Too much gas

There have been reports for weeks now that too much gas is available in Pakistan’s supply system – but there has been no action from the top echelons of government. Now, gas suppliers have raised the ‘red flag’ about the dangerously high-pressure levels in supply lines. Lower electricity demand and better hydropower generation are among the reasons why gas demand has drastically fallen in the last few weeks. The fact that the system has failed to re-adjust to real gas demand is a damning indictment of the gas network in the country. It is strange to hear that PSO and SNGPL have asked the energy ministry to intervene about lower gas consumption by the power sector. Both authorities should have enough authority and flexibility to be able to readjust supply if demand goes down. The power sector has been consuming 714 mmcfd against the promised demand of 828 mmcfd. High hydroelectric power generation is supposed to be a good thing, but the way Pakistan’s power sector has been developed in the last many decades is that high renewable power supply could end up being a disaster.

As a temporary measure, the government has reduced domestic gas supply to avert dangerous accidents, but this is not a solution to the overall problem it has shown up in the gas system. Oversupply is rarely an issue that we hear of in Pakistan, but those who design gas management systems need to be aware of them and factor them in on how they run gas supply. Finally, there has been sufficient readjustment to be confident that disaster will not strike immediately, but this was a dangerous situation that was averted too slowly.

Is the solution to force power plants to consume the gas supply they have committed to using? At a time when Pakistan has been forced to import much of its gas supply, consumption guarantees can be considered important. PSO has claimed that it has been left exposed to financial and credibility risks. It has been forced to delay unloading of imported liquefied natural gas. Even now, despite the reduction in local gas supply, the next round of cargo is being threatened. It would no doubt be better if we relied on sustainable domestic supply, rather than prioritised gas imports. But matters are not so simple. International contracts are hard to renegotiate on a whim. Moreover, the admission by the petroleum division of a serious overestimation in the power sector demand should be inexcusable. While the problem may have been temporarily fixed from a risk point of view, this has shown how unstable the gas supply system in the country is. The need for serious gas sector reform – not tariff increases - is urgent.