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January 10, 2021

Worst gas crisis hits country Gas supply to industry stopped

Top Story

January 10, 2021

ISLAMABAD: In an expected development, the government has halted the RLNG supply to all sectors of economy as Sui Northern on Saturday also stopped imported gas supply to power plants and export industry. The Sui Southern will today (Sunday) cease the supply of imported gas to the export industry.

“Right now, no RLNG is available to CNG, fertilizer, and captive power as the government has stopped gas supply to power sector and export industry,” a senior official at the Petroleum Division confirmed to The News.

The RLNG demand for January to the power sector stands at 250 mmcfd. However, the Sui Northern slashed the RLNG supply to 155 mmcfd some days back, which further tumbled to 125 mmcfd by last Friday (January 08, 2021) and now on Saturday, the RLNG gas supply to the power sector was virtually shut. The gas demand of the country at present is more than 6 billion cubic feet per day. While 4.156 bcfd, including 3.2 bfcd local gas, is available in the system. The country has capacity to import 1.2 bcfd but 956 mmcfd imported RLNG is available. The second PGPL LNG terminal is currently underutilised as it is just re-gasifying 350 mmcfd LNG.

In Sindh, the situation is not very different, as in Karachi the imported gas supply to the CNG sector and captive power plants of general industry was already stopped. The RLNG gas supply to export industry in Karachi was never given as per the agreement in the winter season as it is currently facing 5-9 hours gas loadshedding. And the Sui Southern is set from today (Sunday) to put a stop on RLNG supply to the export industry in Sindh.

With the closure of RLNG to the power sector, the official said, the government will generate electricity from furnace oil and diesel owing to which the electricity cost will increase manifold against generation by RLNG. “Though the captive power plants meant for export industry were stopped for one day in a week as per the decision of cabinet, but the decision will reduce the textile products production by 16 percent. Its impact is expected next month in the form of decline in exports,” said executive director of APTMA (All Pakistan Textile Mills Association).

Even after closing down the supply to all sectors of economy, the domestic consumers across parts of main cities of Karachi, Hyderabad, Quetta, Peshawar, Lahore, Gujranwala, Faisalabad, Sialkot, Rawalpindi are either experiencing no supply of gas or it is available at painful low pressure. Domestic consumers are forced to buy breakfast, lunch and even dinner from the market.

The fear which the media had been highlighting for the last many months that in January 2021, the RLNG crisis will worsen has unfortunately proven correct. The main reason is the government’s failure to arrange the LNG vessels for the first 20 days of January 2021 through future trade in August-September.

Owing to this negligence, the government procured the costly LNG as it issued tenders almost one month before for next month for the winter season 2020-21. On account of the ill-conceived strategy, the government received the highest-ever bids in spot trading for almost every month. Shockingly, for the first 20 days of January, the government failed to attract any LNG bids for three LNG cargoes. Afterwards, the government arranged an urgent tender for three cargoes for the first 20 days of January, but the LNG suppliers came up with the highest-ever bids at $12.95-19.8 per MMBTU. So, the government dropped the idea to procure LNG for the first 20 days of January. The story does not end here as the government also received bids for two LNG vessels for February, 2021 at 21-23.4 percent of the Brent, which is again on the higher side.

In this winter season, because of the huge global demand of LNG, the LNG cargoes were already booked. Even freight cargoes were not available. The government was forced to procure LNG at the highest-ever rates for November, December and January and February.

However, the government rescheduled some LNG cargoes due in last December, 2020 to January, 2021 to stagger the impending gas crisis, but all endeavors seem to have gone futile.

Shahid Sattar, Executive Director, All Pakistan Textile Mills Association (APTMA), confirmed the development saying that the gas supply to export industry has been stopped and the closure of RLNG will reduce 16 percent textile products production, leading to decline in textile product export but the real impact in exports will appear next month.

Officials at the Petroleum Division, while confirming the closure of RLNG to export industry, told The News that Engro LNG terminal is suffering some problems in re-gasifying the LNG and is providing 40 mmcgd less RLNG to the national grid since late December 2020. “The Floating Storage Re-gasification Unit (FSRU) at Engro terminal is not performing up to the capacity as the temperature of sea water at the port is lower than 18 degree Centigrade due to which the FSRU is re-gasifying the LNG less by 40 mmcfd,” the official confirmed.