Poor infrastructure casts doubts on country’s plans to import gas

KARACHI: Pakistan's plan to import 750mmcfd gas from Iran and 800mmcfd liquefied natural gas (LNG) is embroiled in a debate whether the country's existing gas distribution system is able to handle such flow.
“Pakistan may not be able to import gas from Tehran despite a nuclear deal between Iran and the US, which has renewed hopes for improved economic ties between the neighbouring countries,” a business leader said on Monday.
“Iran has completed its part of the pipeline to transport 750mmcfd of gas to Pakistan, while Islamabad has started implementation of 880km of pipeline, but it hasn’t considered upgradation of gas distribution network,” Ghiyas Paracha, central leader of the All Pakistan CNG Association (APCNGA) said.
Paracha said that the existing old-fashioned gas infrastructure could not sustain the pressure of Iranian gas; therefore, it must be upgraded immediately, otherwise all efforts to tame the energy crisis through Iran gas would go down the drain.
Pakistan’s gas demand-supply gap is hovering around 2,000mmcfd. The government, in order to bridge the gap started importing liquefied natural gas (LNG).
A tender was issued for a 400mmcfd LNG terminal (initial imports of 200mmcfd). Engro setup a 660mmcfd terminal. Afterwards, the government issued tender for another similar terminal.
However, the multimillion dollar terminal is under-utilised, while the government also had to pay capacity charges for the period the terminal remained idle.
Issues arise from the less-developed pipeline infrastructure and the dominant role of state monopolies.
Paracha said that Pakistan initiated efforts to import LNG a decade ago, but gas utilities did not upgraded the capacity of the pipelines.
"The LNG terminal has a capacity of 660mmcfd, but it is operating at around 200mmcfd, which is another example of mismanagement and incompetence of gas companies for which the country and masses are made to pay the price."
Paracha said that in response to his letter, the gas utility admitted that the system could not handle a flow of over 325mmcfd.
APCNGA is the main stakeholder of the gas business as CNG stations do not have any alternate fuel. The CNG bodu is next in line to import LNG after PSO using Engro Elengy’s terminal, but the network is hampering their plans.
“We are all set to import LNG to meet the demand of out members particularly in Punjab, but we have been stopped as utility companies are not capable of handling more flows,” Paracha said.
Sui Southern Gas Company (SSGC) spokesman said the pipeline being installed to transport gas from Iran would connect to Nawabshah junction from where it would be distributed to both SSGC and SNGPL. “There will be no issue in handling the supply as far as imports from Iran are concerned,” he said.
Analysts say LNG and Iranian gas is costly than the locally produced natural gas therefore gas companies should reduce gas losses standing at 14 percent to internationally accepted standard of 1.5 to 2 percent.
“When the LNG terminal was setup and tender for 2nd terminal was issued many observers were expecting improvement in the system; however, there is no such news,” an analyst said.