Pakistan starts banking on natural gas, LNG imports

ISLAMABAD: Year 2015 saw major developments in Pakistan’s energy sector when investors found more opportunities and the country emerged as a potential buyer of gas on the world energy map.

Oil consumers got a big relief as global crude prices plunged more than 50%, but there was no end to the sufferings of gas consumers who continued to face load-shedding in winter.

In an effort to meet growing demand, the government took some steps to secure energy supplies for the future including the Turkmenistan, Afghanistan, Pakistan and India (Tapi) pipeline that would bring gas and ensure peace in the region by connecting South Asia with Central Asia and Europe.

For long-term energy security, the country started importing liquefied natural gas (LNG) for the first time in 2015 and built the first LNG terminal. The government had also been making strenuous efforts to strike a 15-year state-to-state LNG deal with Qatar, but the matter dragged on in the absence of an agreement with power producers over the payment mechanism. In the meantime, Pakistan State Oil floated a tender for short-term supply contracts and declared energy giants Gunvor and Shell as successful bidders. They would supply 120 LNG cargoes over the next five years.

The government believes that LNG consumption in power plants by replacing the expensive furnace oil will help to save $2 billion a year and bring down power tariff for the consumers.

Apart from power generation, the LNG will also be consumed by compressed natural gas (CNG) outlets and fertiliser plants to run their operations smoothly, which was not possible with domestic natural gas supplies. In 2015, the two sectors also got some LNG to operate their businesses.

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