Sunday, June 10, 2012

Comprehensive Energy Policy For Pakistan's Future

Since the middle of the 18th century, the Industrial Revolution has transformed the world. Energy-hungry machines are now doing more and more of the work at much higher levels of productivity than humans and animals who did it in pre-industrial era.  In recent years, the rapid growth in computers and mobile phones spawned by the Information  and Communications Technology (ICT) revolution has further increased demand for energy. Currently somewhere between 5-10% of  electrical consumption is for ICT and it's likely to continue to grow rapidly.

Energy Consumption:

Energy consumption in this day and age generally indicates a nation's level of industrialization, productivity and standards of living. Going by this yardstick, Pakistan's 14 million BTUs per capita consumption in 2009 indicates that the country has a long way to go to achieve levels comparable with the world average productivity signified by 71 million BTUs per capita as estimated by US Energy Information Administration for 2009.

Regional Comparison:

Although Pakistan's 14 million BTUs per capita energy use is ahead of Bangladesh's 6 million BTUs and Sri Lanka's 10 million BTUs, it is less than India's 18 million BTUs, and far behind China's 68 million BTUs and Malaysia's 97 million BTUs.

 Energy Costs:

Fossil fuels are currently the primary source of the bulk of energy used. Cost of producing energy from various fossil fuels ranges from $2-4 per million BTUs for coal to $19-20 per million BTUs from oil. Costs of energy from natural gas vary widely depending on the source. Cost of shale gas in the United States has plummeted to about $2 per million BTU recently, while Pakistan has signed agreements to purchase gas from Iran and Turkmenistan in the range of $10 to $12 per million BTUs. Cost of production of domestic natural gas is in the range of $2 to $4 per million BTU.

Impact on Economy:

Energy costs have had a huge impact on Pakistan's economy. Its heavy dependence on imported oil has been a big contributor to balance of payments crises in the past. In 2008, for example, the oil prices jumped from less than $50 a barrel to $150 a barrel and forced the country to seek IMF bailout. Pakistan oil import bill has increased from about $7 billion in 2007 to over $12 billion in 2011. Energy shortages have also put a significant dent in Pakistan's GDP growth.

Pakistan's Fuel Options:

If Pakistan could generate all of the 14 million BTUs of energy per capita from coal, the cost would be $28 to $56 for each person. Alternatively, the cost of using oil for the entire production would add up to about $280 per person, a significant chunk of Pakistan's per capita income of $1372 in 2011-12. The costs therefore range from a low of $28 to a high of $280 per Pakistani.

Energy Policy Suggestions:

As the nation develops and the energy demand increases, the policy makers have to try and produce as much of the needed energy at costs closer to the low-end of the range from $2 to $20 per million BTUs. Here are some policy suggestions for Pakistan's energy policy going forward:

1. Develop Pakistan's shale gas reserves estimated at 51 trillion cubic feet near Karachi in southern Sindh province. The US experience has shown that investment in shale gas can increase production quite rapidly and prices brought down from about $12 per mmBTU in 2008 to under $2 per mmBTU recently. Pursuing this option requires US technical expertise and significant foreign investment on an accelerated schedule.

2. Increase production of gas from nearly 30 trillion cubic feet of remaining conventional gas reserves. This, too, requires significant investment on an accelerated schedule.

3. Convert some of the idle power generation capacity  from oil and gas to imported coal to make electricity more available and affordable.

4. Utilize Pakistan's vast coal reserves in Sindh's Thar desert. The problem here is that the World Bank, Asian Development Bank and other international financial institutions (IFIs) are not lending for coal development because of environmental concerns.And the Chinese who were showing interest in the project have since pulled out.

5. Invest in hydroelectric and other renewables including wind and solar. Several of these projects are funded and underway but it'll take a while to bring them online to make a difference.

6. Curb widespread power theft, improve collection of electricity dues from consumers, and resolve spiraling circular debt to make Pakistan's energy sector attractive to domestic and foreign investors. 

Energy Conservation:

In addition to significantly increasing energy production, Pakistan needs to take prudent steps to conserve by promoting the use of energy-saving electric bulbs and machines. Concerns about the environment have propelled many developed nations to cut energy consumption in recent years.  For example, serious conservation efforts have reduced  Japan's 172 million BTUs per capita in 2009 down from 178 in 2005, Germany is at 163 million BTUs in 2009 down from 175 in 2005, and the United States is down to 308 million BTUs in 2009 from 340 million BTUs per person per year in 2005.


Instead of addressing different pieces of the energy puzzle in an ad hoc fashion under multiple ministries and bureaucracies fighting turf battles,  Pakistani policy makers need to look at the big picture for the sake of the nation's future. Nothing short of a holistic approach with a comprehensive energy policy formulated and implemented under a competent and powerful energy czar will do.

Related Links:

Haq's Musings

US EIA International Data on Per Capita Energy Consumption

Affordable Fuel for Pakistan's Electricity

Pakistan Needs Shale Gas Revolution

US Census Bureau's International Stats 

Pakistan's Vast Shale Gas Reserves

US AID Overview of Pakistan's Power Sector

US Can Help Pakistan Overcome Energy Crisis

Abundant and Cheap Coal Electricity

US Dept of Energy Report on Shale Gas

Pakistan's Twin Energy Crises

Pakistan's Electricity Crisis

Pakistan's Gas Pipeline and Distribution Network

Pakistan's Energy Statistics

US Department of Energy Data

Electrification Rates By Country

CO2 Emissions, Birth, Death Rates By Country

China Signs Power Plant Deals in Pakistan

Pakistan Pursues Hydroelectric Projects

Pakistan Energy Industry Overview

Energy from Thorium

Comparing US and Pakistani Tax Evasion

Pakistan's Oil and Gas Report 2010

Circular Electricity Debt Problem

International CNG Vehicles Association

Rare Earths at Reko Diq?

Lessons From IPP Experience in Pakistan

Correlation Between Human Development and Energy Consumption


Anonymous said...

Dr. Haq,

This is an excellent article. Pakistan certainly needs lots of investment in the energy sector, and foreign direct or indirect investment certainly has a role to play.

However, I would like to point out that in all the other fast growing Asian economies, the DOMESTIC component of investment far, far, far exceeds any FOREIGN investment component.

Here are the conventional formulae to grasp--
1) Gross Domestic Savings Rate = Total Domestic Production - Total Domestic Consumption
2) Gross Savings Rate = Gross Domestic Savings Rate + Aid & Remittances
3) Gross Investment Rate = Gross Savings Rate + Current Account Deficit
4) Gross Fixed Investment Rate = Gross Investment Rate - Inventory & Valuables

As you can see DOMESTIC Savings is the KEY sustainable factor that decides how much physical investment is possible. The foreign investment component shows up in the Current Account Deficit term in (3) and is usually a small part of total physical investment. If foreign investment becomes disproportionally dominant, then, as history shows, that it leads to economic and financial instability. This is why all the other Asian countries try to manage its proportion such that it never dominates total investment.

You can see for yourself--

The common thing in all these other rapidly developing Asian countries is the OVERALL TREND of increasing Domestic Savings leading to increasing Investment.

All these countries seem to be following a PLAN to first increase domestic savings rates to > 30% of GDP and invest heavily in development of energy, infrastructure, industry, health and education. As you can see, while all of them welcome foreign investment, none of these countries are overly dependent on foreign investment as most of their Investment comes from Domestic Savings.

Now compare the above countries to our own country:

As you can see, our country does not even seem to have a plan. Our boom years are accompanied by low savings and a horrific over-dependence on foreigners. In fact, our trend is more similar to countries in Sub-Saharan Africa:

We are nothing like the other fast growing Asian countries. If we are indeed following some "model", then it looks more like an African-Latin model than any version of any Asian Model. This worries me because there is not one single example of a poor, Third-World country that ever on the basis of foreign investment alone. And I fail to see how Pakistan could prove to be the sole exception.

I would like to suggest that you re-focus your top-notch analytical abilities on the core issue facing our country: HOW can we get Pakistanis to SAVE more such that our Gross Domestic Savings Rate INCREASES CONSISTENTLY over the next 10-20 years so to match the sustainable growth path of all the other Asian Countries.

Here is a start from our fellow-Pakistani blogger (he is actually an economist) on this very subject-

Thank you.

Riaz Haq said...

Here's an ET story on Punjab's plans to generate electricity:

The business community of Punjab, while praising the provincial government for allocating Rs10 billion for energy projects, has underlined the need for some concrete measures in this regard before starting any joint ventures between the government and private sector.

They have even offered their cooperation to the government as energy is the most critical issue of the industry, which has been battered by power and gas shortages.

“Though the provincial government has taken this step too late, we still appreciate them for taking the initiative to save the industry to some extent,” said Kashif Younis Meher, Acting President of the Lahore Chamber of Commerce and Industry (LCCI).

Meher agreed to the idea of public-private partnerships in developing coal-gasification plants.

According to budget documents, the provincial government has chalked out a policy to install coal-fired plants at six different industrial estates. Each plant will produce 50 megawatts of electricity and provide uninterrupted power supply to industries. Special incentives will be given to those who will invest in this project.

The government has also claimed to have completed feasibility study on 10 hydropower projects at a cost of Rs29 billion, which will generate 80 megawatts. It plans to complete five projects through public-private partnerships while the remaining will be undertaken by the government with the help of Asian Development Bank.

Besides these, the Punjab Power Development Board has started research work on 54 different projects, which will generate 688 megawatts of electricity.

Anonymous said...

Riaz another lost decade in the offing 2007-2012 is already the half way mark.

Riaz Haq said...

Here's World Bank economist's assessment of Pak competitiveness, according to The News:

Pakistan needs to improve its competitiveness for rapid industrialisation, which offers it a range of potential benefits, including more jobs creation, tax revenues and economic growth, said Dan Biller, World Bank’s lead economist on South Asia Region for Sustainable Development.

Addressing businessmen in Lahore, he said that the GDP growth of Pakistan in 2011 was only 24 percent, while China grew at 9.2 percent, India 7.8 percent, Sri Lanka at eight percent, Indonesia 6.4 percent and Malaysia 5.2 percent.

Among all these countries, Pakistan has the largest agricultural share of GDP and smallest industrial share, he said.

Biller said that lower industrialisation in Pakistan against other regional countries is due to its lower competitiveness, adding that Pakistan ranks poorly on the Global Competitive Index of the World Economic Forum. Pakistan’s institutions are weak, scoring 3.4 points out of 10, he said, adding that Malaysia score 5.2 points, China 4.3 points, India 3.8 points, Indonesia 3.8 points and Sri Lanka scored 4.2 points on quality of institutions.

Biller said that Pakistan’s score in infrastructure was dismal 2.8 points, while Malaysia scored 5.5, China 4.3, India 3.6, Indonesia 3.8 and Sri Lanka scored 4.1 points.

