Pakistan, ADB agree to complete study on gas storages by next year

ISLAMABAD: Pakistan and Asian Development Bank (ADB) have agreed to complete the study to build gas storages till next year in order to arrange financing for the project needed to deal with growing energy shortfall, a PM aide said on Monday.

Special Assistant to the Prime Minister on Petroleum Nadeem Babar said Pakistan wants to build emergency stockpiles of gas to deal with supply disruption amid the country's growing domestic and commercial demand especially in winter.

“The construction of strategic underground gas storages is part of the government’s policy to improve energy security and affordability in the country,” Babar said during a meeting. The meeting was told that ADB is supporting the effort and a consortium of European oil and gas equipment companies is leading the study.

Both the sides agreed to expeditiously complete the study report on methodology of underground gas storages till May 2021. Funds for the facility will be arranged in due course of time. Final report will provide a blueprint for the facility with respect to size, modulation and security supply of gas.

ADB assured to complete the study regarding methodology for construction of strategic underground gas storage. The government is mulling over a plan to build underground gas storages aimed at preventing gas crises in future. The facilities will be used to store gas that is not immediately marketable, especially in the summer season when the demand is low. The gas can be delivered to consumers during the high demand periods in the winter months.

Last year, Pakistani authorities discussed it with the bank that agreed to undertake a feasibility study for the project for which it also allocated a grant. Inter State Gas Systems, a state-run entity, will be the focal agency for the project. Recently, ADB has completed its competitive bidding process and appointed the international consultant for preparing a feasibility study. Project infrastructure could be funded through gas infrastructure development cess.

Strategic underground gas storages facilities are crucial for the country in view of committed supplies of imported gas under the international gas agreements and fast-growing gas demand in the country to keep pace with the economic progress.

The project would also significantly enhance Pakistan’s capability to provide uninterrupted gas supply for sustainable economic growth. Oil and Gas Regulatory Authority said the gas demand and supply gap during FY2019 was 1.4 billion cubic feet per day (bcfd), which is expected to rise to 3.7 bcfd by FY2025 and 5.4 bcfd by FY2030.