KARACHI: Pakistan may face its worst gas shortage in the next three to four years, according to Topline Securities, a local brokerage house.
The gas shortage may grow by 1.7 billion cubic feet per day (bcfd) in the fiscal year of 2010 to 2.7 bcfd in 2014, according to Topline Securities analyst, Farhan Mahmood.
The estimates and projections are based on actual requirement from various sectors, released by Sui Northern Gas Pipelines Limited and Sui Southern Gas Company.
Furthermore, most of the gas supply projects which were expected to be operational within two years have either been delayed or are stuck in litigation.
Meanwhile, the Oil and Gas Regulatory Authority issued new gas wellhead prices for some of the major gas producing fields.
Under this revision, the wellhead prices for Sui and Kandhkot fields for the second half of the fiscal year 2010 have broadly increased to 24.3 per cent on the back of higher Arab Light and HSFO prices. Price of Pariwali field was up 22 per cent and Miano price increased 21 per cent.
PPL benefits most by the price hike
Pakistan Petroleum Limited (PPL) with a 100 per cent stake in Sui is the primary beneficiary of this revision as the field contributes over 60 per cent to PPL’s total gas production, according to JS Global Capital.
Based on calculations, the revision in Sui and Kandhkot fields’ wellhead prices would improve PPL’s second half earnings by Rs1.76 per share.
Gas projects delayed
Mmost of the gas supply projects which were expected to be operational within two years have either been delayed or are stuck in litigation.
The delayed projects include UCH-II development project, Qadirpur gas compression project, Sinjhoro and Tando Allah Yar gas projects.
The shortfall would be reduced to 2.2 bcfd by fiscal year 2014 if the delayed projects start production during the next two years, said Mahmood.
The actual demand for gas by power sector would increase by more that 65 per cent, more than 600 mmcfd in the fiscal year 2010 as compared to 2009.
Overall demand is expected to rise by 4.9 bcfd in the fiscal year of 2009 to 6.5 bcfd in the fiscal year of 2014, according to Topline analyst.