Self sufficiency is a term used rarely in Pakistan but thankfully the all important natural resource that is natural gas does not disappoint on this account as the country manages to meet its domestic gas requirement through domestically produced natural gas. The country's natural gas production has grown at a healthy pace of 8 percent in the past five years.
The valley of river Indus has the lion's share of total natural gas production, whereas Balochistan comes a distant second, with negligible contributions from the other two provinces. But there is a worrying sign for the years to come as the natural gas reserves are fast depleting and can only account for just another 17 years.
Power sector is the major consumer of natural gas consuming more than one-third of total gas produced. This highlights the inefficient in the Pakistan energy model because the scarce resource should rather be utilises for productive purposes instead of being burnt as fuel. But the wrong priorities of the energy managers over the course of years have deprived the industrial sector from using the gas as feedstock - which in turn is causing huge losses to the exchequer.
What is more worrying is that the ever rising trend of natural gas consumption by the transportation sector in the form of CNG - the share of which has increased by six times in as many years. The policy makers back in 2002 did not realise the growth potential of the sector as it offers cheap alternative fuel for the economy class - this is now hurting the economy very badly. Government has failed to curtail the gas usage as CNG and has time and again succumbed to the pressure of the strong transport lobby in the country.
There has also been a lot of criticism from the industrial sector especially by the textile manufacturers on feedstock gas supplied to the fertiliser sector at heavily discounted rates. Fertiliser sector has a 13 percent share in the consumption pie of the gas used as feedstock, but nearly 70 percent of its gas comes from Mari gas field which produces low quality gas. This gas can only be optimally utilised in the manufacturing of urea and therefore somewhat justifies the discounted prices.
The security situation in Balochistan is a threat in the future as many studies reveal a large potential of undiscovered gas reserves still rest in that area. Moreover, government needs to address the problems faced by the gas distribution companies and must revisit their decade old plea of revising the fixed asset based return formula. The current formula restricts the distribution companies' ability to engage in massive infrastructure development as it does not cover the cost of debt incurred in the process.
To conclude, there is a dire need for better utilisation of gas resources and government needs to incentives E&P companies to operate in such security situation in certain areas. Moreover, the allocation of natural gas also needs to be done more effectively and alternate sources such as hydel, wind and solar energy should be worked on for the power sector to ease off the pressure on the fast depleting natural gas reserves.