Caretakers bet on LNG to tackle winter gas crisis

Decision to provide expensive LNG to avert gas crisis

ISLAMABAD:

The caretaker government is betting on providing expensive Liquefied Natural Gas (LNG) to the people and industries during the winter season to overcome the looming gas crisis. The move is likely to have an impact as it would add to the already mounting circular debt.

The previous governments had been supplying expensive LNG to the consumers during the cold spell, which also resulted in a similar situation.

At present, LNG has caused a major spike in the circular debt for state-run marketing company Pakistan State Oil (PSO) that was scheduled to receive Rs470 billion from the Sui Northern Gas Pipeline Limited (SNGPL) on account of LNG supplies.

PSO imports LNG from Qatar on contract basis and supplies to SNGPL. But SNGPL had not been able to receive dues from the domestic consumers due to the absence of legal framework, and therefore, did not pay to the PSO.

Now, Caretaker Energy Minister Muhammad Ali announced that they would provide imported LNG to people and industries, especially during the winter season, which may add to the circular debt.

Read Govt raises gas prices amid Rs2tr loss

Speaking at the 29th Annual Technical Conference (ATC) organized by the Society of Petroleum Engineers (SPE) and the Pakistan Association of Petroleum Geo-scientists (PAPG), the minister expressed the hope that the gathering of experienced geo-scientists and engineers would spark new ideas for the exploration of indigenous oil and gas resources in the country.

He praised the conference's theme, "Exploring the Unexplored: High-Risk Plays and Economic Challenges," and believed it was highly relevant to the current situation.

PSO, already grappling with financial difficulties, was scheduled to receive over Rs700 billion from its customers, out of which Rs470 billion were to be collected on account of LNG supplies.

Keeping in view the current situation, this winter season may be hard for both SNGPL and PSO if the government supplies expensive LNG to domestic customers to minimize gas shortages.

The caretaker government has already announced that gas will be supplied three times a day for cooking purposes, and that it had arranged one additional LNG cargo for December and two for January 2024.

These cargoes are meant to overcome the rising demand of gas during the winter season, resulting in another addition to the circular debt in the gas sector.

While addressing the energy conference, Ali was confident that the event would offer opportunities to address the ongoing challenges and strategy for the development of energy resources, especially in the field of oil and gas exploration.

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Highlighting the untapped potential of Pakistan's sedimentary basin, the energy minister noted that nearly 60-70 per cent of the country remains unexplored for oil and gas, emphasizing the need to reduce fuel imports.

He also mentioned the government's efforts to attract foreign direct investment (FDI) in the oil and gas sector and the importance of fostering international collaboration.

He underscored that the international oil companies (IOCs) consider factors like geographical access, technology, community engagement, operational feasibility, security, and long-term sustainability while investing.

Recent discoveries by Mari Petroleum and OGDCL have demonstrated the technical and commercial viability of the industry, but security challenges must be addressed.

The minister acknowledged that Pakistan faced energy shortages and was heavily reliant on fossil fuels, which made up a significant portion of the energy mix.

He explained that the global oil price fluctuations and increased energy import costs due to geopolitical factors pose economic challenges.

Ali called for discussions during the conference on technical, economic, and regulatory measures to reduce the energy import bill and encouraged participants to share their insights on addressing these challenges, both locally and globally.
He expressed optimism that the conference would serve as a valuable platform for generating innovative initiatives and solutions to drive the industry forward.