Similarly, he said, Pakistan’s score was the lowest among these countries in macroeconomic stability, health and primary education, higher education and training, goods market efficiency and labour market efficiency. Only in the market size, Pakistan had a better score than Sri Lanka, he added.

He also said that Pakistan has the most expensive and least-efficient port systems in the region, adding that the handling charges at the Karachi Port Trust are $110 per ton. India charges $80 per ton, Sri Lanka $150 per ton and Hong Kong charged $140 per ton. Ship charges of 2,800 tons are $30,000 at KPT, $5,500 in Sri Lanka, $6,000 in Hong Kong and $25,000 in the Indian port.

He said Pakistan handles 55 containers per hour, Sri Lanka 70 per hour, Hong Kong 100 per hour and India 65 per hour. The Customs authorities in Pakistan examine 10 percent containers physically; Sri Lanka and Hong Kong less than five percent, while physical examination of containers in India is also high, but less than 100 percent, he said, adding that Pakistani ports lack water depth, which is 10.5 feet at KPT, 13 feet in Sri Lanka, 14 feet in Hong Kong and 12 feet in Indian ports.

The World Bank economist said that Pakistan provides relatively low access to services that impeded foreign investment. Pakistan has two fixed telephone lines per 100 people against 22 in China, 2.9 in India, 17.2 in Sri Lanka, 15.8 in Indonesia and 16.1 in Malaysia.

Around 99.4 percent of the population in China has access to electricity; it is 66.3 percent in India, 76.6 percent in Sri Lanka, 62.4 percent in Pakistan, 64.5 percent in Indonesia and 99.4 percent in Malaysia, he added.

The roads and power generation are number one infrastructure concern for the businesses worldwide, Biller said, and advised Pakistan to reduce the transport cost that is critical to competitiveness.

In addition, the state should ensure safe mobility and enhance regional connectivity. Pakistan’s foreign market access potential is at least 4.5 times higher than the United States, he said, adding that its current market access is only 4-9 percent of the United States.

Pakistan’s market share in total global exports is less than half percent and remained stagnant since 2000. India, on the other hand, increased its global export share from 0.6 percent in 2000 to 1.5 percent in 2010, he added.

Riaz Haq said...

Here's a Daily Mail piece on the economic history of the world since Jesus:

A stunning chart that shows the entire economic history of the world's most powerful countries over the past 2,000 years has been released by investment bank JP Morgan.

Viewed as a whole, the graph shows the creeping restoration of Asian economic supremacy as the rest-of-the-world catches up to the West and its levels of industrialisation.

Charting the globe's 10 major powers since the time of Jesus, the graph can be broken down by simply applying a cut off point at around the 1800 AD mark.

That was the birth of the Industrial Revolution in the U.K. and when taken into account, everything to the left of that mark can bee seen as economic power through sheer size of population and to the right is the effect of mass production on a country's economic output.

One feature of the simple graph is to show that up until around 1500 AD India and China accounted for between 50 and 60 percent of the world's economy until the late 18th century when the Industrial Revolution rendered countries with large populations, just countries with the largest populations.

In 1 AD, China had a population of almost 60 million people, while the United States had a population of 680,000.

It took the United States 1800 years to overtake China's economic output.

But by 1950, even though the U.S had a population three times less than China, it's economic output was three times as great.

Additionally, in 1913, China had a population of 437 million and the U.K. had a population of 45 million, but their economic output was almost identical.

Indeed, when the graph is broken down into its constituent parts, the analysis of what happened in Europe and later the United States shows that the Western lead was taken even before 1800.

For the majority of human history the most important factor in economic growth was the relationship between births and deaths.

If there were too many births then there was not enough food to go around and without mass production techniques people went without until there was starvation or disease.

After a higher death rate, a stable supply of food was re-established, goods were shared among a smaller group of people and everyone felt and became richer until the cycle occurred again.

However, between 1000 AD and 1500 AD, wages, or GDP per capita had started to slowly rise as small economies of scale were made in agrarian organisation and moderate technological advances were made which improved the quality and length of life.

If a similar graph is opened up to show the world from Jesus to Napoleon, the slow building growth especially of Europe is clear to see, even without factoring in the Industrial Revolution.

However, if the graph is expanded to show the world from 1500 to World War I then the effect of mechanisation on the planets economic growth is clear.

Theories about why the Industrial Revolution occurred in the U.K. and then Northern Europe include the dense, localised population, easy availability of natural resources and the mild climate that exists around the North Sea and the U.K. for cotton spinning.
As the world escaped the trap foreseen by Thomas Malthus of a rising population never matched by food production, population and GDP exploded.

The industrial revolution changed the Malthusian Trap leading to a situation today where the U.S. accounts for five percent of the world population and 21 percent of its GDP whereas Asia (minus Japan) has 60 percent of the world's population and only 30 percent of its GDP.

Riaz Haq said...

Here's an ET story on Russian interest in energy projects in Pakistan:

Pakistan has agreed to award contracts without bidding for multi-billion-dollar Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects to Russia, which will also extend financial assistance.

However, in an understanding reached with Russia, Pakistan made it clear that it would award the contracts on government-to-government basis only. Private Russian firms will not be entertained.

“Pakistan’s government will ask the cabinet to waive public procurement rules for award of pipeline contracts to Russia,” a participant of the meeting of Pak-Russia Joint Working Group on Energy told The Express Tribune.

A 15-strong delegation of Russia, led by the deputy minister for energy, participated in the meeting held in Islamabad on Wednesday.

The two sides would sign a memorandum of understanding (MoU) in next two to three months to move ahead with the projects, he said. Third meeting of the joint working group will be held in Moscow in 2013.

The government has already floated tenders, inviting bids for giving contracts for construction and pipeline procurement for the IP project, costing $1.5 billion.

“Russian energy giant Gazprom may also participate in bidding for the engineering, procurement and construction (EPC) contract, which gives an edge to the company that will pledge financing as well,” a government official said, adding Moscow also agreed to finance the rehabilitation of Guddu and Muzaffargarh power plants.

According to sources, Pakistan will submit a draft of agreement for financial and technical assistance for the IP pipeline in 15 days. Though the Russian side assured financial assistance for the pipelines, they did not indicate the amount.

In a preliminary meeting held in Islamabad on Tuesday, the Russian authorities offered cooperation in gas import through pipelines and the Central Asia South Asia (CASA) electricity import project, which would bring electricity from Central Asian states.

Besides Russia, Iran is also willing to provide $250 million on government-to-government basis for constructing the IP pipeline. Pakistan wants $500 million for the pipeline.

Iran has also come up with a plan to lay Pakistan’s portion of the pipeline based on a mechanism called ‘supplier’s credit’, which Pakistan will repay after two years.

Pakistan is also seeking China’s help for the IP pipeline. In a recent visit to Beijing, President Asif Ali Zardari and Adviser to Prime Minister on Petroleum Dr Asim Hussain succeeded in convincing the Chinese leadership to take part in bidding for the construction of the pipeline.

Electricity import

In addition to supporting the gas pipelines, Russia has also expressed its willingness to cooperate in import of 1,000 megawatts of electricity from Central Asia. Leading financial institutions including the World Bank and Islamic Development Bank have committed financial support for the power import project.

Construction of a cross-border transmission line is being considered for creating a dedicated link aimed at supplying surplus hydropower during summer months from Kyrgyzstan and Tajikistan to Pakistan.

Riaz Haq said...

Here's an Asia Times story on power outages or loadshedding in India:

Power outages in India, now enduring the peak demand of hot summer months, are running to as long as eight to 10 hours in northern cities, including the capital, and while large parts of the country continue to be off grid rural areas with access to electricity can be without power for over 20 hours at a stretch.

The Uttar Pradesh government this week ordered that electricity be cut off at malls and shopping centers in the evenings, before apparently backtracking in the face of angry traders who put up defiant protests, clashing with police.

Billions of dollars have been invested by power producers to create new capacity over the past few years, but numerous factors linked to populist politics, over-zealous implementation of

environment norms, transmission losses, pilferage, free power to agriculture and bureaucratic tardiness have resulted in under utilization of existing capacity. In short, India can produce more power if it wants to, but is unable to.

One bottleneck is coal, the majority of which is mined by state-owned Coal India Ltd (CIL). The bulk of Indian power is produced at coal-fired thermal plants, but CIL has not been able to increase output to meet the country's needs.

The environment ministry has declared many of the company's mines to be in "no go" zones, while the bulk of CIL's coal supply comes from areas in eastern India where Maoist rebels are active.
It also has to rely on another government institution, the slip-shod Indian Railways, to move the coal. Coupled with in-built delays and indecision within the government, CIL's output growth has been near stagnant over the past three years, with the result that more than one-third of India's coal-based thermal power plants are running on critically low levels of fuel stocks this season.

Estimates suggest that if CIL continues to falter in supplying coal, India's target for adding new power capacity for the 2012-17 period will need to be slashed to 45,000 megawatts from the proposed 76,000 MW. New Delhi has already scaled down its capacity addition target for the next five years by 25,000 MW to 75,000MW from conventional sources.

The coal ministry, meanwhile, has projected that India's annual coal demand could rise over 40% by March 2017 to nearly 1 billion tonnes while domestic coal output may increase by less than 30%, leaving a gap of around 300 million tonnes that will have to be met by imports.

India's power woes do not stop there. Electricity generators such as NTPC, Tata Power and Adani have the option of buying coal from the likes of Indonesia, Africa and Australia, but overseas prices are too steep compared with the artificially depressed domestic prices set by the government.----------
As India does not produce enough of its own oil, the bulk of the diesel is imported, draining foreign exchange, creating balance of payments problems and weakening the rupee - which drives up the cost of imported products such as oil and coal.

The government continues to subsidize diesel to protect among others the transport sector - which adds to the ever-rising fiscal deficit, which again helps to fuel inflation. It is no surprise that rating companies such as Standard & Poor's have cautioned that India's investment climate could be pegged at "junk'' levels.

Meanwhile, in the sweltering streets and fields of India, the poor die of heatstroke, a savage reminder that the structural infirmities built into power generation ostensibly to protect the poor are actually harming the impoverished the most. While India pushes to increase its use of renewable and nuclear power, it is the thermal power energy chain that needs some serious attention and reform.

Riaz Haq said...

Here's a Daily Times report on Punjab's plans to deal with power crisis:

The Punjab government has finalised plans to install coal energy plants in industrial estates across the province through public-private partnership, Chief Minister Shahbaz Sharif said on Thursday.

Presiding over a meeting at his Minar-e-Pakistan tent office to review the pace of development of energy-related projects in the province, the CM said that provision of relief to the people, who are undergoing agonising load shedding, poverty and inflation, was of utmost importance.

