenicshippingnews.com/pakistan-oil-import-up-3-8pc-i... 

The country’s oil import bill went up 3.8 per cent year-on-year to $10.6 billion during 9MFY19, from $10.22bn in same period last year, according to data from the Pakistan Bureau of Statistics (PBS).

The rise in imported value of the petroleum group was led by surge in liquefied natural gas, higher by 49.3pc and crude oil 15.19pc. On the other hand, cost of petroleum product dipped 15.33pc during the nine-month period, whereas a 33.9pc decline was recorded in terms of the quantity imported, bringing the total down to 7.57 million tonnes.

The overall import bill during July-March FY19 fell by 7.96pc year-on-year to $40.75bn, leading to a 13pc decline in trade deficit to reach $23.67bn.

Barring petroleum and agriculture groups, all other categories saw their value of imports shrink during the period under review.

Food imports contracted 9.92pc to $4.73bn during July-March 2018-19, from $4.26bn in corresponding months last year. This decline was largely due to a 10.22pc fall in the value of palm oil, which decreased to $1.39bn in 9MFY19, from $1.54bn.

Import bill of the machinery clocked in at $6.74bn during the nine months, lower by 20.54pc, from $8.48bn in same period last year. The biggest contributor to the decrease was power generating machinery, which plunged by 49.09pc, followed by 17.26pc contraction is electrical and 8.86pc in telecom.

Similarly, transport group — another major contributor to the trade deficit – also receded during July-March FY19 as it posted a 35.7pc decline, with decrease in imported value of almost all sub-categories.

On the other hand, agriculture imports inched up by 1.6pc to $6.58bn, from $6.47bn on the back of 16.49pc increase in fertiliser, 13.32pc insecticides and 7.31pc medicinal products.

Textile exports inch up

The textile and clothing export proceeds posted a paltry growth of 0.08pc year-on-year to $9.991bn during 9MFY19, as against $9.983bn in same period last year.

Product-wise details show that exports of ready-made garments went up by 2.02pc, knitwear 9.29pc, bedwear 2.69pc while those of towels declined 1.85pc and cotton cloth 2.09pc.

Among primary commodities, cotton yarn exports dipped by 15.44pc, yarn other than cotton by 3.23pc, raw cotton 71.84pc whereas made-up articles — excluding towels — increased by 1.26pc and tents, canvas and tarpaulin gained 3.49pc in value during the period under review.

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 depreciations during the last year.
Source: Dawn

Comment by Riaz Haq on April 26, 2019 at 7:08am

#Qatar emerges as front-runner for long-term #LNG deal for #Pakistan, one of the world’s fastest growing LNG markets. Pakistan is seeking long-term supply contracts for second LNG terminal, which can receive 600 million cubic feet per day of natural gas. https://reut.rs/2IHTHzT

Qatar has emerged as the front-runner for a long-term gas supply deal to Pakistan, a senior Pakistani official said on Friday, with the cabinet of Prime Minister Imran Khan set to decide in the coming weeks on an agreement.

Pakistan, with 208 million people, is running out of domestic gas and has turned to liquefied natural gas (LNG) imports to alleviate chronic energy shortages that have hindered its economy and led to a decade of electricity blackouts.

Qatar is already Pakistan’s biggest gas supplier after signing a 15-year agreement to export up to 3.75 million tonnes of LNG a year to the South Asian country. That 2016 deal supplied Pakistan’s first LNG terminal.

Emerging as one of the world’s fastest growing LNG markets, Pakistan is looking to secure a long-term supply contracts for its second LNG terminal, which can receive 600 million cubic feet per day (mmcfd) of natural gas.

Pakistan has already signed a five-year import deal with commodity trader Gunvor and a 15-year agreement with Italy’s Eni, but is seeking long-term agreements for about 400 mmcfd.

Pakistan has been negotiating with eight countries with whom it has signed inter-governmental agreements in recent years, including Qatar, Russia, Turkey, Italy, Oman, Azerbaijan, Malaysia, and Indonesia. A Saudi Arabian delegation representing state-owned Saudi Aramco has also shown interest in a gas deal.

The senior Pakistani official told Reuters that state-run Qatargas put forward the lowest bid for a long-term LNG supply contract that would have a price review after five or 10 years.

“Qatar has offered the lowest price,” said the official, declining to say the amount of LNG or the price offered by Qatar.

Pakistan’s cabinet is in the next week or two expected to decide if it will proceed with a government-to-government deal, when it will also decide on the size, he said.

Cash-strapped Pakistan is most likely to go with the cheapest supplier, in this case Qatar, officials have said. However, the government may choose more expensive rates to bolster its relations with a chosen country.

Khan’s cabinet could also choose to put out an open tender for long-term agreements, said the senior official. However, some energy officials believe direct government-to-government deals could offer better rates than tendering.

The Pakistani official added that Saudi Aramco may sign a long-term supply deal with Pakistan, potentially also providing some of the 400 mmcfd available at the second terminal. (Reporting by Drazen Jorgic; editing by Christian Schmollinger)

Comment by Riaz Haq on May 18, 2019 at 5:31pm

Gas shortage to increase by 157pc next fiscal year
Khaleeq Kiani Updated April 27, 2019 

https://www.dawn.com/news/1478633

Gas shortage to increase by 157pc next fiscal year
Khaleeq Kiani Updated April 27, 2019 Facebook Count

With an addition of 700,000 consumers last year, Pakistan’s gas shortfall is estimated to jump by 157 per cent to 3.7 billion cubic feet per day (bcfd) in fiscal year 2019-20 — almost equal to total gas supplies at present.

