LONDON: Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain recently informed the Senate that total demand for natural gas is eight billion cubic feet per day (BCFD) while supply is four BCFD, a shortfall that created a huge gas shortage in the country this winter. Some people argue that Pakistan is rich in petroleum resources and should extract gas from its own soil, instead of looking for alternative means. It should, however, be noted that the current and previous governments have issued dozens of exploration licences to national and foreign companies but no major oil or gas discovery has been made for over a decade.
The Pakistan Petroleum Limited (PPL), in partnership with international companies, has drilled many offshore wells near Karachi and Makran in the Arabian Sea; however, none has yet been successful. Malaysian giant Petronas searched for oil and gas reserves in Sindh for many years without any success and has finally sold its exploration licences in Pakistan, limiting their presence to a minimum level.
After many years of delay on the Iran-Pakistan gas pipeline project, we have finally signed the agreement with the Iranian government. Under the deal between the National Iranian Oil Company and Pakistan’s Interstate Gas System, Tehran will provide 750 million cubic feet per day of natural gas for 25 years, from its giant offshore South Pars field in the Persian Gulf. The total cost of laying down the Pakistani section of the pipeline is $1.5 billion. Iran has already completed the construction of its section and is funding $500 million for the construction of the Pakistani section, with our government furnishing the remaining one billion dollars.
Pakistan spends around $12 to 13 billion annually on oil imports, mainly on furnace oil, which is used to produce expensive electricity. Import of Iranian gas will not only help overcome the gas shortage, it will reduce electricity generation cost as well. The plan is to complete the construction of 781 kilometres of the Pakistani section of the pipeline in 15 months, which means that the gas will be available from December 2014.
The US has pressed the Pakistani government to go for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. However, the prospects for this project remain bleak due to the prevailing security situation in Afghanistan, particularly after the withdrawal of Nato forces next year. Furthermore, it will take many years to construct the TAPI pipeline after all four countries agree on the terms to materialise this project.
Early completion of the gas pipeline project has become essential to reduce the magnitude of the energy crisis, and in the absence of any other mega project under construction, we cannot afford to delay it any longer.
Irfan Hussain
Published in The Express Tribune, March 14th, 2013.