He said that the government had chalked out a plan to provide solar panels to poor families and biogas units to small farmers for running their tube wells. He said that the programme of providing solar panels to poor families would be initiated from south Punjab. “The solar panel will run one fan and two electric bulbs,” he said, adding that

Shahbaz said that the present energy crisis had adversely affected all sectors, and had deprived citizens of their sleep and peace. “Therefore, under these circumstances, provision of immediate relief to the people has become essential,” he said.

The CM said that provision of solar panels to the poor would be made through transparent balloting, and similar method would be adopted for distribution of biogas units among small farmers.

He directed the officials concerned to evolve a methodology for distribution of solar panels and biogas units so that the programme could be implemented at the earliest.

He also told them to hold negotiations with reliable and best companies for the purchase of solar panels. He disclosed that the quota of south Punjab with regard to provision of biogas units to small farmers would be 10 percent higher and, initially, 1000 biogas units would be distributed.

Shahbaz said that a programme had also been evolved to set up coal-energy plants of 50MW in the industrial estates with public-private partnership.

Earlier, Energy Secretary Jehanzeb Khan informed the meeting about the progress on coal-related energy projects. The investors present in the meeting also showed interest in make investment in the energy sector.

Riaz Haq said...

Here's an Indian Express story on Gurgaon power cuts:

Morning traffic was brought to a standstill on Tuesday by Gurgaon residents protesting acute shortage of power and water.

The city has been battling severe power and water crisis, made worse by the delay in arrival of monsoon and the heatwave.

As per official estimates, the power demand in the city has surpassed previous records and continues to rise.

On June 28, the demand was to the tune of 1,528.33 lakh units (the highest demand for one day), against 1,127.45 lakh units on the same day last year, said Amit Kumar Agrawal, Managing Director of Dakhshin Haryana Bijli Vitran Nigam (DHBVN).

To rein in the shortfall, the Nigam has announced that starting Wednesday, all industries will be given just eight hours of power. They will be supplied power from 8 am to 12 pm and 3 pm to 7 pm.

Residents, on the other hand, blame the sharp rise in demand to the mushrooming of small guesthouses in buildings meant for a single family.

“In front of my house there is a 120 sq yard area, which has been turned into living quarters for 20-odd families. The power demand will automatically shoot up,” said Anthony Cruz, a resident of DLF Phase-III.

Residents of both old and new Gurgaon claim outages stretch to as long as 16 hours a day. This, in turn, has affected the water situation in the city.

“The Basai water plant is supplying very little water, while the private water plant is almost dry. Power cuts leads to non-storage of water and residents have to buy water. We shell out Rs 800 for around 5,000 litres of water,” said Cruz.
DHBVN Superintendent Engineer Sanjiv Chopra told Newsline, “There has been a 20-22 per cent shortfall in power supply in Gurgaon. While the demand is around 200 lakh units, we have been able to supply 150 lakh units. Sometimes the supply went down to 130 lakh units. We are trying to make the situation normal.”

Power officials said supply could dip further as Yamuna Nagar units I and II of 300 MW each and Hisar unit-I of 600 MW are closed. Hisar unit-II of 600 MW and Jharali (Jhajjar) units I and II of 500 MW each had tripped, resulting in sharp reduction in availability of power in the state.

About 150 MW power from Lanco Amarkantak Project is also not available due to non-availability of coal, officials said.

Riaz Haq said...

Here's a News report on CNG growth in Pakistan:

Pakistan has become the third country in the list of countries with the most natural gas vehicles, as over 26 percent of the vehicles on the roads consume natural gas, suggests the data of Natural Gas Vehicles (NGV) Europe.

The NGV Global suggests that Pakistan has observed the fastest growth in natural gas vehicles since the year 2000 as the number of gas vehicles has surged to around 3.5 million from less than 100,000 vehicles back in the year 2000. While Pakistan is the country with the highest number of CNG refilling stations in the world.

Former CEO of OGDCL, Zahid Khan said that independent seminars and analysts consider CNG to be a burden on the system.An official at the Ministry of Petroleum said that from 2005-06 to 2010-11, CNG consumption increased at the rate of 24 percent, the highest increase witnessed in any sector.

“With gas production facing a decline, this growth is at the expense of other value-added sectors like fertilizers, the general industry and the power sector,” he said.With growing car ownership and CNG prices being kept at 55 percent of petrol prices, the CNG monster is fast eating into the legitimate gas share of other sectors. Commenting on the investments made by the CNG sector, the official said that many CNG stations were initial investments based on a government incentive.

However the initial cost to set up a CNG station is approximately Rs55 million including Rs.31 million of the land cost and on average, the payback period is three years. Based on current CNG prices, most of the CNG stations have already made significant profits. The industry people say that when deciding on gas allocation, the government should consider the opportunity cost of the allocation of the gas to different sectors.

Fertilizer, textile and other manufacturers are value added industries producing goods locally with capital and equipment, which is already present in the country and this reduces the import of goods and increases the exports of locally manufactured items.

CNG, on the other hand, involves the substitution of one fuel by another.“Keeping energy prices in the form of CNG artificially low, encourages energy inefficiency. But energy spent using petrol for example, is likely to be less as the efficiency of use will be higher. Hence total expenditure on transport will not increase proportionately if CNG is withdrawn,” industry sources said. “The government should consider the fact that petrol is a perfect substitute for CNG, but there is no substitute available for fertilizer plants that use gas as a raw material,” he added. The ministry official said that the CNG sector was stating inaccurately that the government was imposing Rs141 cess tax per mmbtu on CNG.

In reality, in the first official communication on Cess dated Dec 15, 2011, the Cess for CNG was announced to be Rs 141/mmbtu for Region-1 (KPK, Baluchistan, Potohar Region) and Rs 79/mmbtu for Region-2 (Sindh, Punjab excluding Potohar Region). Later on it was reduced to Rs 84.6/mmbtu for Region-1 and Rs 47.4/mmbtu for Region 2 after the CNG associations went into negotiations with the government of Pakistan. Whereas, the fertilizer industry pays Rs 300/mmbtu.

Riaz Haq said...

Here's a Bloomberg report on PSO's tender for crude oil purchase:

Pakistan State Oil Co. (PSO) is seeking to buy 2 million metric tons of high-sulfur fuel oil over one year starting in August, according to a notice on its website.

The state-owned company is Pakistan’s largest fuel retailer. Details of the tender are as follow:

Product: High-sulfur fuel oil
Quantity: 2 million tons
Delivery: One year from award of contract
Port: Fauji Oil Terminal (FOTCO), Karachi
Offers close: Aug. 7, 10 a.m. local time
Offers valid: Aug. 18, 9 p.m. local time

Riaz Haq said...

Here's a Bloomberg report on FDI in Pakistan's energy sector:

Pakistan may receive the most overseas investment in four years as companies set up wind and coal generation plants, helping curb the nation’s record energy shortage, a government agency official said.

“Pakistan serves as the gateway to Iran, central Asia and even India so we have a lot of potential to attract foreign investment,” Mohammad Zubair Motiwala, chairman, Sindh Board of Investment, said in an interview in Karachi today. “Energy is a field where an investor can come and really make money.”

Pakistan needs to increase overseas investment to help meet an economic growth target of 4.3 percent in the year that began July 1. Power outages lasting as long as 18 hours a day have led to factory shutdowns and riots across the nation.

Foreign direct investment may rise to $2.5 billion in the year that began July 1, mostly in energy, said Motiwala, 56. That would be the highest since the 12 months ended June 30, 2009, when overseas companies invested $3.7 billion. Overseas investment declined 50 percent to $813 million in the year ended June 30, according to the central bank.

Norway’s NBT AS and Malaysia’s Malakoff Corp. Bhd signed an agreement with Pakistan yesterday to build a $600 million wind power plant in the southern province of Sindh that will generate 500 megawatts a day within 18 months, Motiwala said.

South Korea, China and India are among the countries “most interested” to invest in Pakistan, he said.

Pakistan’s $200 billion economy faces the fastest inflation in Asia, an insurgency on the Afghan border and reduced aid flows. Political tension has increased after a dispute between civilian leaders and the judiciary led to Yousuf Raza Gilani’s ouster as prime minister last month.

Riaz Haq said...

Here are two reports of rising profits at Pakistani energy companies:

1. PSO hits trillion rupees in sales, according to Dawn:

Board of Management of Pakistan State Oil (PSO) meeting Thursday at Karachi reviewed performance for year ended June 30, 2012, in which it achieved a major milestone by becoming Pakistan’s first company with revenues exceeding a trillion rupees.

For the year ended June 30, 2012, PSO’s revenue exceeded Rs1,199 billion as compared to Rs 975 billion in FY11, representing 23 per cent growth.

It announced after tax earnings of Rs9.06 billion in FY12 as compared to Rs14.78 billion in last year.

Profitability was severely impacted by rapid devaluation of Pak rupee along with reduction in inventory gains. These losses absorbed improvement in margins of Furnace Oil and HSD along with recovery of financial income from power sector.

Earnings in FY12 are lower as compared to FY11 due to a deferred tax adjustment made in previous year amounting to Rs2.29 billion which had resulted from reinstatement of rate of turnover tax by tax authorities.

Further, financial cost resulting from accumulation of highest ever receivables continue to constrain both profitability and liquidity of PSO.

In period under review, industry’s volumes for Black Oil reduced by 8 per cent, whereas, White Oil grew by 4 per cent reflecting increase in PMG consumption of 22 per cent while a decline of 1 per cent was recorded in HSD demand.

In spite of reduction in market size of HSD, PSO has been able to increase its market share from 54.9 per cent to 56 per cent. It also continued its overall domination of market with its share in Black Oil and White Oil segments standing at 78.1 per cent and 55.1 per cent respectively, thereby contributing to an overall market share of 65.4 per cent.

Based on this performance, the company’s Board declared a final cash dividend of Rs2.5 per share in addition to already paid interim dividend of Rs3 per share.

2. OGDC profits rise 53%, reports Platts:

Pakistan's largest exploration and production company, Oil and Gas Development Company Ltd's, net profit rose 53% to Pakistani Rupees 96.9 billion ($1.03 billion) in its 2011-12 fiscal year (July-June) from 63.5 billion in 2010-11, OGDCL announced Thursday.

OGDCL's sales revenues in 2011-12 rose 27.7% to Rupees 197.8 billion from Rupees 155.6 billion, the company said in a statement to the Karachi Stock Exchange.

The company's exploration expenses fell 39% to Rupees 4.047 billion from Rupees 6.621 billion the previous fiscal year. Financing costs rose 15.7% year-on-year to Rupees 1.718 billion in 2011-12 from Rupees 1.484 billion.

"Non-payment of gas bills from state-run companies forced OGDCL to borrow more to pay its debt, creating financial difficulties," said Nauman Khan, research analyst at Karachi-based brokerage Topline Securities Ltd.

