The Curious Case of Pakistan’s Natural Gas
By Maha Rehman
This winter has been marked by not only the regulars – fog and Kashmiri chai – but also by a worsening smog and gas shortage. In fact, energy shortfall and disputes over its allocation have become regulars as well. From frequent electricity breakdowns to acute gas load-shedding, these crises have only worsened in one way or another. A couple of weeks ago, the gas shortage reached such a high level in Sindh that industrialists in Karachi threatened to shut down factories in protest if the government did not address the problem.
Is there a common thread among these crises that leads all the way to policy, planning and operational levels? Are we keeping track of the basic indicators that are both predictive and prescriptive of these crises? Or are these indicators getting camouflaged in lobbying by industries as well as by political point-scoring?
A look at the indicators shows that almost 40 per cent of Pakistan’s energy needs are being met by natural gas. Power sector consumes 43 per cent of the total natural gas available in the country, followed by the residential sector and fertiliser production, each consuming 21 per cent of it.
In terms of the provincial share of the demand for natural gas, Punjab and Sindh lead, with 47 per cent and 43 per cent, respectively, followed by Khyber Pakhtunkhwa and Balochistan. Sindh is also the major supplier of natural gas – followed by Balochistan – which makes it strange that the province is also suffering an acute shortage this winter. According to a report prepared by Oil and Gas Regulatory Authority (OGRA) in 2016-17, the gap between supply and demand is expected to increase to 3,999 Million Cubic Feet per Day (MMcfd) in FY 2019-20 and 6,611 MMcfd by FY 2029-30 without imported gas.
These statistics leave very little room for adjustment if and when demand increases or supply decreases. Already when there is a 40 per cent increase in the demand during winter season, it always leads to cuts in supply but those cuts are never applied to the two industries — power and fertilisers. They are, instead, shifted to domestic consumers and other smaller industries that run on natural gas.
The growing demand for gas, however, has a history. It has been driven by not only an annual increase in its consumer base but also due to a switch by industries and automobiles from using oil to running on gas over the past decade and a half. When the switch started taking place, the policymakers failed to gauge its impact on the long-term balance between supply and demand. Additionally, the opacity of the way the change was allowed to take place hindered holistic and long-term planning.
Read the rest of this essay at Herald