ISLAMABAD: Highlighting salient features of Pakistan’s energy sector and SARA Pakistan initiative, Nadeem Babar, prime minister’s advisor on Petroleum, took pride in initiatives taken by Pakistan Tehrik insaf (PTI) government for reforming energy sector to make it well- equipped for sustainable, affordable, responsive and available (SARA) energy to every domestic consumer . We appreciate the government efforts to restore trust of the companies engaged in Pakistan’s energy sector, but somehow Nadeem Babar’s assertions in a recent interview look hollow and indicate that the advisor to the prime minister lacks ground knowledge required to efficiently manage this key sector.
On LNG sector, the advisor told the interviewer that anybody can bring LNG, pay toll and get it moved through the pipeline. Likewise, he spoke on LNG terminals, which in his views, are available for anyone and that imported LNG any one can sell he wishes to. He believes strategic facilities like gas pipelines and LNG terminals will put pressure on monopolistic culture currently existing in Pakistan’s energy sector. He also spoke on 12-14% UFGs (un-accounted for gas) and hinted at doing something for improvement in this area. PTI government took control of LNG terminals ready for construction and take preliminary tasks like feasibility studies, estimates of dredging, pipeline cost, terminal cost, mangroves after surveys and lot of efforts with so many departments involved like SEPA, PQ, CAA, MoD, Explosive Department, OGRA, SSGC/SNGPL and concerned ministries. The projects finances were ready, lands were allocated and things were ready to move towards for construction and initiation of works at sites, which could have led to job creation substantially, besides creating countless opportunities for Pakistan’s SME sector. Contrary to its declared policy of taking care of projects of national significance, PTI government scraped LNG zone at Qasim Port, where lands were allocated and international companies were waiting to kick-off construction without realizing how much preliminary works were done to reach at the milestone. Again a new tender was launched to hire consultants to identify new LNG zone who would give their report in six months. This ill-conceived idea rolled back minimum 2 years of hard efforts of international companies which as a result went back to stage 1 with new efforts required to do re- feasibility on new land allocations. It is not the same world after COVID-19 and global consumption, it may take some more time to get back from where it fell down. We keep hearing the same comments from the government policy-makers of allowing third party LNG import with additional re-gasification capacity at 2nd LNG terminal. Realistically, if existing terminals are not fully utilized ,it may not make a genuine space for the new ones. We do keep hearing third party LNG import, but when someone asks if a single shipment has been moved on this model so far, the answer is No. There are lobbies and they will protect their interests. They will not let the government bring UFG to 2-5% which is average world standard as compares to 11-14% UFG in Pakistan and in the past, none of the government could do anything about it. Even some funding available for UFG control collapsed and as of today, Pakistanis are paying 11-14 extra for gas, which they never consumed. A number of other real problems of LNG sector also need to be addresses to bring any sustainability in this sector. Pipeline capacity, being a major handle in gas injection into pipeline system without effecting the existing supply chain from domestic wells, needs to be improved. The advisor also hinted at upgrading of refineries, midstream and downstream sector. He said refineries will be upgraded and from September 1, 2020 Pakistan will start selling Euro 5 oil instead of Euro 2. This, being a major initiative to improve quality of fuel, needs to be appreciated at every level. We did hear of PRL up-gradation for the last 5 years, but it remained confined to feasibility studies. Khalifa Coastal Refinery has yet not made anything on ground. The recent shortage of oil and immediate increase in price represent two things for sure.. mismanagement of overall supply chain, which is a pretty complex phenomenon and requires experts to even manage it properly and most importantly as usual some lobbies make hefty profits utilizing situation to the most. Even if new refineries and up-gradation are made now and when equipment is imported companies will see another surprise of EDB together with high ups running the ministry of industry that almost all gas and oil plants are now locally manufactured in Pakistan. Nadeem Babar asserted that poor man’s fuel is LPG, but he and his team is still working on a policy to lower its cost. There is LPG in SSGC and SNGPL network that can be extracted. There are many wells where LPG is present in abundance and production can be increased by implementing proper policies and ability to move with these projects ahead. This will require rules, eliminating regulatory hurdles and investment by restoration of investor trust. To gear-up exploration and production sector and to cope- up with 9.5% gas declining rate, the government needs to take bold steps. The advisor mentioned that in next couple of years, Pakistan will run out of gas and will have no gas to supply if the government does not uplift this sector. He mentioned awarding of 10 new blocks and auctioning another 20 blocks in September 2020. This looks encouraging., I really wish good things happen in our country, but, as a journalist, I cannot buy any statement which has no backing. Many international E&P companies have left Pakistan and some which exist now are in an exit mode and getting their evaluation/bidding done to exit Pakistan. There are many discoveries already made, but they are yet to start production. The potential of these discoveries is estimated at 500-600 mmcfd, almost of size of First LNG terminal of Pakistan. Despite cost of millions of dollars, Pakistan has failed to monetize low BTUs from these wells. A number of fields have been abandoned due to unavailability of pipeline network and security conditions prevailing at those concessions. The government needs to look into this area also.