Royalty payments in 2011-12 rose 30.6% and operating expenses were up 4.2% to Rupees 23.12 billion and Rupees 34.37 billion respectively, the statement said.

Pakistan's oil and gas sector has been caught in a spiral of circular debt since mid-2008, with state-held utilities defaulting on payments to oil marketing companies, which in turn are unable to pay refiners their dues, which then have trouble financing crude oil purchases and running plants.

The total value of outstanding dues currently amounts to around Pakistan Rupees 425 billion, and has also affected the liquidity of local exploration and production companies, restricting drilling activity.

Riaz Haq said...

Here's a BR story on massive Rs 1.2 trillion subsidy to power sector in last 4 years:

Prime Minister Raja Pervez Ashraf has said that the government has provided Rs1,200 billion subsidy on electricity over the past four years. Moreover, he added, the government initiated short-, medium- and long-term projects to bridge the demand-supply gap.

Addressing a function organised in connection with Independence Day celebrations here on Tuesday, the Prime Minister highlighted the PPP-led coalition government’s performance over the past four years, criticised the previous government and said that it was responsible, especially for the energy crisis and security situation in Balochistan.

Raja Pervez Ashraf also acknowledged that people were also facing problems because high inflation and unemployment. He said that the government had provided subsidy to the people through Utility Stores Corporation (USC) to minimise their problems.

Raja Pervez Ashraf said that the government had “inherited energy problem” but after coming into power had been making serious efforts to address it.

According to him, the government had added more than 3,500 megawatts of electricity in the national electricity network.

“We have initiated short-, medium- and long-term projects to bridge the demand-supply gap. We are working for quick completion of these projects,” he added.

The Prime Minister said that to address the grievances and complaints of the provinces about unequal electricity distribution, the Council of Common Interests (CCI) had formed a special committee to submit suggestions in this regard.

The government, he said, had also decided to exploit 175-billion-ton coal reserves in Thar on a fast-track basis for electricity generation.

He said that the size of the Public Sector Development Programme (PSDP) had been increased from Rs416 billion to Rs873 billion over the past four years and remittances had crossed $13 billion mark....

Riaz Haq said...

Here's a Power Engg report on inefficient electricity generation in Pakistan:

A recent research study by Arshad H Abbasi, advisor Water and Power, Sustainable Development Policy Institute (SDPI) highlights inefficient electricity production and chronic line losses as the major reason for an energy crisis in Karachi Electric Supply Company (KESC).

The only ways out of this crisis, the report suggests, is to invest and buy affordable electricity from hydro power, improve fuel efficiency of power plants and introduce 'smart grid' with advanced metering system, said a press release on Friday.

The report 'Pakistan Power Outlook: Appraisal of KESC after Privatisation' underpins the causes of chaotic energy situation in Pakistan while discussing KESC as a case study. It is the first ever study that comprehensively assesses the performance of KESC since its nationalisation in the early fifties.

The report highlights that KESC has been given huge amounts of subsidy even after privatisation, which distorts the purpose of privatising the utility, which was to reduce the burden on government of Pakistan.

The report says that thermal power plants in Pakistan, particularly of KESC, operate at extremely low efficiency and consume very high quantity of fuel to generate per unit of electricity.

KESC takes 11 to 18 cubic feet of gas to generate one KWh of electricity whereas plants of other companies such as Uch Power, Saif power and Orient Power take only 7.37, 7.47 and 7.56 cubic feet of gas respectively for generating one unit.

On regional level, when gas consumption is compared with thermal plants of Bangladesh, the consumption of KESC was found to be almost double. "Control of fuel costs, exercised through benchmarks alone could help substantially reduce or even eliminate the subsidies that government has to pay for reducing tariff to a politically acceptable level," the report added.

One of the recommendations stressed in report was to go for cheap and green hydro and wind power projects which are holded up due to lack of investment. "Dams like Bunji, Dasu, Lower Spat, Kohala and Tarbela 4th extension are capable of adding 15631 MW into the system.

The feasibility studies of most of these projects have been completed but the development is stalled or slowed down due to lack of fund and inefficiencies within the departments," report says.

The report calls on KESC and concerned authorities to invest and buy electricity from these hydro power plants at minimal cost instead of purchasing it from independent power producers (IPPs) at very high costs.

Currently, KESC is purchasing electricity on average at the rate of Rs8/KWh to Rs16/ KWh, which is very high as compare to Rs0.37/KWh obtained from hydro power plants with minimal wheeling charges by National Transmission and Despatch Company (NTDC). The report says, increased dependency on fossil fuel is the fundamental cause of present energy crisis and the best option available is to skew the generation mix with the renewable energy resources.

The findings, conclusions and recommendations of the report are equally applicable to all thermal power plants of the country. "These thermal plants are the backbone of our electricity system with the capacity of generating almost 70 percent electricity," it says...

Riaz Haq said...

Here's a Washington Post piece on India's thirst for energy:

Like China two decades ago and the United States in 1950, India stands on the cusp of transformational economic and social change, a jumping-off point at which the demand for electricity is about to explode.

Its economy and population are among the fastest growing in the world, and it has ambitious and energy-intensive plans to develop its infrastructure and industrial base. But business leaders are crying out for uninterrupted power supplies, and a third of India’s population is not even connected to the national grid.
Every modern, industrial society in history has gone through a 20-year period “where there was extremely large investment in the power sector, and electricity made the transition from a privilege of an urban elite to something every family would have,” Varro said. “India is right now just at that jump point.”

Whether it succeeds in meeting that demand could be the single most important determinant of India’s economic prospects over the next two decades, one of the main factors that will decide whether the country can continue to pull hundreds of millions of people out of poverty and realize its ambitions to be a 21st-century economic powerhouse.
But even if India finds the fuel it needs to power its generators, it is not clear how it will pay for the electricity they produce.

State electricity distribution companies across India are mostly bankrupt, forced by their political masters to give power away — free to farmers to run water pumps to irrigate their land, and at below-cost prices to everyone else. Theft and losses of power amount to 28 to 30 percent of output, further bleeding the distributors of resources.

Nationally, separate ministries for coal, gas, power and renewable energy routinely fail to coordinate.

“Policymaking in the energy sector is rather fragmented, and we really don’t have a forward vision,” said Rajendra Pachauri, who won the Nobel Prize in 2007 for his work as head of the Intergovernmental Panel on Climate Change.

Pachauri forecasts that if India continues on its path of “business as usual,” it will have to import unimaginable, and unfeasible, amounts of coal and oil in two decades.

A failure to invest properly in researching and developing renewable energy also threatens environmental ruin. “India can’t possibly continue on the path we are on,” he said.

Charles Ebinger, director of the Energy Security Initiative at the Brookings Institution in Washington, said the difficulties that India faces in meeting its rising energy demand “would pose a serious political challenge for a well-run government — and that certainly isn’t the case here.”

He said the country could struggle to hold its own against other emerging economies, including Brazil, Russia, China and South Africa, countries that with India constitute what is known as the BRICS group.

“If I had to bet, I would say there is a greater possibility of India failing to meet the challenge than of meeting it,” Ebinger said. “You will see India slip down, out of the ranks of the fast-growing BRICS emerging markets, and you will see more political disturbances when energy fails.”

Hopewins said...

This is a nice graph you have published:


But why stop at 2005? Why not link the most current data from World Bank?

GAS % is DOWN, OIL % is UP:

Where are those "super-huge coal reserves in Thar"? Why are they still not doing anything after all these years?

Hopewins said...

Have you finally understood the evil plan that the cunning Baniyas are hatching against our country?

They saw that we have very low savings and are very cleverly using their high savings advantage to surround us from all sides and then trap us into quiet obedience and helpless servitude.

Do you now see what they are trying to do? Do our thick Paindoos in Pindi & Aabpara understand the strategy of the baniya who smiles even as he nervously clutches his ragged dhoti? Can you appreciate the grave danger our country is in? Our ghairat itself is at stake.


Dr. Haq,

I have trying to explain to you that the Cunning Baniyas have a policy-driven long-term strategic plan.

Having seen the graphs (below) that I had sent you once before:

(1) Do you now understand what they are trying to do?
(2) Do you now understand their plan?
(3) Can you see how devilishly cunning it is?
(4) Can you appreciate its diabolical nature?
(5) Have you understood its strategic implications for Pakistan?

Do you now comprehend what I mean by "ominous signs"?

We must move beyond the over-analyzed blog-articles on FDI in Fat-Burgers, Halal Pizzas, Cows & Buffaloes, Mango-Lassi Factories et cetera. We need to focus on core issues and avoid falling into the pitfall of superficial analyses of mundane consumption trends.

Thank you.

Riaz Haq said...

HWJ: "Do you now comprehend what I mean by "ominous signs"?"

No, I don't. The bottom line is that the energy consumption per capita in both India and Pakistan is growing very slowly and currently at 14-15 million BTUs, far below the world average of 70 million BTUs. It requires more attention, planning and investment to improve the productivity of ordinary people.

HWJ: "We must move beyond the over-analyzed blog-articles on FDI in Fat-Burgers, Halal Pizzas, Cows & Buffaloes, Mango-Lassi Factories et cetera. We need to focus on core issues and avoid falling into the pitfall of superficial analyses of mundane consumption trends."

There is nothing superficial about growth in per capita production and availability of something as basic as food. Rising consumption by growing middle class represents real progress on the ground for the real people.

Hopewins said...

RIAZ HAQ: "No, I don't. The bottom line is that the energy consumption per capita in both India and Pakistan is growing very slowly and currently at 14-15 million BTUs, far below the world average of 70 million BTUs...... Some Management Slogans (SMS)"


Ten years from now, with a continued rapid expansion of their High-ICOR Heavy Industrial Base, India is projected be at an estimated 2/3 level of per capita energy consumption in China today.

Given that we have no heavy industrial base "worth mentioning" (as the economist said) and little savings with which to even begin to build it, where will we be 10 years from now?

Again: SAVINGS, SAVINGS, SAVINGS. Savings-> Investment-> Sustainable growth. There are NO SHORTCUTS.


RIAZ HAQ: "There is nothing superficial about growth in per capita production and availability of something as basic as food. Rising consumption by growing middle class represents real progress on the ground for the real people"


But where is this "growth in per capita PRODUCTION" of which you speak? The total GDP growth rate is at about the same level as the population growth rate; therefore, by definition, there is little growth in per capita PRODUCTION.

If that was just a typographical error and you were actually refering to the growth in per capita CONSUMPTION, I would point to the inescapable fact that rising per capita consumption in the face of stagnant per capita production can ONLY be possible-- again, by definition-- when accompaned by TOTAL COLLAPSE of per capita SAVINGS & INVESTMENTS.

