ISLAMABAD: Amid calls for further deregulation of oil and gas market, Petroleum Minister Shahid Khaqan Abbasi asked the petroleum industry to invest in ending energy crisis, otherwise public sector companies would expand energy infrastructure, output and supplies.
“Market is there. The burden is now on companies. If the private sector companies do not invest (to take benefit of the market), the government-owned companies will do,” he said at the annual conference of Petroleum Institute of Pakistan (PIP).
The minister said the government could not achieve economic growth, create jobs and increase revenues without energy but deplored that the government did not hear any support, suggestions or solutions from the industry, experts and the media. “We have now adopted common sense solutions” and working on increasing primary energy to resolve the crises.
To do this, he said there was a need to move away from oil and since hydropower generation took time, the only immediate solution left was increasing gas supplies. “We have heard about energy solutions in cow-dung and nuclear energy but these are no solutions”.
He said the entire world was now moving towards gas-based energy and even oil producers were now importing liquefied natural gas (LNG) for power generation instead of using their own oil for power production. This, he said, was common sense because oil based plants offered plant efficiency of 25-32 per cent. “This is criminal,” he said, adding that Pakistan was second-largest importer of furnace oil after China which was not a good thing to go about.
“The solution to energy shortfall is in gas. Fix the gas. Add more gas to the system and the problem will be over,” he said. Therefore, he said the government was fast tracking LNG imports to bridge energy shortfalls. Against domestic production of around four billion cubic feet per day (bcfd) of gas, the demand was about 8 bcfd, he said.
The minister said around 70 gas discoveries had been made since the PML-N came into power in 2013 but these were so small that they could not even make up for the natural depletion of existing supplies. He said the exploration and development activities had been accelerated but this had its own limitations while the country required big finds.
Mr Abbasi said shale gas offered great potential but that too was difficult to be materialised in a low-oil price situation because the cost of oil production was less than $5 per barrel. He said there had been talks of Turkmen gas imports for 22 years and it was still four years to be materialised as Turkmenistan government was now starting its development.
Moreover, the import of gas from Iran was also hit by sanctions which were now over and the project was expected to move forward. But all these supplies were for the future while the country needed immediate solutions to end energy crisis and hence import of LNG was the only solution to do that today.
He said despite hindrances the government has been able to start supplying 400 mmcfd of LNG which would be increased to 2 bcfd. He said that the private sector should come forward and take the lead because regulatory environment was already in place and the government was working through its gas utilities to enhance pipeline capacity through two gas pipelines — from Gwadar to Nawabshah and from Karachi to Lahore — with an investment of over $4bn.
The minister said LNG was now available to all power plants that could be run on gas while fertiliser plants were again running to capacity and CNG sector stood revived and expected to grow further to replace liquid fuels while industry had round-the-clock gas supplies.
“This is just the start. Very soon, the system will deliver gas to anybody anywhere in Pakistan,” he said, adding the solution to power crisis too was in gas because original engineering manufacturers (OEMs) of gas plants were providing 62pc guaranteed efficiency.
The minister said the government would wipe away existing power crisis in 2017 and do it in cost-effective and efficient manner on a sustainable basis. He said the base load sources — gas based power — need to be enhanced because renewable resources could also create problems.
The conference recommended the government to come up with an integrated energy plan, introduce regulatory reforms, ensure fool- proof security to the oil and gas industry on the pattern of CPEC, move oil consumption to 92RON and euro-II standards, completely deregulate LNG imports and petroleum margins and divide gas utilities into smaller distribution companies to overcome shortages.
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