Pakistan's domestic gas supplies are projected to deplete by more than 28 percent to mere 2.3bcfd in 2024 from the existing output of 3.2bcfd, raising the fuel's shortage for domestic users, industrial consumers, urea producers and power generation to 5.5bcfd as the total demand is estimated to rise 11.6 percent to 7.7bcfd from the present 6.9bcfd.
This shortfall in the supplies will partially be offset through import of 1.9bcfd LNG (liquefied natural gas). But the authorities will be required to either create additional capacity to import LNG, or boost the domestic output on an emergency basis, to meet the remainder gas deficit of 3.6bcfd, industry experts said.
Gas consumption in Pakistan has grown by more than 80 percent over the last 20 years. It is estimated that Pakistan's overall demand for energy will increase 350 percent by 2030, while the proportion of the country's total energy needs met from domestic sources will fall from 72 percent to 38 percent.
Several factors have contributed to the reduction in domestic gas production. The most important one is inadequate investment made in gas exploration in the country over the last few decades in spite of hefty growth in demand and consistent depletion of the previously discovered reserves.
The past policies of massively subsidizing all types of gas consumers from industry to domestic and commercial users created anomalies and entitlement for cheaper gas. Further, the policy encouraging the use of gas by the transport sector and car owners until recently, as well as inadequate maintenance of the existing gas pipeline networks also played an important role in creating the supply gaps in the gas sector.
The LNG import policy pursued by the previous government had attracted significantly large local and foreign private investment in the construction of two LNG terminals in Karachi and in other required import infrastructure, easing gas shortages for the export-oriented industry, power producers and other consumers.
The successful operation of Engro Elengy and Pakistan GasPort Consortium (PGPC) terminals and the development of LNG import infrastructure paved the way for more LNG terminals in the country.
The government and gas sector experts believe that Pakistan needs at least three to four more LNG import terminals to address the country's ongoing energy shortages. In 2019, the country's total gas demand stood at approximately 4800mmbcfd. More than 20 percent of gas was supplied through Regasified Liquid Natural Gas (RLNG) by the two terminals of Engro Elengy and PGPC.
However, the much-publicized anti-corruption drive launched by the National Accountability Bureau (NAB) in the last couple of years and institution of inquiries against the terminal sponsors scared away the prospective investors who had committed to invest in new terminals to increase the supply of imported gas to meet the growing domestic demand.
In the recent bids invited by the Pakistan LNG Limited (PLL) for the supply of 240 LNG cargoes over a period of next 10 years, two top global LNG suppliers stayed away from the process because of the NAB's investigation into LNG terminals and imports from Qatar. The ongoing NAB inquiries turned into media trials and led to the arrests of former ministers without due legal course at the expense of the watchdog's own public reputation.
The government has recently conceded that the NAB need to be reformed and issued an ordinance to protect the businesses and bureaucracy from the anti-graft watchdog, which would start inquiries against them for committing procedural lapses.
Bureaucrats had been reluctant in making decisions for fear of facing the NAB cases. As a consequence of these flimsy cases, the country is once again facing a serious gas crisis, which could have been averted if more LNG cargoes had been imported in a timely manner.
It is important to recall that Pakistan began importing LNG its economy was losing around two percent of its GDP (gross domestic product) or $5-6 billion annually due to energy shortages.
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