We are in effect destroying our future. We are taking a sledgehammer to our economy RIGHT NOW. It is only a matter of time before we face both, a financial crisis as well as total macroeconomic collapse. The only unknown at this point is as to which one will come first. I suspect the financial crisis will come first, and that the total macroeconomic collapse will come later, but that is admittedly just a guess.

Our whole economy is headed in the WRONG direction. We must refrain from singing songs about well we are dining even as we eat our Seed-Corn. We must slow consumption and boost savings. There IS NO OTHER WAY.

And this is precisely what I have been trying to drum into your head.

Riaz Haq said...

Here's Platts on Pakistan's new energy exploration policy:

Pakistan has released 60 oil and gas exploration and production blocks for auction, a Ministry of Petroleum official said Tuesday.

The release is part of a new policy to spur development of the country's oil and gas industry that includes a rise in rates for any gas produced to $6-6.60/MMBtu, from $4.20/MMBtu earlier, the official said. The rate for offshore blocks in areas designated shallow zones is set higher at $7/MMBtu, deep zones at $8/MMBtu and ultra-deep zones at $9/MMBtu.

"Interested oil and exploration companies and countries have almost two months to submit bids, the official said.

The bids will be opened December 13 and the names of successful bidders announced a week later, he added.

The government is hoping to sell four of the blocks under government- to-government agreements, he added.

Exploration activity in Pakistan has slowed in recent years due to the low prices offered by the government and the impact of circular debt issues in the oil and gas sector. The country has gas reserves of 23 Tcf/day.

Pakistan's current domestic gas demand exceeds its production capacity of 4.2 Bcf/day by 1.2-1.4 Bcf/day, which increases to 2 Bcf/day in winter. If adequate gas is not discovered within 3-4 years, the shortfall is projected to increase to 2.5-3 Bcf/day.

N Farid said...

Riaz Sahab, I have been using my blog to get a lot of statistics about Pakistan in my work. Thanks also for this piece on energy policy. However, I think you have not given enough credit to what energy efficiency can achieve. In many ways, it can also be seen as a source of energy, since it gives access to additional services while utilizing the same or lower amount of energy. Pakistan needs to include it for a truly comprehensive energy policy.
Please check out my energy conservation campaign on:

Riaz Haq said...

Here's Power Engineering report on Japanese investment in Pak coal power transmission project:

ISLAMABAD, Nov. 3 -- Japan has offered to support Thar Coal power projects and construct transmission line to inter link the project with national grid.

Japanese Ambassador to Pakistan, Hiroshi OE stated this during a meeting with the Federal Minister for Water and Power, Ch. Ahmed Mukhtar here on Thursday.

During the meeting, the Ambassador discussed various matters of mutual interest, energy situation and current political situation.

The Ambassador expressed his views on investment opportunities in Pakistan and observed that the investment environment is better here in Pakistan so that Japanese companies are interested to put their capital in Pakistan in various projects. He also offered to invest in the Mangla Dam power extension project. He assured that Japan would continue its financial and technical support for social sector development. The Ambassador also appreciated the current recovery drive of the Ministry of Water and Power and said that it would help to increase the cash flow for power generation.

The Minister while welcoming the envoy appreciated the Japanese offers and said that the government is taking all possible measures for generation of cheap electricity. He said that the indigenous resources are being utilized for future projects to generate affordable energy. He said that a wind power project would start generation next couple of month while the other wind projects would be completed next year. Mr. Mukhtar also asked the Ambassador to invest in the wind, solar and other hydel power projects.

Riaz Haq said...

Here's a Nation story on KESC's planned investments to add capacity and reduce cost of generating power:

Karachi Electric Supply Company has reaffirmed its commitment towards Pakistan by announcing an ambitious investment plan in excess of Rs40 billion. According to the statement, KESC has already invested around USD one billion over the last four years in various large scale projects in generation, transmission and distribution. The new Rs40 billion investment plan is aimed at enhancing KESC’s generation capacity, improving its generation fleet efficiency, reducing the cost of power generation and building the requisite transmission capacity to meet growing power demand across its service territory. These projects will be completed over the next 18-36 months and KESC will be arranging required funding from local and foreign institutions in shape of both debt and equity.CEO KESC, in a related statement said, “We believe in the potential that Pakistan offers and despite the difficult operating environment we have demonstrated this through unprecedented investments in the past. The new investment plan is just a reiteration of this belief and comes at a time when Pakistan is witnessing dampening of investors’ sentiments, both local and foreign”.Under the new investment plan, KESC is undertaking combined cycle projects at its three power plants at Korangi and SITE that will significantly enhance the efficiency of these plants and add additional 47 MW of generation capacity. A specially designed ‘Transmission Package’ will see the installation of new transformer bays, addition of 3 new grid stations at strategic locations and extension of 6 existing grid stations. In line with the strategic intent to bring down the cost of generation, the new investment plan will allow KESC to convert two of its oil-fired units of 210 MW each at its Bin Qasim-I to coal. KESC is also undertaking to develop a bio-waste to energy project which will convert cattle manure from Landhi Cattle Colony and organic food waste to produce 22MW of electricity. The new investment plan will help KESC accomplish many strategic objectives, including creation of social and environmental values.

Riaz Haq said...

Here's Reuters on opening of a new refinery in Pakistan:

Karachi-based Byco Oil said it had completed Pakistan's largest oil refinery at Balouchistan with a capacity of 120,000 barrels per day, which is expected to reduce the country's imports of oil products.

The new refinery, manufactured in the UK and assembled in Pakistan, is currently in the pre-commissioning stage, with tests being done on various equipment, the company said on its website. Byco Oil is the parent company of listed Byco Petroleum .

"It will enhance overall crude oil refining capacity in the country from an existing 12.25 to 18 million tonnes per year and will significantly contribute in reducing a shortage of refined petroleum products in the country," the statement read.

Byco officials could not be reached for comment.

The new plant will more than triple Byco's current capacity of 35,000 bpd at its existing refinery.

The refinery can be further expanded up to 180,000 bpd, the company said.

An isomerisation plant to produce higher volumes and cleaner motor gasoline is also being commissioned with the refinery.

Pakistan operates five other refineries, the largest of which is Pak-Arab Refinery's 100,000 bpd plant.

Pakistan State Oil, a major oil importer in the country, imports about 250,000 tonnes of diesel every month through term volumes, they added.

Riaz Haq said...

Here's BR on PPL introducing new petroleum exploration technology in Pakistan:

A PPL statement here on Saturday said that developed by NXT Energy Solutions (NXT), a geophysical service company based in Canada, SFD (Stress Field Detection) is a proprietary cutting edge, eco-friendly airborne reconnaissance method to identify potential hydrocarbon traps and reservoirs in a time- and cost-effective manner, especially in unexplored on- and off-shore frontier regions with limited access and infrastructure.

It said that the SFD is expected to be particularly useful in the current energy scenario, warranting fast track identification of, and production from, relatively deeper, more complex reserves of hydrocarbons to bridge the supply-demand gap.

Welcoming the guests, PPL's Managing Director and Chief Executive Officer, Asim Murtaza Khan, underscored the increasing importance of deploying latest exploration technology to meet production and reserves replacement targets to address the current deficit and ensure future energy security. SFD technology has been successfully applied by leading oil and gas companies in North America, Colombia and other countries. PPL is proud to be the first company to apply the technology in Pakistan', he said.

Riaz Haq said...

Here's a Dawn report on PPL exploring for oil and gas:

ISLAMABAD, Jan 8: The Pakistan Petroleum Limited, in collaboration with ENI, a foreign exploratory firm, is set to start drilling of a well in the Arabian Sea along Pakistani waters for discovery of oil.

The PPL has acquired exploration rights in a block located at 100km from Baghdad for oil exploration and it is hopeful about discovery of oil.

In a briefing to Senate Standing Committee on Petroleum and Natural Resources at the Parliament House, the PPL MD, Asif Murtaza, informed that drilling of exploratory well has already started in the block acquired in Iraq and there are bright chances of oil discovery.

In case of major success, the Pakistani company would benefit. The company is already working in Yemen on two blocks.

Regarding previous attempts made by the company to find oil from the sea, off Pakistani coast, the PPL MD informed the committee that in Mekran deep sea, some 12 exploration wells were drilled, but none succeeded.

The committee, which met with Senator Mohammad Yousuf in the chair, was informed that many foreign exploration companies still have interest in drilling of exploration well in Mekran Deep Sea. However, drilling has been delayed for one year due to various reasons.

Additional Secretary of Petroleum Naeem Malik informed the committee that drilling of an exploration well in deep-sea requires at least $100 million investment and foreign companies take decisions with due care.

The federal government recently announced new exploration incentives and the companies which would make first three discoveries in deep-sea would be given extra benefits with incentives to encourage more companies to come forward. The PPL MD informed that PPL is working in Zandan Block (Khyber Pakhtunkhwa) and is planning to acquire five more blocks in KPK as Tal Block area has great potential of discoveries.

To exploit un-conventional gas reserves in the country, some seven exploratory wells, eight appraisal wells, and 19 development wells have been planned in the next five years and the expected outcome would be 150bcf shale and tight gas production in the country.

He informed that shale gas and tight gas price approval has been sought from the regulator to speed up exploration activity. He further informed that some seven pilot projects have been planned for exploration of shale and tight gas reserves. He further informed that in Kirthar block, one exploratory well Rahman-1 is under way.

He informed that Hala, Kotri, Notari North, Jangshahi, Gambat and South blocks are potential areas for discovery of shale and tight gas reserves.

The committee was informed that PPL has geared up its seismic survey in the country and some 780sq kms were surveyed in 2011-12, while during the current fiscal year, some 1,400sq km have been surveyed.During the meeting, it was informed that District Kohlu (Balochistan) has huge gas reserves and due to law and order situation, exploration companies do not go there.

The committee was informed that the federal government was collecting 12.5 per cent royalty on gas production and the entire amount is transferred to provinces and if any provincial government is not spending the amount on welfare of its population or in the relevant district, where oil and gas have been found, it is their internal issue.

Riaz Haq said...

Here's PakistanToday on expansion of re4fining capacity to 18 million tons:

Karachi - country’s largest oil refinery at Mouza Kund, District Lasbella, Balochistan. At present the refinery is in a state of pre-commissioning and preparatory activities wherein different plants, equipment and instrumentation are being put to confirmatory checks and tests.

The cold circulation of crude oil has already been established and sustained. Also furnaces of different process units have been test fired. The refinery is ready for hot commissioning and start up.

This newly-commissioned petroleum refinery would have an installed refining capacity of 120, 000 barrels per day.

Combined with existing and fully operative smaller refinery, the cumulative capacity shall be over 155,000 barrels per day which is 55% higher than the existing largest refinery in Pakistan.

Thus it would enhance overall crude oil refining capacity in the country from existing 12.25 to 18 million tons per year and would significantly contribute in reducing import of deficit refined petroleum products in the country.

