Review of oil and gas, power and renewable energy sector of Pakistan.

• Author: Nisar, Ahsan

Byline: Ahsan Nisar

Economic role of natural gas

Pakistan's primary energy supply mix clearly shows natural gas as playing major role in country's economic development by accounting for nearly 50 percent of its total primary energy supply mix. Pakistan's natural gas production has remained stagnant at nearly 4,000 mmcfd during the last decade. Over last few decades, Pakistan has developed a formidable gas sector. Its economy has so far survived due to abundant initial gas discoveries. The natural gas market of Pakistan is among the biggest in Asia and is somewhat comparable with the size to France and The Netherlands. Pakistan was gas sufficient till 2005, however. after that gas production didn't keep up with the gas demand. The constrained demand of natural gas is 6,000 mmcfd whereas the unconstrained demand is 8,000 mmcfd (8 BCFD) or even potentially higher than this during winters when the domestic gas demand surges exponentially.

The peculiar energy mix of the country created space for oil as a major fuel source for power generation which resulted in piling up of circular debt. The gas dependent sectors are suffering with the number of power plants shut down on account of uneconomical fuel use (HSD), rationing of gas. This resulted in enhanced imports of urea. The largest use of natural gas is in power sector followed by domestic, fertilizer, industrial and transport sectors. Major gas reserves including Sui Field of Balochistan, Qadirpur and Zamzama gas fields of Sindh are depleting rapidly, the supply-demand gap in the country is broadening and the country needs alternative sources of fuel to ensure the smooth functioning of local industries.

Pakistan is an agricultural economy and fertilizer sector plays an essential role in enhancing agricultural output to meet local requirements as well as exports but as a result of serious gas shortage the fertilizer industry suffered a lot but now with the arrival of LNG the situation is improving. LNG import is a major milestone for Pakistan's gas sector. LNG development will serve as an impetus for growth not only in gas sector but also in gas consuming sectors including fertilizer and power sector.

Rising oil refining capacity

Global refining capacity is expected to reach 115 million bpd by 2020 despite low crude oil prices and consequently the gloomy scenario for the oil and gas sector. It is, however, speculated that the global trend of declining oil prices would be arrested in the near...