Imported gas: govt encouraging companies to build onshore underground storage facilities

ISLAMABAD: The federal government is encouraging the state-owned gas companies as well as private companies to build onshore underground imported gas storage in various parts of the country to ensure smooth and affordable supply of gas to industrial, commercial, and domestic consumers, sources in the Petroleum Division said.

In this respect, the Oil and Gas Regulatory Authority (OGRA) is working on a petition filed by M/s Engo Elengy, a private company for the issuance of a provisional license for construction and operation of underground imported LNG storage at Port Qasim.

State-owned Sui Southern Gas Company Limited (SSGC) is also at an advance stage to file request to the oil and gas regulator for grant of underground storage facility at the port and a technical study by the Asian Development Bank (ADB) would likely be completed soon, sources 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.

The Oil and Gas Regulatory Authority estimated that the gas demand and supply gap during financial year 2019-20 was 1.4 billion cubic feet per day (bcfd), which is expected to rise to 3.7 bcfd by the financial year 2025-26 and 5.4 bcfd by the financial year 2030.

Pakistan currently possesses no capacity to store even a single gas molecule. The USA has the gas storages capacity for 10 years. China and Japan have also built many gas storages and more importantly India has also erected the gas storages, but Pakistan stands nowhere.

Like oil storages for 20 days in Pakistan, the government wants the gas storages also as strategic gas reserves for 12-15 days. If the government goes for capacity to have for one week storage of gas, then the government will have to store three billion cubic feet gas per day and in case, the underground storage capacity requires for 15 days, then the government to build the storage for six billion cubic feet gas per day.

Earlier, the government had feasibility study for developing the gas storages, but that was old, and now the government wants to get it updated.

Pakistan’s domestic gas production ranges between 3.8 to 4bcfd and is importing 1.1bcfd LNG totaling 5.1bcfd against the immediate demand of the country that stands at 6bcfd. By 2024 Pakistan will be having 1.3bcfd gas from Turkmenistan through $10 billion TAPI. The LNG, in the open market, gets cheaper in summer season and its prices surge manifold in the winter season.

The rationale behind the decision, sources said, to store the imported gas in summer season at cheaper rates and utilise it in winter season, is for keeping the country energised and industrial activity intact. More importantly, in case of disruption in LNG supply chain on account of any tsunami in the sea or any other reason, the gas storages will be used for industrial activities till the time the problem is over.

An official of the Petroleum Division said that Pakistan has many such gas fields where the gas has been enormously depleted and there are the areas where in the imported gas can be stored. “Initially, we have identified areas through the study conducted many years back for making gas storages in the country,” he said.

There are Bokhari and Kharewl gas fields, wherein, the government would first make the gas storages as strategic stock.

Copyright Business Recorder, 2022