This refinery can be further expanded up to 180,000 bpd.

“This milestone, for sure, has been made possible with sheer hard work of our Employees and support & cooperation of all our valued contractors. Upon commissioning this Refinery, with the blessings of the Almighty, will become the single largest in the country,” said Qaiser Jamal CEO Byco Oil Pakistan while declaring the completion.

Along with this new Refinery, the Country’s first isomerisation plant is being commissioned, he said.

The introduction of isomerisation technology in Pakistan would not only enable this refinery to produce higher volumes of motor gasoline to meet the country’s demand but this will be the first environment friendly motor gasoline, with almost nil content of Benzene.

The first parcel of crude oil for this refinery will be brought to the country’s first single point mooring installed 10km into the Arabian Sea for direct discharge to the Refinery storage tanks. This facility can discharge tankers carrying over 100,000 metric tons of crude oil.

With an investment of significantly over $600 million and rising, Byco also operates as a fast growing petroleum marketing business network comprising of 222 retail outlets.

Amir Abbassciy, CEO of Byco Industries Incorporated, parent company of Byco’s operating companies in the country said: “These are the first significant steps toward achieving our aim to be in integrated oil to chemicals and related infrastructure businesses.”

Riaz Haq said...

Here's PakistanToday on nuclear power expansion in Pakistan:

ISLAMABAD - Pakistan Atomic Energy Commission (PAEC) envisages production of 8,800 MW by the year 2030 through nuclear power reactors. Two nuclear power plants, 340MW each, are under construction at Chashma and expected to be commissioned by 2016 with Chinese assistance. Construction of these power plants became possible after a long-standing agreement, while three other nuclear power plants already commissioned in the country are performing well. According to official sources, the allocation for PAEC is almost 11% of the total federal development budget estimated at Rs 360 billion for the financial year 2012-13.
Officials said a major chunk of the PAEC budget has been allocated to two nuclear power plants.
“An amount of Rs 34.6 billion has been set aside for Chashma Nuclear Power Plants, C3 and C4. The total cost of these two projects is Rs 190 billion which will be partially funded by a Rs 136 billion Chinese loan.
The government has so far spent Rs 62.4 billion on the mega project having a 660 MW generation capacity. With Rs 34.6 billion additional spending, the government will be able to complete almost half of the work by June 2013, an official said. According to an official in Ministry of Science and Technology, government is harmonising the efforts made in the energy sector by different ministries, departments and research centres by creating an ‘Energy Council’ with heads of relevant organisations. The council will be entrusted to advise on priority areas for Research and Development (R&D) and management of resources and to fill the gaps.
Acquisition of technology for building nuclear power reactors through R&D, as well as transfer of technology agreements is also in consideration, he said.

Riaz Haq said...

Here's a summary of BMI report on Pak power sector:

Boston, MA -- (SBWIRE) -- 01/03/2013 -- BMI View: In spite of chronic and persistent power shortages, reflecting under-investment and system inefficiencies, Pakistan has a plethora of potentially varied and rich power options from which to choose. There is vast untapped hydro and renewables capacity available, but it remains to be seen if the investment will actually materialise. Thus, this is likely to increases the country's reliance on growing its gas-fired, coal-fuelled capacity, as well as its modest nuclear programme, although controversial import deals with Iran could cause political backlash. While these opportunities exist for the thermal generation, delays in payments by state-owned transmission companies to independent power producers limit the profitability of the sector, and could cap its growth.

View Full Report Details and Table of Contents

The country continues to suffer from a shortfall of electricity of more than 3 gigawatts (GW) daily, and while this has fallen from the highs of 7GW, permanent resolutions and solutions to the situation remain out of sight. While the shortfall is caused by poor performance from existing generating assets, the lack investment in generating capacity, and an inefficient grid, the government also faces difficulty in sustaining subsidies. This, in turn, drains the profitability of power generation companies, forcing them to cut back on much-needed investment in the sector.

The key trends and recent developments in the Pakistani electricity market include:

- The constructions of the various dams have met with increasing environmental concerns and financing issues, which threaten to stall works. In particular, the World Bank and other international aid agencies have withdrawn their support for the Diamer-Basha dam project due to environmental concerns raised by India. Given the growing demand for electricity, a delay in the completion or cancellation of the project could mean ,the electricity shortfall is likely to persist beyond the government's original timeline.
- Progress of talks between India and Pakistan regarding the sale of electricity and petrol remains slow, with Indian officials citing their Pakistani counterparts keeping a cautious stance. While several suggestions have been raised during the talks, including building of a pipeline directly to Lahore, the Pakistan government remains wary of issues such as security and dependability of oil imports from India. However, worsening energy shortage in Pakistan may push Pakistani authorities to push ahead with negotiations, although imports from India are unlikely to exceed supplies from Kuwait.

Riaz Haq said...

Here's PakistanToday on primary energy consumption in Pakistan:

KARACHI - Pakistan’s gas requirements are growing hastily, while the domestic gas production is not growing at the same pace. Primary energy consumption in Pakistan has grown by almost 80pc over the past 15 years, from 34 million tons oil equivalent (TOEs) in 1994/95 to 60 million TOEs in 2010/11 and has supported an average GDP growth rate in the country of about 4.5pc per annum.

Consumer Rights Commission of Pakistan (CRCP) in collaboration with Citizens’ Voice Project hold policy dialogues on “Role of Government and Regulators in the Gas Sector of Pakistan” with parliamentarians, policy makers, regulators and civil society organisations here on Wednesday.

CRCP recommended Effective Governance & Regulation for development of Gas Policy in dialogue.

The present natural Gas crisis clearly indicates that overall governance of the gas sector needs improvement. The growing energy shortages have made life difficult for Pakistanis across the board. The quality of life of citizens has deteriorated.

Dialogue reported that economic growth rates have been stunted, and industry and agriculture have suffered. The Government of Pakistan has not yet recognising magnitude of crisis and its effect on the people and the economy. Government has to take emergency measures to address, manage and reduce the impact of crisis. The reasons for present crisis in gas sector have both technical and governance aspects.

The dialogues have given comprehensive insight into the current situation of transparency, public participation and accountability processes in gas sector of Pakistan. The intervention is likely to result in enhanced understanding of the sect oral issues for the stakeholders.

Most important of all, it is expected to inform the policy makers and especially the public representatives about the governance situation of the sector and shall persuade them to take positive actions for sectoral improvement. In Pakistan, industrial and fertilizer sectors are getting gas on subsidised rates, while the CNG stations were being subjected to an exorbitantly high tariff regime, neglecting the general public’s interest. The gas consumers’ woes could not be resolved unless Pakistan had an autonomous regulator free of political interference. Besides, the problems could not be resolved without improving people’s access to information, putting in place a system of strict penalties on consumers involved in gas pilferage and non-payment of gas bills

Riaz Haq said...

Here's a Dawn story on oil and gas discoveries in Pakistan:

Following a lacklustre period of several years, when things remained quite on the oil and gas exploration sector, in the face of heightened security situation and circular debt issues, the oil and gas fields have started to buzz with activity.

In the current financial year-to-date (July 1, 2012 to March 11, 2013) the country’s oil and gas sector has spudded as many as 56 wells. It represents a big leap over the 31 wells drilled in the same period last year. The sector has drilled 20 new exploratory wells as against 12 wells same time last year, depicting a significant increase of 67 per cent.

On the discovery side, the picture was a lot brighter than the earlier years as a total of 10 discoveries have been made by the sector in FY13 so far.

The sector’s drilling of a total of 56 exploratory and development (E&D) wells during the period also represents achieving 61 per cent of the full year target set at 91 wells. Even in that sphere, the sector fared better than the comparable period last year when only 41 per cent of the target 76 wells could be drilled.

“O&G sector’s focus continues to remain on the development wells”, says Nauman Khan, analyst at Topline Securities. Of the total wells drilled, 36 were development wells (representing 64 per cent of total activity). It reflected improvement over 19 wells or 61pc of total wells drilled in the comparable period last year.

Apart from the development wells, the activity on the exploration side also represented encouraging growth. Although, contribution of the exploratory wells had slightly declined to 36pc as against 39pc in the same period last year, the overall trend was heartwarming.

The sector spudded 20 exploratory wells, which was significantly more than 12 wells drilled in the comparable period last year while it represented 45pc of full year target of 44 wells.

Analyst said that amongst the listed companies, Pakistan’s largest oil and gas explorer, the Oil and Gas Development Company (OGDC) had drilled 13 wells which were 63 per cent higher than eight wells drilled last year. Included in those 13 wells, were two exploratory wells and 11 development wells.

Pakistan Petroleum Limited drilled five wells (one exploratory and four development), up from two development wells in the comparable period last year. However, with full year target of 16 wells (six exploratory and 10 development), sector watchers expect the drilling activity of the company to significantly intensify in the remaining of the year.

The third major oil and gas E&P company, the Pakistan Oilfields Limited drilled only one exploratory. In the comparable period last year, POL had drilled two exploratory wells.

Though much of the success eluded the E&P companies on the listed sector, the revival and discovery would benefit the country. The darkest hour for the sector came possibly in late 2010 and early 2011, when exploration and development work had started to limp.

According to the data compiled by Pakistan Petroleum Information Services (PPIS), 28 E&P companies in the country, that hold operator licences, together had drilled only 19 wells in first half of the year 2011, compared to 80 wells targeted for all of the FY11.Besides the poor security situation, the two major reasons for the underperformance of E&P companies were the nagging circular debt, which had affected the drillers’ liquidity thereby restricting their drilling portfolio and secondly, the continuation of the carry over wells of the earlier year that stalled companies from launching into new wells, keeping them focused on already drilled ground.

Riaz Haq said...

Here's a BMI report on Pak energy sector:

Boston, MA -- (SBWIRE) -- 05/24/2013 -- Successive energy shortages in Pakistan have led the government to acknowledge that longterm gas self-sufficiency has become impossible. A March 2013 agreement with Iran on the development of the IP pipeline by 2015 could ease the risk of an energy shortage. Domestic consumption continues to rise rapidly, boosted by the start-up of additional gas-fired power stations and continued use of Condensate Natural Gas cars. As import volumes rise, LNG is set to become part of the energy mix. In the meantime, Pakistan will again attempt to privatise more of its various state-controlled energy companies and stimulate investment in domestic oil and gas production. While we do not believe it would render Pakistan gas selfsufficient over the next 10 years, the recent start-up of shale gas exploration creates a large upside risk to our forecast.

