PIDE Forecasts Indigenous Oil Reserves To Be Exhausted By 2025.

ISLAMABAD -- Pakistan Institute of Development Economics (PIDE) has predicted that indigenous oil reserves will be exhausted by 2025; however, current gas reserves will last for maximum of 15 years.

Oil and Gas Regulatory Authority (OGRA) remained hostage to government decisions because of the extensive state presence in all activities in the supply chain. The OGRA law allows too much mandatory government involvement in the current oil and gas regulatory system, that has made the regulator powerless, said the latest research brief on 'Gas Crises in Pakistan' released by the Pakistan Institute of Development Economics (PIDE).

Natural gas and imported LNG contribute more than 40 percent to the country's current energy mix, including gas resources used in electricity generation. In recent years, the demand for gas has increased rapidly in Pakistan. However, gas exploration and production have declined, and the LNG operational and regulatory framework is weak, leading to a nationwide shortage and increased supply costs.

According the PIDE, 15 gas explorations and production companies work in 55 gas fields spread throughout the country. The gas distribution and transmission are mainly owned and operated by two state-owned companies Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL). The gas exploration/production industry and gas distribution/transmission industry lack competition in Pakistan.

PIDE research quoting OGDCL said that it is predicted that Pakistan's indigenous oil reserves will be exhausted by 2025. However, current reserves will last a maximum of 15 years if demand is capped at present-day gas levels by 2030. PIDE research showed that 78 percent of households have no access to natural gas in Pakistan. Natural gas consumption in the domestic sector has grown by about 11 percent over the years. Supplying gas to households requires significant investments. The cost of gas supply to households is much higher than the cost of supply to the industry or power sector. Gas allocation policy has remained based on political priorities rather than on the objective of maximising value addition. Low gas prices and inefficient gas allocations have encouraged higher demands.

With 30.6 billion cubic meters of natural gas, Pakistan shares 0.8 percent of global production. There is a sharp increase in gas demand in Pakistan, but due to the inefficient distribution of natural gas resources, Pakistan has been facing...