LAHORE, Aug 19: The subsidy being enjoyed by domestic consumers of natural gas will be withdrawn in next three years to bring their tariff at par with the industrial and commercial consumers.

This was stated by the Sui Northern Gas Pipelines Limited (SNGPL) Managing Director Abdur Rashid Lone while addressing the members of the Lahore Chamber of Commerce and Industry (LCCI) here on Tuesday.

He said the purchase and sale price of gas was fixed by the government and it had linked it with the prices of crude oil. “So when the prices of crude oil go up, the gas rates also rises.” He said it was an incentive for the companies involved in exploration of gas in the country.

He said the gas company gave preference to the industrial consumers because it earned more revenues from them. “That is exactly why during last three years, incentives have been given to the industrial consumers.

Mr Lone said over 20 companies were involved in gas exploration in the country and Pakistan had a good rate of recovery as out of every three, one exploration turned out to be positive. While in the world this rate was one positive result out of 10 drillings.

He said a foreign firm would be starting exploration of oil and gas in deep-sea waters of Pakistan at a cost of $500 million and hopefully its results would come by the end of next year.

He said original recoverable natural gas reserves in Pakistan stand at 42 trillion cubic feet (tfc) while the cumulative production till now stands at 15 tfc. “Thus Pakistan still has a balance of 27 tfc of natural gas reserves and if we count the present trend of consumption of 900 million to one billion cubic feet of gas consumption per year, these are enough for 27 years,” he added.

Discussing gas production, reserves and projections in a presentation, Mr. Lone said there was no gap between supply and demand of gas till 2008. But if there would be no new discovery or import of gas, Pakistan would have to face a huge gap. He said in order to meet the demand there were many options like laying of gas pipeline from Iran to Pakistan and India. He said this would be beneficial in terms of meeting gas requirements of the country. Besides, Pakistan would earn $600 million as transit fee per annum. “Other option is laying gas pipeline from Qatar to Pakistan. But it would be expensive and difficult as it would have been to be laid through open sea and secondly as it would pass through the Gulf waters. Iran would never allow it,” he said.

He said the third option was to lay a pipeline from Turkmenistan-Afghanistan to Pakistan. However, it was also difficult due to unstable situation in Afghanistan.

He said they had proposed to the government that the company, which had expertise and manpower, could lay a pipeline from Iran to Pakistan for only $1.5 billion. Out of this only $300 million would be foreign exchange component and rest would be local component. “We are pushing the government for it and the proposal is under consideration.”

There is yet another project of converting coal into gas and a plant of coal gasification is being set up near Bhakkar using Makkarwal coal. He said that under this plan, coal would be utilized to feed gas to nearby towns or villages where this coal is present.

There is another plan of storing the gas and the SNGPL has found an empty field near Rawalpindi. Gas would be stored in this empty field during summer when there is less consumption and would be put on the system in winter when there is more demand.

Talking about the energy demand, he said natural gas was 43 per cent, oil 41 per cent, one per cent nuclear, 10 per cent hydel and 5 per cent coal. He said power plants had also gone on gas from furnace oil. “They are being provided 525 mmcfd of gas replacing 4.4 million tons of oil saving $500 million per annum.”

He said the captive power producers were also being provided gas but the government had fixed a quota for them. This is being provided to export-oriented industry. The company has urged the government to remove this quota condition. However, he said, had these units not located on the supply system, they would have to bear the expense of laying pipelines.

Earlier, LCCI President Yawar Irfan Khan read out address of welcome and highlighted various problems being faced by the industry.