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KARACHI: The supply and shortage of gas has made headlines all this past year. Yet almost stealthily, the share of oil in the energy mix requirement is growing.
According to the recently released Pakistan’s Energy Yearbook 2011, gas contribution to energy mix decreased to 48 per cent in financial year 2011, from 50 per cent five years ago in FY06.
Concurrently the contribution of oil in energy requirements increased from 28 per cent in FY06 to 32 per cent in FY11.
Forever grappling with the problem of acute energy shortage, the scales are tipping towards expensive imported oil to bridge the demand-supply gap. The perennial problems of circular debt and challenging security environment have been counted as reasons that deter exploration activities of indigenous oil and gas.
During FY11, country’s primary energy supplies increased by 2.2 per cent to 64.5m toe, from 63.1m toe the year earlier, with major thrust coming from oil and hydro-power that rose by 4 per cent and 13 per cent, respectively.
On the other hand, gas supplies remained almost flat vis-à-vis last year, exacerbating the shortfall in growing demand of gas.
“Thus, widening energy demand-supply gap is posing a major challenge to Pakistan economic health, which is estimated to have curtailed GDP growth by 2 per cent in last few years,” says analyst, Nauman Khan at Topline Securities.
The analyst mentions that of the total oil consumption, country’s reliance on imported oil rose to 86 per cent in FY11, from 82 per cent in FY09 and 81 per cent, the year before.
“The shift towards expensive imported oil has increased country’s vulnerability to uncontrollable commodity shock as was seen in FY08,” cautions the analyst. The reliance on imported energy primarily arises from increased demand of petroleum products, particularly furnace oil (FO) which is primarily used for power generation.
After adjusting transmission, system losses and non-energy use, final energy consumption of the country during FY11 stood almost flat at 38.8m toe.
All of that goes to prove that despite improvement in primary supplies, higher system losses restricted net supplies to the same level.
In the face of acute shortage of gas in FY11, government’s allocation of available supplies to various sectors makes interesting reading.
Domestic sector was given priority with 6 per cent more supplies diverted to the sector. On the other hand, power sector which consumes almost 27 per cent of total country’s gas, received 8 per cent lower supplies, which was thought to have also restricted overall electricity generation.
Moreover, general industries which contribute 23 per cent of total country’s gas also faced reduced supply.
Gas supply to CNG sector increased by 14 per cent in FY11 and supplies to fertilizer sector increased by 4 per cent. However, even that remained short of requirements of the sector as demand rose on account of commissioning of new fertilizer plants.
Analyst at brokerage JS Global, Atif Zafar, forwards the trend of oil consumption during the month of February 2012.
Oil consumption during the month witnessed contraction of 8 per cent over the same time the previous year, attributed to decline of 13 per cent and 46 per cent in volumes of Furnace Oil (FO) and Jet Fuel (JP), respectively.
In the eight months (July-Feb 2011-12), oil sales posted a marginal decline of 1 per cent to 12.7 million tons over the corresponding period of FY11. “The subdued sales are largely owing to the prevailing circular debt and high product prices,” says the analyst.
The discontinuation of Nato supplies to Afghanistan resulted in a sharp drop of 46 per cent in sales volume of jet fuel.