View Full Report Details and Table of Contents

The main trends and developments we highlight for Pakistan's Oil & Gas sector are:

- Energy minister Asim Hussein has acknowledged that the current situation in Pakistan requires policy rationalisation. Several steps have been taken including a rise in regulated gas prices, a revamp of licensing regulation to promote exploration and distribution of production in local markets, the offer of 60 onshore blocks in a licensing round, offshore and unconventional exploration, and development of necessary import infrastructures.
- We expect gas reserves to fall until 2022 as consumption increases from 39bn cubic metres (bcm) in 2012 to 55bcm by the end of the forecast period. Production will not follow that trend. We see gas output peaking at 40.1bcm in 2015 and falling afterward to slightly above 35bcm by 2021 as the Sui Gas Field, the main producing field in Pakistan, reaches the end of its life.
- We see oil demand rising from an estimated 376,600 barrels per day (b/d) in 2012 to nearly 482,000b/d in 2022, about 30,000b/d more than previously forecast. While we expect production to continue its increase throughout the decade, this will leave the county with a growing import requirement. From 62,000b/d in 2011, we see oil output growing steadily until 73,500b/d in 2022.
- LNG imports will start in 2013. The government expects to import 2bcm of LNG in 2013, acquired on the spot market and arriving at Port Qasim. International supply contracts are to be allocated for up to 8bcm in the coming years, while discussions have reportedly already started with the US and Qatar.
- The controversies surrounding the IP and TAPI pipelines continue, with the US providing increasing support for Pakistan to meet its energy needs through LNG imports. While we can still see some risks to the completion of the line, especially from a political perspective, the IP pipeline appears to be on its way to start first flows in 2015. We do not believe that LNG imports will be sufficient and we hardly envisage a scenario where neither pipeline is completed by the end of the decade.

Riaz Haq said...

Here's an ET report on a partnership for off-shore drilling for oil in Pakistan:

State-run Pakistan Petroleum Limited (PPL) and Singapore-based oil and gas company Orion Energy are likely to form a joint venture for offshore drilling in Pakistan.
Orion Energy, an independent oil and gas company headquartered in Singapore and with offices in London, is currently exploring scores of opportunities in Latin America.
According to sources, Orion had expressed interest in investing in Pakistan at the Pakistan Exploration Bidding Round 2012, held in London in December 2012 by the Pakistan Peoples Party-led coalition government.

On the sidelines of the event, Orion Energy Director David M Thomas, and his lawyer Nadim Khan, met the PPL managing director. The interaction was followed by another meeting between representatives of PPL and Orion, chaired by the director general of petroleum concessions.
In the Petroleum Policy 2012, the government had increased the gas price for Offshore Shallow Zone to $7 per million British thermal units (mmbtu), for Offshore Deep Zone to $8 per mmbtu and for Offshore Ultra Deep Zone to $9 per mmbtu. A bonanza of $1 per mmbtu will be given to exploration companies for the first three offshore discoveries under the policy.
Orion Energy had expressed interest in exploring offshore areas in Pakistan in partnership with PPL because of the latter’s good reputation and extensive experience in exploration and production of gas.
Following extensive technical discussions and encouraging feedback from PPL, the two companies agreed to initially undertake a joint study to evaluate prospects of offshore drilling and identify prospective areas for comprehensive exploration work.
Orion Energy had also expressed a desire to come to Pakistan for technical discussions with PPL on offshore exploration and on matters pertaining to forming a joint venture to carry out the joint study. Both sides had also finalised a joint study agreement, which had been ready to be signed by officials.
However, the visit was delayed due to general elections in Pakistan. It was only later, in the first week of June, that an Orion team reached here.
Technical staff from Orion and PPL will undertake the study, based on the geological data available with the two companies and the directorate general of petroleum concessions. The study will be completed in about four months, and its main objective will be to identify potential offshore areas for detailed evaluation through an exploration work programme and the financial obligations that will entail.

Riaz Haq said...

Here's a Dawn report on UNESCAP Statistical Year Book 2013:

ISLAMABAD, Dec 3: About 1.3 billion people in the world are living without electricity; two-thirds of them being in 10 countries and four of them, including Pakistan, in the Asia Pacific region, says a report of the United Nations.

According to the Statistical Yearbook for Asia and the Pacific-2013 released by a UN commission on Tuesday, an estimated 60 per cent of capacity-addition efforts in future will be focused on mini-grids and off-grid connections in which renewable energy sources will play a vital role.

In the generation of electricity from renewable sources, the Asian and Pacific region led the world in 2010. But this amounted to only 15.8 per cent of the region’s total electricity, which is below the world average of 19.4 per cent.

With less than 400 kilowatt-hours per capita, the annual household electricity consumption in the region is the second lowest among the world’s regions, after Africa where it is 200kwh.

About 2.6bn people in the world and 1.8bn in the region use solid fuels for cooking. The WHO estimates that more than 1.45 million people die prematurely each year from indoor air pollution caused by burning solid fuels with insufficient ventilation.

Women’s economic empowerment

The report says that despite its economic growth, the region lags behind in economic empowerment of women. It calls for targeted policy measures to facilitate women’s economic empowerment.

Women still bear the burden of unremunerated productive work, shouldering the major share of household management and care-giving responsibilities.

The report says that in Pakistan women spend 5.5 hours a day on housework and 1.2 hours on childcare whereas men spend 2.5 hours on housework and 0.9 hours on childcare.

It also says that women are overrepresented in sectors and positions that are vulnerable, poorly paid and less secure. For instance, 42 per cent of working women/girls belonged to agriculture sector in 2012 compared with 36.0 per cent of male workers.

Riaz Haq said...

Here's a Guardian story on possible end of CNG as fuel for cars:

When Pakistan first started promoting compressed natural gas to the nation's motorists in the 1990s, the alternative to petrol seemed like a wonder fuel.
Getting motorists to convert their cars to run on cleaner, cheaper gas would cure urban pollution and lower demand for the imported oil that was gobbling the country's foreign currency reserves.
Car owners loved it and today 80% of all cars in Pakistan run off compressed natural gas (CNG), according to the Natural and Bio Gas Vehicle Association (NGVA), a European lobby group. Only Iran has more gas cars running on the road.
But as the country struggles with a chronic gas shortage, Pakistan's 20-year CNG experiment seems to have been thrown into reverse gear.
The government has introduced strict rationing. And there have even been discussions about shutting down thousands of gas stations for the whole of thewinter. "CNG is finished in Pakistan," said Owais Qureshi, the owner of a handful of once lucrative gas stations in Rawalpindi. "I'm not going to invest any more money in it."
It has been years since he has been legally allowed to sell and install CNG conversion "kits": essentially large gas cylinders that are placed in the boot of a car to feed the engine. The system allows for cars to still be able to use petrol instead, if required.
Although CNG is popular with an estimated 2.8m motorists in Pakistan, according to the NGVA, the increasingly scarce resource is also in demand from other sectors – including the country's factories and for domestic use.
"The government has been left with little choice but to put a lid on it because there simply isn't much gas left," said Farrukh Saleem, an economist. "It has been a massive policy failure because the government actively promoted CNG knowing full well that natural gas reserves would not last beyond 25 years."
Successive governments heavily subsided CNG, ran schemes to encourage car conversions and dished out licences to political allies to build gas stations.
But abandoned stations are now a common sight around the country. So too are queues of hundreds of motorists waiting to fill their cars on Wednesdays – the last remaining day of the week in many places on which CNG is legally allowed to be sold.
This weekly ordeal for CNG users is compounded by a chronic lack of electricity, the other aspect of Pakistan's energy crisis. And because electricity is needed to run the gas compressors used by CNG stations car re-filling grinds to a halt during the many power cuts.
"All over the world countries are promoting CNG but in Pakistan they are killing it off," said Ghiyas Abdullah Paracha, chairman of All Pakistan CNG Association.
"If we don't have enough gas we should import LNG [liquid natural gas]."
Pakistan, however, has failed to build the infrastructure needed to import large amounts of gas from overseas. A legal challenge by Pakistan's activist supreme court killed off one scheme to build a massive LNG terminal in Karachi.
The other lifeline for Pakistan's CNG supply is a controversial, multi-billion dollar pipeline to import natural gas from Iran. But Pakistan lacks the cash to build its half of the pipeline and the US has warned that completing the project would be in breach of US economic sanctions imposed on Iran.
Even as natural gas is being touted elsewhere in the world as a great alternative to petrol, soon it may be a mere memory in Pakistan.
Paracha fondly recalls the grand opening of the first CNG station in Karachi, which was built with foreign aid money. "It was the start of a revolution," he said. "Before CNG came you could not see the sky in the cities because the air was so polluted."

Riaz Haq said...

Here's a Dawn piece on projected primary energy needs in Pakistan in tons of oil equivalent:

KARACHI: Pakistan’s energy deficit is likely to reach 110.8 million Tonnes of Oil Equivalent (TOEs) in the next 15 years if average gross domestic product remains around 4.5 per cent, according to a document issued by the Petroleum Institute of Pakistan (PIP) on Friday.

The document, Pakistan Energy Outlook (PEO) 2013-2028, predicts that country’s energy demand would grow to 147.78m TOEs by 2027-28 against the domestic resources of 36.90m TOEs in the same year.

Addressing a media briefing at the launch of PEO, PIP’s chairman and former adviser to the prime minister on petroleum and natural resources Asim Hussain said that Pakistan Energy Outlook is a flagship document of the institute, and has been prepared with the help of independent consultants taking into account energy demand-supply models based on the economic realities of the country.

“Recommendations identified in this document provide long-term energy solutions for Pakistan to secure higher GDP growth and economic development on sustainable basis,” Mr Hussain said. He maintained that mobilising and generating affordable and environment-friendly energy resources are one of the key challenges.

He urged the government to work together with the petroleum industry in framing the policies.To a question why there is so much stress on import of LNG these days when Pakistan itself has vast gas reserves and other indigenous options, Mr Asim Hussain said, “Expensive fire is better than no fire at all.”

He said that even gas producing countries, like Qatar, are now diversifying their energy mix by considering other possibilities.

He said that besides utilising indigenous resources, Pakistan should also look for import options, too.

Presenting the outline of the PEO, Mr Akhtar Raza of Enar Petrotech said that the energy deficit will have to be met through the import if coal, oil and gas as domestic production is likely to be insufficient.


The document recommends the government and other stakeholders to efficiently utilise natural gas; strengthen regulatory institutions to facilitate partnership between public and private sectors; make policy for aggressive exploration and production (E&P) to incentivise exploration of on-shore and on-shore oil, gas, tight gas and shale gas; fast-track indigenous coal projects, import of LNG and cross-border gas pipeline projects to improve the country’s energy mix, exploit renewable energy resources; cut transmission and distribution losses in the power sector; and develop a competitive market to root out pricing distortions in the energy sector.

The PIP is a non-government body established in 1963 by the oil and gas industry with a vision to establish itself as an energy advisory body.

Riaz Haq said...

