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September 28, 2020

Country to face gas deficit up to 1.5bcfd this winter

Top Story

September 28, 2020

ISLAMABAD: Contrary to the government claims that countrymen will experience gas shortage close to 800 million cubic feet per day (mmcfd) in the winter season, top sources in private and public sector companies dealing with natural gas, LNG, and LPG have disclosed to The News that the deficit is feared to go up to 1.5 bcfd.

In the system of Sui Southern the shortfall is likely to be in range of 350-500 mmcfd whereas in Sui Northern it is feared to hike in the range of 700-1000 mmcfd, the sources said.

This means that all categories of consumers, commercial industry and domestic sector will suffer the most.

Painting the bleak picture about the gas crisis, they said if the two existing terminals are utilised at 1200mmcfd, the gap between the demand and supply of gas, without any major discovery in the country, will rise to 2000 mmcfd on a base-case scenario and up to 3000 mmcfd on an optimistic scenario in next five years.

However, there are short to medium and medium to long term solutions available with the government to cope natural gas crisis but it requires having political will.

Under short-term measures, which can be taken in a span of 60-180 days, the government needs to ensure that the contracted capacity of 1200 mmcfd on the two Floating Storage Re-gasification Units (FSRUs) is fully utilised.

And Enar Petrotech, which is government entity should be tasked to determine the exact capacity of the SSGC pipeline from Custody Transfer Station (CTS) at Port Qasim to Pakland and the actual capacity in RLNG-II pipeline. According to earlier computer simulations, the pipeline system can deliver around 1350 mmcfd as opposed to SSGC position that it can deliver only 1200 mmcfd. This can be done within a fortnight and will create space for transportation of gas to the north, they said.

They explained that the PGPC pipeline and the K-Electric (KE) Injection Point are approximately at a distance of 500 meters. FOTCO has the right of way and the licence for construction of a transmission line. The same can be done in 60-90 days.

By using this new interconnection between PGPC and KE, they stressed that PGPC should be allowed to deliver 100-150 mmcfd directly to KE on a negotiated price, as permitted under LNG Policy. The supply can start within 90 days.

And the PGPC FSRU can be tested for capacity up-gradation of up to 900 mmcfd, without leaving port and without interrupting supplies (except for 4 hours) within 4 days. This testing should be immediately allowed and if the additional capacity is available, PGPC should be allowed to utilise the same for private sector sale immediately. Likewise Engro Terminal, they said, can substitute its existing FSRU with a higher capacity FSRU, as permitted in the agreement and LNG policy. This can bring another 100 mmcfd of gas.

Maximum swapping capacity between SSGC and SNGPL systems will supply more gas to the north. Enar Petrotech should be tasked to independently determine the swapping capacity between SSGC and SNGPL. This can be done within 15 days. The availability of LPG in abundance, the officials said, is another solution to cope with gas crisis.

They said that the LPG is a lifeline for customers who do not have access to pipeline gas and for pipeline customers when there is gas loadshedding. Country’s production of LPG can go up by 16.67 percent or about 400-500 MT per day in 48 hours by restarting the state-of-the-art Jamshoro Joint Venture Limited (JJVL). The federal cabinet approved the restart of the plant on August 31, 2020 but despite the delay of about 4 weeks, the Ministry of Law and the Ministry of Energy (Petroleum Division) have yet to complete the formalities for restarting the plant. JJVL meets the energy requirements of over 600,000 homes.

Talking about the mid-term solutions in a span of 180 days to 400 days, the industrial sources said that the government needs to use Gwadar Port for immediate import of LNG and distribution to Sindh and Karachi through containers/browsers is an option. The Gwadar International Terminals Limited (GITL) has, in principle, allowed Pakistan GasPort Limited (PGPL) and Al-Qasim Gas to utilise Berth-3 to moor a FSU for direct unloading into containers/browsers through a header arrangement under safe conditions.

However, this would require removal of certain regulatory restrictions from Ogra and Explosives Department. And 100-150 mmcfd of LNG can be brought in at Gwadar and no pipeline is required for transporting it to Sindh and South Punjab. Apart from the gas becoming available, it will spur economic activity in Gwadar and transportation activity and employment in Sindh and South Punjab.

Another major advantage of this project is that as LNG will be delivered directly to consumers and not through the SSGC/SNGPL pipeline it will benefit the consumers by saving 15-17 percent Un-accounted For Gas (UFG) charged by the two Sui companies to consumers of gas.

And this project can be up and running in 240 to 360 days. All necessary arrangements are in hand. Action required is convening of a meeting of Ogra, Ministry of Petroleum, Explosives Department, and the sponsors i.e. PGPL and Al-Qasim Gas.

Talking of long-term solutions, which can be materialised from 400 days to 1095 days, they said that the country has the possibility to produce another around 500 MT of LPG per day. The same is not being done due to bureaucratic red tape and discouragement for local production of LPG.

Additional LNG import terminals, they said, must be installed with a speedy pace. They said that the federal cabinet last month directed the Ministry of Defense to give an NOC for the location in Port Qasim for the construction of two additional LNG terminals. The terminals are indeed needed but will require at least 30-36 months for completion.

Yet, a project which is completely ready for start of construction having achieved the following milestones, is not allowed to proceed: a) NOC from the Ministry of Defence; b) The PQA Board in its meeting of December 6, 2017 reiterated that “The Board resolved to re-confirm the request for NOC with the condition that the specific site/location will be subject to adjustment, after relevant studies about realignment of the channel since the proposed site may be in the remodeling zone.”

They said that for PGPC LNG terminal-2, land has already been leased and rent is being paid for many years. And all requisite studies are ready and construction contract has been signed with a Chinese company; more importantly, Port Qasim Authority (PQA)’s own consultant, HR Wallingford, has recommended that our site is the most suited for quickest and safest implementation of the LNG terminal.

EPC contractor has undertaken to complete the project in 10 months from groundbreaking. Among the reasons that the terminal can be commissioned within 10 months is also the fact that our pipeline from the jetty to the CTS is already available and is capable of transporting up to 1.3 bcfd (only the interconnection between the two jetties – PGPC Terminal-1 and Terminal-2 is required).

The Project is being funded through equity and requires no government guarantees for off-take of gas. The entire risk is being taken by the sponsors.

The FID for the project is not dependent on the gas transportation pipeline capacity allocation upfront. The project will be completed on risk basis by the sponsors and pipeline capacity should be allocated by the government in due course.

Mentioning about construction of South-North pipeline (LNG-3 pipeline), they said that it is important for the country that this pipeline is constructed on fast-track.