Page 14 - GLNG Week 46 2022

GLNG ASIA GLNG

Pakistan set for gas, power

rationing amid LNG crunch

SUPPLY PAKISTAN is having to ration natural gas sup- As such, Pakistan simply cannot procure the
ply this winter for households, businesses and LNG it needs. And a weak rupee and shrinking
industry, amid the country’s worsening energy foreign currency reserves mean the country will
shortages and foreign currency exchange crisis, also struggle to obtain other fuels it requires.
and may have to implement rolling blackouts to Pakistan has its own domestic gas – 0.4 tril-
conserve electricity. With global economic vol- lion cubic metres proved at the end of 2020,
atility and high gas prices here to stay for some according to BP data. But its output is steadily
time, the outlook for the country certainly is dwindling, from 36.6bn cubic metres in 2012 to
not good. only 30.6 bcm in 2020. By late 2021, it was equiv-
The South Asian country embraced natural alent to less than 29 bcm.
gas a decade ago as a means of ending its reli- Meanwhile, the country’s consumption came
ance on what was then considered costly fuel oil to 41.2 bcm in 2020, after peaking at 44.5 bcm in
imports. The high cost of those imports, and the the previous year. Pakistan has relied on LNG to
poor state of Pakistan’s energy infrastructure, has fill the gap since launching its first regasification
left the country suffering perennial energy short- terminal in 2015, with supplies reaching 10.6
ages over the years. Until very recently, liquefied bcm in 2020, two-thirds of which originated in
natural gas (LNG) was considered a cheaper fuel Qatar.
option for gas, which is why Pakistan invested in The government has made successive
two regasification terminals to access the world’s attempts to bolster domestic gas production, by
LNG supply. For much of the last decade, LNG issuing more and more licences, but so far these
prices have been cheaper on the spot market efforts have not paid off. The number of sizable
than under long-term, oil-indexed contracts, discoveries in recent years has been few, and
and so Pakistan chose to rely on a large decree efforts to exploit the country’s shale gas resources
on those spot volumes to cover its needs. have so far been fruitless.
Circumstances have changed greatly over As such, it made sense for Pakistan to
the past year, however. Global gas prices have embrace LNG, given the lack of viable alterna-
soared following a robust recovery in demand tives. Fuel oil is not only more expensive than
after the worst of the coronavirus (COVID-19) gas, under normal conditions, but its use also
pandemic, and years of underinvestment in undermines the country’s climate objectives.
supply. And spot prices have been highest. At The country has a much vaunted programme to
the same time, Pakistan has been grappling with expand its nuclear power capacity, but progress
fast depleting foreign currency reserves, a slump to date has been limited. The role of renewables
in the value of the rupee and widening fiscal and is expanding, but only slowly, and in a country
current account deficits. The rupee has shed with weak energy infrastructure and prone to
18% of its value since December 2021, while blackouts, there is a limit to how useful intermit-
the country’s reserves have shrunk to as little as tent energy supply is. Hydro dams can provide
$9.8bn, which is not enough to pay for 45 days as much as a third of Pakistan’s power, but their
of imports. output is heavily dependent on water levels.™

P14 www. NEWSBASE .com Week 46 17•November•2022