Pakistan faces severe gas crisis due to 27pc less LNG procurement

Pakistan faces severe gas crisis due to 27pc less LNG procurement

ISLAMABAD   –  The country is expected to face severe gas shortage in December and January as it will procure up to 27 percent less LNG during these months as compared to the same period of previous years, it is learnt reliably here.

As per the official estimates, the country will procure 886 mmcfd LNG in December and 950 mmcfd in January 2022, which is up to 27 percent less than the imports during December 2020 and January 2021, official documents reveals.

Against the import of 12 LNG cargoes in December 2020, the government will procure 10 cargoes in December 2021.In case no emergency spot purchases are made, the total available LNG in December 2021 will be 886 mmcfd against 1200 mmcfd during the same period of the previous year. The country will import 10 LNG cargoes in December, instead of 12, as the state owned PLL received no bids for December 2021, and January 2022 spot purchase tenders. All the cargoes in December are coming from the long term contracts. When contacted regarding its LNG procurement during November and December, PSO replied in a written statement that “PSO does not have any ‘assigned quota’ of LNG cargos. We have long term contracts with defined annual quantities of cargos which are being scheduled as per the demand of downstream gas utilities. PSO will be importing 8 cargos in November and December each as per demand.” Similarly PLL will also import two cargoes from its long term contract. Unless no alternate arrangement for spot cargoes are made, the country is going to face enormous gas shortage during peak winter season, the source said. No one from PLL was available for comments.

Interestingly, the regasification capacity of both the terminals are more than 1260 mmcfd, however due to inability of the government to make spot purchases for December, the quantity of procured LNG is just 886 mmcfd, which is 70 percent of the installed capacity. When contacted an official of the one of the LNG terminals told the scribe that both the terminals can handle 12 to 13 cargoes per month. As per the data, in December against the demand of 4474 mmcfd 3757 mmcfd gas will be available, which is 717 mmcfd less than demand. Similarly in January 2022 the gas shortage will reach to 918 mmcfd as against the demand of 4683mmcfd the supply will be 3821 mmcfd.    In the last three years, the local gas production reduced by 234 mmcfd, while in December 2021, the supply of LNG is 314 mmcfd less than previous December. In January 2022 also the supply of LNG is 950 mmcfd which is less than previous January.

Citing the reasons for the expected severe gas crisis, the source said that the incumbent government has done nothing during last more than three years of its tenure  to increase the regasification capacity or construct new transmission line for the supply of RLNG. Only recently permission has been granted for the construction of new LNG terminals, while work on Pak Stream Gas pipeline has yet to start. Although the federal minister for Energy, in a media interaction, has claimed that the LNG supply has nothing to do with the gas shortage in the country, but interestingly the LNG based CNG stations are the first target of gas crisis and will be closed down from December 1, till January 15. The total shut down of gas supply to general industry (Non export) is also on the card.

The Sui Northern Gas Pipeline (SNGPL) has proposed, to bridge the supply demand gap on the company’s system within next three months (December 2021 to February 2022),  the company will require to divert RLNG worth Rs 92.147 billion in the system for the consumption of domestic and commercial consumers.

Till November, the cumulative RLNG diversion, to domestic and commercial sectors, cost Rs 102 billion to the government, while by the end of February 2022, the total RLNG diversion cost will reach to Rs 194.147 billion. In December 2021 the company will require to divert 361 mmcfd (worth Rs 29b), January 2022 the diversion will be 575mmcfd (worth Rs 42.373b) and for February 2022, it will divert 332 mmcfd of RLNG (worth Rs 22.907b) to domestic and commercial sectors.

However ruling out the possibility of providing the imported LNG to domestic consumers without proper legislation, the Energy Minister Hammad Azhar Sunday said “We have 2 gas circuits in operation in Pakistan. 70 percent is based on local gas and 30 percent on imported LNG. Both circuits are ring-fenced in pricing and supply. During winters a demand spike occurs in local gas circuit which cannot be plugged by imported LNG till WACOG legislation.”

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