LNG vital for energy mix in emerging economies

ISLAMABAD: Liquefied Natural Gas (LNG) is the essential part of the energy mix needs of emerging economies, official sources in the Ministry of Petroleum and Natural Resources said Friday.

The world is turning towards LNG and emerging economies such as China, Korea, Japan, India, Thailand, Indonesia, European Union, and Brazil to ensure LNG remains part of its energy mix, they told APP.

They said Japan was importing 80 million tonnes of LNG every year (MTPA) and India 15MTPA due to the commodity’s cheap price and efficiency as compared to other fuels.

Pakistan, they said signed a 15 year agreement with Qatar to import up to 3.75 million tonnes of LNG a year, which was being highly appreciated by the business community.

Economic experts and entrepreneurs, including Federation of Pakistan Chamber of Commerce and Industry (FPCCI) President Abdul Rauf Alam, Pakistan Industrial and Traders Association (PITA) Chairman Irfan Iqbal Sheikh, and All Pakistan Compressed Natural Gas Association Chairman Ghiyas Abdullah Paracha appreciated the government for signing the historic deal.

The country’s total gas production is around 4bcfd (billion cubic feet per day) against the demand of 6bcfd, showing a demand-supply gap of two bcfd.

The deal will help the country add about 2,000 megawatts of gas fired power generating capacity and improve production from fertiliser plants now hobbled by the lack of gas.

The sources said the settled LNG price was 13.37 percent of the Brent and cheaper than the gas to be imported through the Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects, as well as the indigenous gas.

Even India’s LNG contract is expensive by 30-35 percent, they said. The landmark deal will save the country s Rs100 billion per annum and help meet its energy needs by 25 percent.

They said LNG based power production would cost 9.5 cents per kilowatt hour (kWh) as compared to energy produced through diesel which costs approximately 18 cents per kilowatt hour.

According to the ministry, the procurement price from Qatar is the lowest as compared to the prices it offered at various points in the past.

The LNG price for the Mashal Project was 6.94 per mmbtu, Integrated Project 6.01 per mmbtu, while Qatar’s initial offer was 6.56 per mmbtu which was brought down after negotiations, and now the estimated cost for the month of March is 4.78 per mmbtu.

The IP and TAPI border rates are 5.70 and 5.90 per mmbtu respectively while Qatar’s current rate is 5.35 per mmbtu.

Justifying the LNG import deal, they said In Pakistan natural gas accounts for 35 percent of all power generation, 23.8 percent of industrial use, 15.6 percent fertiliser, 5.4 percent CNG, and 18.1 percent of the household use. The current gas shortfall is of two billion cubic feet per day or 33 percent of the total gas demand.

Besides the sources said Pakistan’s indigenous gas supply was expected to deplete to 1,500 MMSCFD in 2030 (from 4,000 MMSCFD today) and the demand supply gap is expected to reach 7,000 MMSCFD in the next 15 years as the existing gas reserves are depleting fast.