The estimates have been made by the Oil and Gas Regulatory Authority (Ogra) that put the gas shortfall increasing almost continuously every year to 6.6bcfd by FY2028.

In its flagship “State of the Industry Report 2017-18”, the authority noted that the (natural gas) demand-supply gap during FY2017-18 was 1,447mmcfd and that this gap was expected to rise to 3,720mmcfd by FY2019-20. The regulator put the total gas demand at about 6.9bcfd in fiscal year 2019-20 compared to total supplies of about 3.2bcfd.

It said the demand would increase to 7.7bcfd by 2024 but domestic supplies would fall substantially to 2.3bcfd, leaving a shortfall at 5.5bcfd. The shortfall would practically be about 3.6bcfd in FY2024 as the gap would be partially met by about 1.9bcfd of imported LNG.

The domestic gas production would continue to decline from about 3.3bcfd at present to less than1.6bcfd by 2028 while the gas dem­and would keep going up to reach 8.3bcfd by that year. Ogra estimated that despite the induction of all the import options, including LNG, Turkmen­istan-Afgha­n­is­tan-Pakistan-India (TAPI) and Iran-Pakistan (IP) pipelines, the total supplies would decline to 3.7bcfd by 2028, creating a net shortfall of about 4.6bcfd, more than total supplies at present.

The regulator said the gap was rising because of higher consumption in almost all the major sectors particularly power, domestic, fertiliser, captive power and industry as the supplies were not keeping pace with higher demand.

Both the gas utility companies added around 0.7 million domestic, commercial and industrial consumers, in their respective systems, during fiscal year 2017-18. Consumer addition is incre­asing the gap between dem­a­nd and supplies, day by day. Especially in winter, the gas demand further increased and as a result the government is being forced to curtail supplies to various sectors.

Despite this, the natural gas is a major contributing fuel in the country’s energy mix. Its share in the primary energy mix is around 48pc.

There is a significant rise in demand and consumption of gas by residential and domestic consumers owing to price differential vis-a-vis other competing fuels, i.e. liquefied petroleum gas (LPG), fire wood and coal. The LPG presently accounts for about 1.3pc of the total primary energy supply in the country.

The current size of LPG market is around 1.3 million tonnes per year. The LPG consumption has increased by 5.88pc in 2017-18 compared to the previous year.

LPG consumption during FY2017-18, stood at around 3,508 tons per day. Local production catered for around 58pc, the rest was imported.

The share of re-gasified LNG in the overall gas supply increased to 23pc in FY 2017-18. The total gas consumers were more than 9.2m by the end of FY2017-18, including 6.3m in the SNGPL network and 2.9m in the SSGCL network.

The power sector was the main consumer of natural gas during FY 2017-18, consuming 37pc, followed by domestic sector 20pc, fertiliser 17pc, captive power 10pc, industrial sector 9pc, transport 5pc, and commercial sector having 2pc share.

Punjab had the highest 50pc consumption, followed by Sindh 39pc, Khyber Pakhtunkhwa 9pc and Balochistan 2pc. Natural gas supplies during the year stood at 4.357bcfd, of which Sindh supplied 50pc, whereas Khyber Pakhtun­khwa, Balochistan and Punjab supplied 12, 11 and 4pc respectively. The remaining 23pc of gas was imported in the form LNG.

Comment by Riaz Haq on May 31, 2019 at 4:51pm

#Pakistan #oil #import bill surges in 10 months. Oil imports up by 4% year-on-year to $11.899 billion due to the rise in global oil prices. Liquefied Natural Gas (#LNG) imports soared by 46.06%, while that of liquefied petroleum gas LPG plunged 5.2%. https://www.hellenicshippingnews.com/pakistan-oil-import-bill-surge...

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

Comment by Riaz Haq on July 16, 2019 at 9:57am

Powering #Pakistan. There is enough #coal at #Thar to cater for the #energy needs of the nation for two centuries. Imported #LNG #gas costs about 40% higher than Synthetic Natural Gas (#SNG) produced from Thar Coal. #power #electricity https://www.pakistantoday.com.pk/2019/07/15/powering-pakistan/#.XS3...

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.

Comment by Riaz Haq on July 19, 2019 at 4:10pm

#Italian, #Chinese major petroleum companies vie in #Pakistan's mega #LNG tender worth $5 billion to $6 billion. Pakistan to be a big growth driver in global LNG demand. Wood Mackenzie estimates the country will need 25 million tonnes a year. #energy #gas https://reut.rs/2LB7SbJ

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.

Comment by Riaz Haq on October 4, 2019 at 8:22am

#UAE to invest $5 billion in #oil #refinery project in #Pakistan by end of 2019. #FDI #Energy
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.

Comment by Riaz Haq on October 5, 2019 at 7:00pm

Pakistan energy consumption 85 million tons or 623 million barrels of oil in 2018

https://worldview.stratfor.com/article/pakistan-strives-switch-natu...

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.

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