Engro-Vopak Terminal Limited (EVTL), a joint venture of international repute with recognised expertise in developing oil handling and storage infrastructure as also in manufacturing chemical fertilisers, has offered to set up an LPG terminal and an oil handling and storage facility at KCR at Gwadar Port, says a Recorder Report.
According to the sources quoted in our report, the joint venture has submitted to the government an investment plan to develop KCR and to operate a jetty and SBM for handling the import and export of oil products. EVTL plans to invest in developing a storage facility for oil and other petroleum products, a 100-mw power and desalination plant and a state-of-the-art LNG terminal at KCR.
Royal Vopak of the Netherlands, which is the world's largest service provider in logistics and distribution of chemicals and oil products, also runs a world-wide network of 75 terminals, including one at Fujairah in UAE.
Similarly, Engro Chemicals is the second largest urea fertiliser producer in the country, with an annual production capacity of 950,000 tons. It also has interests in PVC energy, industrial automation and goods processing. Engro plans to invest over $1.5 billion in Pakistan over the next three years.
According to the Recorder Report, EVTL is the only state-of-the-art integrated bulk liquid chemical and LPG handling and storage terminal in Pakistan, which has handled over 953 vessels carrying about 5.8 million tons of chemicals and LPG.
The planned multipurpose facility at Gwadar will substantially add to Pakistan's oil and gas storage capacity, which has been a rather weak link in our energy chain.
Pakistan is one of the most gas-dependent economies in the world, with a well-developed and integrated infrastructure of transporting, distributing and utilising natural gas with 9,063-km transmission and 67,942-km of distribution and service line network developed over 50 years. Pakistan's development will thus require enormous amounts of energy.
The links between sustainable development and energy will require even greater efforts for long-term energy security. The issue has acquired urgency because Pakistan depends heavily, ie 50 percent, on its reserves of natural gas for industrial, power generation and commercial and household uses. However, these reserves will start declining within the next decade if no new discoveries are made.
Incidentally, about 52 TCF of gas reserves have been discovered, out of which 19 TCF have already been produced. The pivotal role natural gas plays in Pakistan's economic development can be gauged from the fact that the demand for natural gas in 2004-05 was about 3.7 billion cubic feet per day. And it grew by 9.2 percent during 2004-05.
Further, with a primary commercial energy consumption of 55.5 MTOE in 2004-05, Pakistan ranked 30th in the world in terms of energy use. However, its per capita energy consumption (0.36 TOE) is one-fifth of the world's average of 1.77 TOE. The share of natural gas in primary energy during 2004-05 reached up to 50.4 percent, followed by oil (29.4%) and LPG (0.4%). Petroleum products and gas consumption account for approximately 70 percent of modern energy supply in Pakistan.
What is quite worrisome is a recent news report, which said that because of an acute shortage of natural gas, Pakistan is unlikely to attract any new IPPs in the energy sector. Further, according to the sources quoted in the report, due to non-availability of 200 mmcfd of gas, PPIB has reportedly had to shelve projects of 900 megawatts, ie 600-mw Hawkes Bay and 300-mw Gadani projects in the KESC area, where power shortages have reached an alarming level.
Incidentally, distribution of LPG demands extremely careful procedures, most importantly its storage and handling. There is therefore a need to improve safety awareness among all distribution channel members, including transport contractors and distributors. Lastly, although Engro-Vopak's professional and financial credentials are impeccable, it would be much better to complete the selection process through competitive bidding procedures in the larger interest of transparency.