Gas supply expected to improve next year as government orders third LNG terminal

March 6, 2019

Photo: AFP

The Economic Coordination Committee of the Cabinet approved on Wednesday the setting up of a third liquefied natural gas (LNG) terminal in Port Qasim.

The proposed terminal has to be completed in 22 months. The government’s top body on economic matters also instructed stakeholders to chalk out a plan to ensure uninterrupted supply of LNG. The third terminal will be set up in the Port Qasim area but away from the existing terminals to avoid congestion at the port.

Pakistan started importing LNG in 2015 when Engro set up the country’s first Floating Storage Regasification Unit (FSRU). According to a September 2017 report, the government invested $8 billion on a transmission line, terminals and LNG-fired power plants to deal with chronic power crisis and gas shortage in the energy-starved nation.

In 2017, the government decided to move away from oil-fired power plants, two-and-a-half times more expensive compared to the gas-based power plants. Owing to this shift in the energy mix, the share of furnace oil in our energy mix reduced to a fifth of our total generation by November 2018. The share of LNG at the same time was 17%, up from nil in 2015.

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With the infrastructure in place and more projects in the pipeline, Pakistan has become a major buyer of imported gas in Southeast Asia’s booming LNG market, which accounts for two-thirds of the world’s demand and remains a focal point for the global LNG industry.

It is expected that in three to four years, gas-based electricity generation will move to over 40% and will be primarily supplied by LNG. The government plans to phase out FO-based power generation because LNG is cheaper and friendlier to the environment.

The FO-based plants operate on 38% efficiency while LNG-fired power plants operate on 62% efficiency translates to an annual efficiency gain of $1.6 billion, say experts.

The country’s demand for gas is 6 billion cubic feet per day, about 4 bcfd comes from domestic resources and another 900 million cubic feet per day comes from existing two terminals, namely Engro Elengy and Pakistan GasPort Consortium, which regasify imported LNG. The government is paying $500,000 per day in regasification charges to these two terminals.

Related: 12 days later, CNG stations to resume operations in Islamabad, Punjab tomorrow

There is a shortage of at least 700 to 800 mcfd to meet the growing demand for new power plants.

LNG can be put to multiple uses. From domestic kitchen users, to the textile mills producing steam, or fertilizer companies as raw material, to CNG sector as fuel for automobiles, LNG has much wider use than other fuel sources, such as coal.

Experts say any delay in new terminals can cost us in terms of another episode of gas shortage in the country.

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