Depleting resources: Country may not see big oil and gas find, says Abbasi

Says LNG import is the only option left to meet growing energy demand

KARACHI:

Petroleum Minister Shahid Khaqan Abbasi on Monday said Pakistan has no option but to import liquefied natural gas (LNG) to meet its pressing energy requirement as supply from domestic wells has not been able to keep up with demand.

If businesses and households awaiting gas supply are taken into consideration, then total demand has touched 8,000 million cubic feet per day (mmcfd) against supply of 4,000 mmcfd from domestic fields that has been stagnant for years, he told a seminar.



Titled LNG Outlook in Pakistan, the seminar was organised by the Petroleum Institute of Pakistan.

“Our own fields are depleting,” he said. “And in my opinion, the law of probability says we might not see a large find (of oil and gas reserves).”

No substantial gas reserve has been found in decades with the largest one being able to produce just 56 mmcfd, he said.

“I am very proud of the LNG project and I completely own it,” he said, ridiculing the experts who have written articles and appeared on television talk shows to express concern over it.

“One of these so-called experts suggested that Pakistan should use biogas instead of LNG. Could someone tell him that all the buffaloes in the world cannot produce enough manure for even 400 mmcfd,” he said, adding a jibe: “Collecting that manure would be a challenge too.”

Pakistan started importing LNG last year and Abbasi said it would emerge as a big player with a demand for 2,500 mmcfd.



“Every LNG producing country in the world knows the significance of our market. It is only Pakistan, which does not know it yet.”

Supply update

The first LNG terminal at Karachi’s Port Qasim became operational last year. So far, the country has imported 17 cargoes at an average price of $7.8 per million British thermal units (mmbtu).

It recently awarded a five-year contract to commodities giant Gunvor for supply of 0.75 million tons per annum at a price to be determined at 13.37% of Brent crude.

Islamabad is also in talks with Doha to secure a long-term supply contract. Officials say Pakistan State Oil (PSO), which is importing LNG on behalf of the government, has asked Qatari counterparts to reconsider the terms being offered.

Since its inauguration in March 2015, the LNG terminal operated by Elengy, a subsidiary of Engro Corporation, has remained in the spotlight, mostly for wrong reasons.

Abbasi said the criticism surrounding the terminal was unfounded, especially when no alternative to solving the crisis is being offered to a country which meets half of its energy needs burning gas.

LNG, which costs more than domestically produced gas, has been received well by the energy-starved market, he said.

But customers used to consuming subsidised gas still have to get used to the idea of a relatively expensive substitute.

Abbasi said deregulation is the way forward for LNG trade. “We have to charge the actual cost. Otherwise this won’t work.”

Another LNG terminal, also at Port Qasim, is expected to come online in early 2017.



But Port Qasim Authority Chairman Agha Jan Akhtar said every time an LNG vessel comes, container traffic has to be halted for five to six hours.

“There are some other challenges as well like high duties on tugboats, which are used to pull LNG vessels. We don’t receive any grants from the government. Someone must look into this.”

The sponsors behind upcoming terminals have been asked to pay for dredging of their passage ways at the port, he said.

Published in The Express Tribune, January 12^th, 2016.

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