Pakistan has imported over 19 million tonnes of LNG since 2015, saving around $5 billion substituting expensive oil imports, to meet the gas shortage, which keeps increasing given depletion of existing fields, lack of significant discoveries and continuously growing demand.

LNG now constitutes 24 per cent of country’s energy imports and around 22 per cent in power generation mix. Although, LNG price is linked to crude oil price in the international market it is much economical than other energy sources compared with their power generation capacities and per unit costs.

Pakistan currently have two LNG terminals which have pumped approx. 393.6 billion cubic feet of gas into the national gas distribution network in 2019, a 14 per cent increase compared with 345.6 billion cubic feet of gas pumped into the national gas distribution network in 2018. In 2019 Pakistan imported 7.57 million tonnes of liquefied natural gas (LNG) through 123 LNG cargo ships witnessing an increase of 14 per cent in 2019 compared to 108 LNG cargoes in 2018.

Out of country’s total gas demand of approximately 4800 million cubic feet per day in 2019, LNG terminals supplied approx 20 per cent of gas.

Officials said the industrial sector was worst effected by energy crisis, before LNG imports and it took away two percentage points of GDP growth. Moreover, government had to pay capacity charge (idle charges) to natural gas power plants because of non-supply jacking up electricity charges.

According to the Oil and Gas Regulatory Authority (OGRA), which regulates the oil and gas sector in Pakistan, the demand-supply gap during 2017-18 was 1.45 bcfd, which is expected to rise to 3.7 bcfd in this fiscal. LNG Imports reduced total gas deficit of over 2.5bn cubic feet by 25 per cent; without gas imports, the gap is forecast to reach 4.6 bcfd in 2022-23 and 6.7 bcfd in 2027-28.

LNG is considerably more efficient and cheaper fuel with average domestic prices in 2019 being $11.1/mmBtu for RLNG, $12.6/mmBtu for furnace oil, $19.8/mmBtu for Liquid Petroleum Gas, $20.2/mmBtu for High Speed Diesel, and $20.4//mmBtu for mogas (petrol).

The crisis gets severe in winter as demand jumps with declining mercury. This year, the situation is even severe while industries have started layoffs and refusing export orders, as uncertain supply of the utility makes it quite difficult to meet quality and timelines.

It may be mentioned here that a significant number of textile sector industrial units rely on gas based captive power generation.

With the advent of RLNG bases power plants and coal based generation, the fuel component of per unit electricity cost is declining; the fuel cost stood at Rs5.02/kWh in October 2019, which was 8.0 per cent lesser than the costs previous year.

LNG market was developed in the country for it is cheaper than furnace oil by 20 per cent on average; offers more efficient electricity production through combined cycle power plants of 60 per cent efficiency compared with 38-40 per cent efficient furnace oil power plants; and gas is environmentally cleaner than furnace oil.

There is a consensus among the market players that the gas imports needs to be increased to meet requirements of all segments of the consumers. Industry comes first given the rising trade deficit and other macroeconomic challenges, which can only be overcome through industrial expansion. In past, industries were forced to use other expensive energy sources increasing the cost of production and leaving Pakistan’s products less competitive in the international market.

Reportedly, jobs of 4.0 million daily wage-earners in Punjab alone are under threat due to gas shortages that affect industrial productivity Despite all the imports, natural gas supply gap in the country stands around 2.0 bcf/day resulting in increasing gas-holidays for industry and CNG sector, while domestic consumers are facing unannounced load shedding. The answer to widening supply gap is LNG imports, which is significantly cheaper and efficient than all other fuels.

More importantly, the primary consumers of the imported commodity have no objections in paying even a little more for the uninterrupted supply. The CNG sector has already made deals with international suppliers for commercial imports, while a number of players have obtained licenses to setup merchant LNG terminals.

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