ISLAMABAD, March 6: Pakistan is likely to face major gas shortfall, starting with 778 MMCFD (million cubic feet per day) by 2009 and rising to more than 11,000 MMCFD by 2025, with continuously declining domestic supplies and growing economic needs.
Even with two gas pipeline projects and liquefied imports projected to materialise in the second half of the next decade, the country would still suffer more than 4,000 MMCFD of gas shortage between 2018 and 2025. As a result, huge foreign exchange would be required for oil imports to avoid an adverse impact on economic growth.
These estimates were adopted by the government last month, under a pre-feasibility report of the Iran-Pakistan-India (IPI) pipeline prepared by Price Waterhouse Coopers and Hagler Bailly Pakistan on the basis of 6.5 per cent average economic growth projected by the government.
The government anticipates no domestic gas discoveries in the next few years until fiscal 2010-11.
The country's gas demand this year stands at about 4,000 MMCFD and will increase to 4,492 MMCFD in 2008 and further to 5,086 MMCFD in 2010. Compared with this, total supplies at 3,666 MMCFD this year would rise to 4,184 MMCFD next year and 4,308 in 2010. This means that the shortfall would range between 300 and 350 MMCFD in the next two years and increase to 778 MMCFD in 2010.
Considering the fact that power sector will continue to be the largest gas consumer, the shortfall in this area is likely to have multiple choking impacts on the country's economic growth and increase the cost of production for almost every sector.
The power sector's gas demand at about 1,500 MMCFD at present is expected to cross 5,500 MMCFD in 2025. This will be followed by fertiliser sector, general industrial sector, residential sector, cement, CNG and commercial sectors.
The estimates suggest that the gas demand would maintain a steady pace of increase every year to touch 6,763 MMCFD in 2015 but supplies would start slowing down. After reaching a peak of 4,313 MMCFD, the gas supplies would come down to 3,670 MMCFD in 2015. This would mean that almost 50 per cent demand would remain unmet and the overall shortfall would reach 3,089 MMCFD in 2015.
The supplies of two gas utilities – the SNGPL and the SSGCL -- would increase from about 2,800 MMCFD at present to peak at 3,360 MMCFD in fiscal year 2010, but fall drastically to about 2,000 MMCFD in 2015. New discoveries are expected from 2011 at an average of about 100 MMCFD per year to touch 1,450 MMCFD in 2025. By this time, however, the supplies from twin Sui companies would reduce to a meagre 380 MMCFD.
By the year 2025, the gas demand would touch 13,260 MMCFD because of a 6.5 per cent annualised economic growth rate but at this stage domestic supplies would not be more than 2,200 MMCFD, leaving a shortfall of a mammoth 11,100 MMCFD.
From another perspective, the gas shortfall would stand at 1.2 billion cubic feet per day (BCFD) in 2011 and it would increase to 3.1 BCFD in 2015. The shortage will double to 6.3 BCFD in 2020 and further rise to 11.1 BCFD in 2025.
The budding CNG sector which currently consumes about 140 MMCFD of gas would maintain its nominal share to maximise at 700 MMCFD in 2025. This, however, is not clear if the new initiative of providing CNG buses in all major cities has also been accounted for in these projections.
The government is targeting to materialise the first phase of import of liquefied natural gas (LNG) in 2011 to deliver about 526 MMCFD of gas but the shortage would still persist to the tune to about 500 MMCFD. The second phase of LNG import is projected to be completed by 2013 to deliver another 526 MMCFD of gas but the shortfall would remain the same because of simultaneous increase in demand.
The government anticipates that first gas pipeline import project (IPI) would be completed by 2015 to deliver about 2,230 MMCFD of gas. This would be followed by another pipeline -- most probably from Turkmenistan -- in 2018 to provide another 3,350 MMCFD of gas. These three years (2018 to 2020) would be the only period in the next 20 years when demand and supply would converge at about 8,500-9,000 MMCFD. But the deficit will again start rising at the rate of about 500 MMCFD per year to touch 4,500 MMCFD in 2025.
The estimates suggest that if the country achieved economic growth rate of 7.5 per cent, the supplies would never be able to meet demand and the shortfall would cross 13,500 MMCFD in 2025. Even in case of 5.5 per cent economic growth rate, the gas shortfall would remain and peak at 10,900 MMCFD in 2025.
