Page 9 - GLNG Week 30 2022

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Pakistan’s energy crisis

worsens economic crunch

POLICY FEARS are being expressed in international heavy rains had disrupted gas infrastructure.
circles that Pakistan is facing an economic col- However, no major new gas discoveries have
lapse similar to what is being experienced by Sri been made in Pakistan and domestic gas pro-
Lanka. The high price of fuels, especially LNG, duction is in decline, making the country even
is exacerbating the country’s economic decon- more dependent on energy imports.
struction and contributing to inflation, which Pakistan media reported this week that
is causing serious consequences for the general domestic gas production has fallen to 3,388mn
population as well as commercial operations. cubic feet (95.9mn cubic metres) per day during
Not only is the country finding it difficult to fiscal year 2022 from the fiscal year 2012 output
purchase LNG on the spot market, but traders rate of 4,259 mmcf (121 mcm) per day. Had pro-
are also reluctant to deliver oil and diesel, fearing duction stayed at the FY2012 rate, Pakistan could
Pakistan might not be able to pay for the cargoes. have saved $3-5bn per year, the media report
Imports of liquid fuels are also in decline. said. The country’s foreign exchange reserves are
Pakistan’s rupee depreciates daily against the estimated at slightly more than $8bn, according
US dollar, yet the government has expressed to the media.
hope that the rate will reverse itself in the coming The high cost of energy plays a key role in
months with improvements in export revenues Pakistan’s energy and economic crisis. Half of
and remittances. the country’s LNG imports are delivered through
But the energy crisis that Pakistan is fac- long-term contracts, with the remainder pur-
ing jeopardises the futures of Pakistan’s export chased on the spot market, but prices in the lat-
industries and hence its ability to earn foreign ter are proving impossible for Islamabad to meet.
exchange and boost the rupee. Businesses in In June, state-owned Pakistan LNG Ltd (PLL)
the commercial hub of Karachi last week com- posted a tender for 10 LNG cargoes for delivery
plained to the government of days of inadequate through the summer, but the company did not
gas supply and several days of no gas supply at receive a single bid.
all. Industrialists in the city said the gas short- Previous tenders have also proved unsatisfac-
ages have caused them to miss export orders that tory. One tender placed by PLL saw only one bid
could amount to huge sums. received from Qatar Energy at a price of 39.80
The Sui Southern Gas Company (SSGC), per mmBtu, putting the total price for the cargo
which supplies gas to the region, has tried to at around $131mn, much more than govern-
explain this away by saying that regional gas ment financial reserves could tolerate.™
fields are under maintenance and that the recent

Week 30 29•July•2022 www. NEWSBASE .com P9