Pakistan continues to face the challenges of scheduled and unscheduled natural gas load-shedding,
Pakistan continues to face the challenges of scheduled and unscheduled natural gas load-shedding, which is adversely affecting civic life and industrial activities, amidst country-wide demonstrations, more so against the intolerable situation in peak winter months. The energy mix shows a heavy reliance on natural gas as the prime source of energy, with its share of 48 percent. Therefore, due to increased share in energy consumption, the gap between gas supply and demand is widening steeply. On the other hand, the government has not yet been able to support indigenous gas supplies through alternate imported sources, in spite of its repeated tall claims.
Sadly, the natural gas potential of Pakistan is far from being realised. The conventional prognostic gas resource has been estimated at 282TCF (trillion cubic feet) whereas original proven recoverable reserves so far are only 55TCF, thus exploiting hardly 20 percent of potential. Allowing for the cumulative production of gas so far, the remaining reserves amount to 23.18TCF gas. In fact, there is continuous depletion of existing gas-fields, whereas the pace of new gas discoveries has been very slow. Considering current annual production of about 1.49TCF (or 4,160 MMCFD, million cubic feet per day), balance reserves can only last another 16 years or so, unless new discoveries are exploited optimally and timely.
The sector-wise data shows that 28.6 percent of gas is being consumed by the power sector, followed by 25.7 percent by general industry, 22.1 percent by domestic consumers, and 17.7 percent by the fertiliser industry, while the rest is utilised by commercial and transport sectors. Average gas consumption since 2007 has increased in the range of 10-20 percent annually.
Thus, the existing demand of natural gas is over 6,300MMCFD. In comparison, total production during recent years remained static at about 4,000MMCFD, resulting in massive shortfall, also taking into account huge losses and pilferage. The situation thus warranted gas load-shedding across the country, particularly for domestic consumers in winter.
Today, there is a static, if not declining trend in gas production, for a variety of factors, widening further the gap in gas supply. These include lack of strategic vision, mismanagement, slow up-grading of existing gas-fields, limited investment in the sector, besides inadequate exploration of gas reserves. The successive governments have offered, from time to time, extremely attractive incentives and concessions to the investors for development and expansion of the oil and gas sector. The pace of exploration and development of gas reserves however has been slow till recently as drilling activities remained behind the target. Out of 1,263 oil and gas wells, currently only 947 wells are producing hydrocarbons.
There are 97 wells, consisting of 62 developed and 35 exploratory, related to associated and non-associated gas-fields, which are operated by 17 domestic and foreign companies. These include international exploration and production (E&P) companies like BHP Billiton, BP, Eni, Kirthar Pakistan (Kuwait Petroleum), MOL, OMV, Orient Petroleum (OPIL), Petronas, POGC, Total and Tullow. The domestic companies are Dewan Petroleum (DPL), Mari Gas Co (MGCL), Oil and Gas Development Co (OGDCL), Pakistan Oilfields (POL), Petroleum Exploration (PEL) and Pakistan Petroleum (PPL).
It is reassuring that as many as 65 new oil and gas discoveries have been made during the last two years, which has opened up new gas exploration opportunities in the country. Significant gas discoveries have also been made in recent months. In December 2015, PPL found gas in Gambat south block in Matiari, estimated to be 80MMCFD, whereas OMV in October 2015 discovered a new gas-field in the Latif exploration block in Sindh with a potential to produce 50MMCFD of gas. In September last, OGDCL found significant reserves at well Ardin-1 located in Khewari exploratory license area, District Khairpur. Also, the appraisal and development of gas discovered in March 2015 by Dewan Petroleum at Salsabil (Rodho) in the Safed Koh block is being made. Besides the conventional and tight gas reserves, efforts are now being made to explore shale gas resources as well, known to be extensive.
In addition to onshore drilling, sixteen licenses for offshore drilling at Indus Basin, which holds considerable potential for hydrocarbon discoveries, have been issued. These companies are Eni, UEPL, Niko Resources, OGDCL, PPL and PEL. On the other hand, initial exploration activities have been undertaken at offshore Makran Basin. It is anticipated that a detailed evaluation with application of modern technology can lead to success. The government has been providing policy package of liberal incentives for oil and gas exploratory activities in the country. An important factor of delayed E&P activities is however constant demand of the powerful lobby of the companies for higher wellhead price all the time. The framework of discovery of oil and gas has thus been revised by the government frequently—in 1997, 2001, 2007, 2009, and 2012. Improving the gas pricing formula during these years has resulted in manifold increase of gas tariff to the consumers, while the E&P companies made windfall profits.
For sustainable economic growth the long-term, energy security is imperative, of which natural gas is a vital element. With production targets not being achieved in recent years, the government will continue to resort to massive gas load-shedding. Given the present conditions of achieving no major breakthrough on imported gas, there may be a gas shortfall in the range of 2,500-3,000MMCFD by 2020, even if the recent gas discoveries are translated into gas-producing wells in coming years.
The writer is ex-chairman of State Engineering Corporation
