The Friends of Democratic Pakistan (FoDP) Energy Sector Task Force has urged the government to rationalise and restructure gas tariff to recover supply and distribution costs and minimise cross subsidies across various sectors.
In a report, FoDP's Task Force has emphasised the need to implement measures to reduce unaccounted for gas (UFG) as current levels are in the high range of 7 percent to 9 percent. "One percentage point of UFG means a loss of Rs 3.5 billion/year at the current average gas price," the report adds.
Task Force has also said that "litigation cases should be settled that could unblock the production of several hundred mmcfd of pending gas. The indexation of the gas price with reference to crude oil price should be improved for additional gas in the upstream gas sector".
Exploration and production companies can utilise infill drilling technology which consists of drilling new wells inside the existing grid in order to produce gas located in small parts of the reservoir rock which is not drained by the existing wells. These are additional reserves, which can be tapped by increasing the gas recovery rate with a higher production cost. An additional 500 mmcfd of gas production could be realised in the medium term through this source, the report adds.
It is estimated that approximately 35 trillion cubic feet of natural gas is trapped in hard-to-reach reservoirs. It is necessary to utilise modern and costly technology and create artificial permeability to produce this type of gas. According to authorised sources, it is possible to realise an additional 500 mmcfd gas production in the medium term through this source. A specific regulatory framework for producing additional gas from these technologies needs to be put in place. As an incentive, the government can offer higher wellhead gas price to cover additional exploration and production costs, the report adds.