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Pakistan gets busy buying energy from multi-national sources

Pakistan is busy negotiating deals with at least five countries to buy natural gas and electricity to overcome its acute energy crisis. The gas and electricity shortages and outages are so serious that the country’s GDP has lost more than two per cent of GDP, as a result, World Bank estimates. The crisis has also led to widespread agitation and anti-government violence as thousands of industrial labour and commercial workers have lost their jobs.

Actual work on implementation of international gas pipelines, installing electrical infrastructure or buying and transporting liquefied natural gas (LNG), or negotiations on these plans are in various stages. The projects involve Turkmenistan, Iran, India, Afghanistan, and Afghan-Tajik basin, located in northern Afghanistan.

Besides these international contacts Pakistan is also gearing up its own efforts to expand exploration, and domestic output of oil and gas, for which it welcomes foreign companies. The first source of gas inflow though an international pipeline is set to be from Iran. The Iran-Pakistan (IP) gas pipeline will cost $1.2 to $1.5 billion and its gas export to Pakistan will be 21.5 million cubic meters daily (mcmd).

The maximum gas transmission capacity of the 56-inch pipeline, 900 kilometres in length, will be 110 million cubic metres (MCMD). IP starts from the southern Iranian port city of Assalouyeh, Bousher province, to Iranshahr in Sistan province, and into Pakistan’s south-western Baluchistan. Iran has already completed 900 km of the pipeline in its own territory.IP will touch the Pakistani border at Chahabar-Zahedan, by September 21, 2013, Javad Oji, managing director of National Iranian Gas Company, said: “Ninety per cent of the pipeline work will be completed by March 19, 2013. It will be completely fully by end of the next year.”

This is despite current, nuclear-related, US sanctions against Iran. Pakistan Foreign Office spokesman Moazzam Ahmad Khan said: “Our government is determined to complete the IP gas pipeline project before 2014, as well as other energy projects. US has nothing to do with IP and other projects.” He was referring to US sanctions against Iran. Islamabad has stuck to completion of IP, to meet its growing needs of gas oil, and electricity, despite Washington urging it to quit it and find other sources of energy. Moazzam dismissed reports that US planned to invest $280 million in Pakistan’s power sector in return for Islamabad’ s commitment to quit IP project.

Islamabad is also considering plans to buy liquefied natural gas (LNG) from Qatar under a 15-year contract. The gas will be purchased by government-owned Sui Southern Gas Company (SSGC). The price so for mentioned is $15 per million British thermal units (MMBTU), which will be reviewed after 10 years. The prices is considered to be too high, when compared to the domestic price of $3.5, and international price averaging $8 per MMBTU. The Ministry of Finance and other critics of the deal say, it will lead to doubling the tariff for domestic and commercial consumers in Pakistan. Dr Asim Husain, Adviser to the Prime Minister on Petroleum & Natural Resources, said: “The government is working on the LNG import plans, but no decision has yet been taken on Qatar gas.” Qatargas will be the source of proposed LNG import. Qatargas term sheet indicates that Pakistan may import 3.5 million metric tonnes of LNG a year during the first year of the contract. Pakistan will have to pay 100 per cent of the price whether it picks up, or not, full quantity of LNG that it may contract to buy. Its critics claim, United States will be supplying LNG to the Indian company Gail at a landed cost of $7 to $8 per MMBTU, by 2016. Gail deal is linked to Henry Hub, a trading hub, which provides a benchmark price for bulk gas in US.

At the same time, yet other energy deal is on the cards. Pakistan Petroleum Limited (PPL) has been short-listed to participate in bidding, six exploration blocks in the Afghan-Tajik Basin (ATB). It is described as “the company’s strategy to secure international hydrocarbon reserves to meet the country’s increasing energy requirements,” PPL says. PPL is among eight companies which have pre-qualified for exploration, development and production of hydrocarbons in six blocks of Afghan-Tajik Basin-located in Northern Afghanistan.

The other companies, also pre-qualified for the ATB plan, are: Kuwait Energy Plc, Dubai-based Dragon Oil, Brazil’s Petra Energia, ONGC Videsh Ltd., PTTEP Holding Company, Esso International Exploration Ltd, and Turkiye Petrolleri Anonim.

Asim Murtaza Khan, managing director of PPL, said : “We look forward to expanding our international exploration assets, and will be carrying out due diligence to evaluate the ATB blocks on offer.” PPL also says, its international e4fforts will not compromise its fast-track exploration programme. PPL is a key supplier of natural gas. It nearly contributes 20 per cent of Pakistan’s natural gas supplies. It also produces crude oil, natural gas liquid and liquefied petroleum gas.

Pakistan, along with other stakeholder is also busy on completing the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI).It is 1,640 km long. It will provide 0.5 billion cubic feet day of natural gas to Afghanistan, and 1.3 65 bcfd each to Pakistan and India.

Pakistan is buying electricity from Iran for its Baluchistan province. But, now there are plans to increase the import by building necessary infrastructure. Plans are also under consideration to import electricity from India. It is proposed to link Indian border city of Amritsar with Lahore across the border, a distance of 45 km.

Talks are also underway to get gas from Indian company Gail. This being the energy scenario in this country, the country offers huge opportunities to foreign investors and energy companies to come to Pakistan.

Views expressed by the author are his own and do not reflect the newspaper’s policy