Here's an Energy Business Review report on Chashma 3 and 4 nuclear power plants progress:

China's State Nuclear Power Technology Company (SNPTC) has installed the containment dome atop of the containment building of the unit 4 of the Chashma Nuclear Power Complex (CHASNUPP), located near Chashma city, Punjab, Pakistan.

The installation of dome, which weighs 185t, and measures 36m in diameter, and 9m in height, 72 days ahead of schedule, represents a significant milestone in the construction of the second of two reactors being constructed by Chinese companies in the country, World Nuclear News reports.

The general contractor for the third and fourth 340MWe pressurized water reactors (PWRs) is China Zhongyuan Engineering, while the reactor design was provided by the Shanghai Nuclear Engineering and Research Design Institute.

CHASNUPP's first and second 300MWe PWRs were also supplied by China.

Construction of units 3 and 4 commenced in May and December 2011, respectively, and the units are scheduled to start commercial operation in December 2016 and October 2017.

Riaz Haq said...

Here's a Wall Street Journal story on Pakistan in talks to acquire 3 more large nuclear power plants in addition to 2 recently announced for Karachi:

ISLAMABAD, Pakistan—Pakistan is in talks with China to acquire three large nuclear power plants for some $13 billion, Pakistani officials said, in a further blow to international efforts to restrict the trade in nuclear technology.

The deal is in addition to last year's agreement to build two Chinese reactors in Pakistan's southern port of Karachi.

The agreement, if reached, would help plug the crippling gap in Pakistan's electricity supply and cement its strategic regional alliance with China, which is aimed against mutual rival India. Alarming Washington, the China-Pakistan nuclear trade bypasses international rules against nuclear exports to countries—like Pakistan—that have not signed the Non-Proliferation Treaty.

Negotiations are going on currently with China "for three more plants," Prime Minister Nawaz Sharif told his cabinet's meeting this month, according to those present.

The three Chinese reactors would likely be located in the center of the country, in Punjab province, at a site now being prepared, officials said. Two advanced 1,100-megawatt reactors from China are already due to be built near the southern port of Karachi, under a $9 billion agreement completed last year. Mr. Sharif led the groundbreaking ceremony for the Karachi reactors in November but the discussions about the additional plants have not been made public until now.

Mark Hibbs, an expert on nuclear issues at the Carnegie Endowment for International Peace, an independent research organization based in Washington, said that the Nuclear Suppliers Group was "clearly in a crisis that has continued to escalate" as a result of the trade taking place with India and Pakistan. The rules of the group had no binding force, as it is a voluntary arrangement, he said.

Pakistan produces between 12,000 MW and 14,000 MW of electricity, while demand is at least 18,000 MW, according to the ministry of power, causing hours of power outages every day across the country. Demand is set to rise sharply with the ballooning population.

Nuclear energy provides just 750 MW of power currently, through two Chinese-built 330 MW plants at Chashma, in Punjab province, and a tiny, aged, plant outside Karachi. China is currently building two more plants of the same size at Chashma, boosting nuclear output to 1,400 MW by 2016. The plan for the future is to acquire much larger 1,100 MW plants from China, including the two new reactors for Karachi.

Ansar Parvez, chairman of the Pakistan Atomic Energy Commission, which builds and runs the country's nuclear power plants, said that the country's aim is to generate 8,800 MW of nuclear power by 2030.
That target requires Pakistan to build six to seven large nuclear power plants, including the two already scheduled for Karachi. Each such plant costs $4 billion to $4.5 billion, said Mr. Parvez.

A spokeswoman for China's Foreign Ministry, Hua Chunying, defended the countries' nuclear cooperation in December, which she said was in accordance with the countries' international obligations.

"In the future, the Chinese side wishes to continue offering help to the best of its ability to resolve the electricity-shortage issue," Ms. Hua had said.

Riaz Haq said...

Modi on petroleum exploration in Pakistan: Referring to the exploration scope in the region, he said Pakistan has started exploring the area across the border for gas and petroleum products.

"Look across the border in Pakistan, they have started massive work in gas and petroleum sector, why can't we?" he asked.

"It is the same region. There is immense scope for gas and petroleum here. I am sure we can definitely find it here as well. It can give new strength to our nation."

Addressing the youths, he said there will be opportunities in the exploration work in future and asked them to prepare themselves for it.

"We have started a petroleum university in Gujarat and this is for youngsters. I would urge the youth here to go on Internet and search about petroleum university. I invite you to make full use of it," he said.

Riaz Haq said...

According to Mr. Abbasi, LNG imports of 3 million tons would yield cost savings worth an annual $300 million. By using LNG, Pakistan will be able to between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, Mr. Abbasi said.

Pakistan’s electricity shortage results from a failure to build power stations to keep pace with demand, a dependence on burning relatively expensive fuels and the swelling of debt in the sector that has led to some plants being shut down.

The deal would mark the first time that Pakistan will import natural gas. It would be the biggest financial commitment made by Pakistan to date, analysts say.

Pakistan has depended on its own natural gas fields, which have started being depleted in recent years. Longer-term plans are in the works to build pipelines to import gas from Iran and Turkmenistan.

Qatar is the world’s biggest producer and exporter of LNG.

Pakistan is also considering shorter-term deals and open-market transactions to source some of its LNG needs from other countries, including Brunei, Malaysia and China, which isn’t a producer but may have excess imports that it can resell.

Nicholas Browne, a senior manager at Wood Mackenzie, an oil and gas consultancy, said typical pricing for Qatari LNG would be 14% to 15% of the price of oil. At 14%, Pakistan would be acquiring the fuel at $7 per million BTU, an attractive price, said Mr. Browne.

“From a buyer’s perspective, it is a great time to be in the market for LNG, in terms of both price and availability,” said Mr. Browne, because the price of oil has fallen and there is a substantial increase in supply expected in the next couple of years, as Australia and the U.S. bring new output onto the market.

Mr. Browne said Qatar may also have strategic reasons for supplying Pakistan. The tiny Gulf state has run a highly ambitious foreign policy in recent years, seeking influence across the Muslim world.

Under Pakistan’s plans for the LNG, the fuel would eventually fire generation of 3,600 megawatts of power, equivalent to around a quarter of the country’s current electricity output. Pakistan also plans to build coal-fired power stations.

Michael Stoppard, head of gas at consultancy IHS, said that LNG offered environmental advantages, but “coal is hard to beat on the economics.”

Riaz Haq said...

Half of all new #Energy world-wide last year was Green. #Solar #Wind …

Prepared by the Frankfurt School-UNEP Collaborating Centre and Bloomberg New Energy Finance, the report says that a continuing sharp decline in technology costs – particularly in solar but also in wind – means that every dollar invested in renewable energy bought significantly more generating capacity in 2014.
In what was called “a year of eye-catching steps forward for renewable energy”, the report notes that wind, solar, biomass and waste-to-power, geothermal, small hydro and marine power contributed an estimated 9.1 percent of world electricity generation in 2014, up from 8.5 percent in 2013.
This, says the report, means that the world’s electricity systems emitted 1.3 gigatonnes of CO2 – roughly twice the emissions of the world’s airline industry – less than it would have if that 9.1 percent had been produced by the same fossil-dominated mix generating the other 90.9 percent of world power.
“Once again in 2014, renewables made up nearly half of the net power capacity added worldwide,” said Achim Steiner, Executive Director of UNEP. “These climate-friendly energy technologies are now an indispensable component of the global energy mix and their importance will only increase as markets mature, technology prices continue to fall and the need to rein in carbon emissions becomes ever more urgent.”
China saw by far the biggest renewable energy investments last year – a record 83.3 billion dollars, up 39 percent from 2013. The United States was second at 38.3 billion dollars, up seven percent on the year (although below its all-time high reached in 2011). Third came Japan at 35.7 billion dollars, 10 percent higher than in 2013 and its biggest total ever.
According to the report, a prominent feature of 2014 was the rapid expansion of renewables into new markets in developing countries, where investments jumped 36 percent to 131.3 billion dollars. China with 83.3 billion, Brazil (7.6 billion), India (7.4 billion) and South Africa (5.5 billion) were all in the top 10 investing countries, while more than one billion dollars was invested in Indonesia, Chile, Mexico, Kenya and Turkey.

Riaz Haq said...

Below is Pakistan energy report published by

Pakistan is the sixth most populous country in the world. Due to a variety of factors there is a major gulf between Pakistan’s energy potential and its ability to achieve that potential. And that is clearly illustrated in the country’s natural gas sector.

While Pakistan’s conventional natural gas reserves – 24 trillion cubic feet – are declining, the country is sitting on an estimated 105 trillion cubic feet of shale gas. For now, there are too many obstacles to expect much development in Pakistan’s unconventional sector, but there are still opportunities for gas drillers in the country.

One of the largest gas producers is OMV (VIE: OMV). And OMV just announced a major new natural gas discovery on October 12 from its Latif South-1 well, located in the Latif block of Sindh Province. The test well posted some promising figures, with flows of 2,500 barrels of oil equivalent per day (boe/d). OMV believes that the discovery opens up new opportunities in the region. The Austrian company will continue to appraise the well and assess its holdings to confirm the size of the gas discovery. The well drilled by OMV is located just 25 kilometers south of the Latif gas field, and as such, it is well positioned to tie into existing infrastructure, such as gas processing facilities.

OMV holds a 33.4 percent stake in the project, along with its joint venture partners Pakistan Petroleum Limited (OTCMKTS: PKKKY) with a 33.3 percent stake, and a subsidiary of Italian oil giant Eni (NYSE: ENI), controlling the remaining 33.3 percent position.

OMV is also processing 2D and 3D seismic surveys in the Kalat block this year.

OMV is one of the larger operators in Pakistan, producing from several gas fields, including Sawan, Miano, Latif, Tajjal, and Mehar. The company produces around 400 million cubic feet per day (mmcf/d) (or 65,000 boe/d) from its processing plants in Sawan, Kadanwari and Rehmat, which OMV says is about equal to 10 percent of Pakistan’s total gas supply.

OMV also has a stake in eight exploration licenses (five of which it is the operator) and six licenses in the development and production phase.
One of the other most important gas operators in Pakistan is Eni. Eni’s holdings are mostly south of OMV, also in Sindh Province. Eni produced 248 million cubic feet of natural gas per day in Pakistan at the end of 2014.

Eni made several key natural gas discoveries in recent years, including the Lundali in the Sukhpur Block, about 270 miles north of Karachi. In 2013, Eni’s Lundali-1 well had an impressive flow rate of 33 million cubic feet per day (mmcf/d). That followed a previous discovery made a year earlier in the Badhra Block. That discovery held an estimated 300 to 400 billion cubic feet of natural gas. The bulk of Eni’s focus is on the Bhit/Bhadra block (40 percent stake), Sawan (23.68 percent stake), and Zamzama (17.75 percent stake). Eni is also partnered with Pakistan’s state-owned oil company, as well as a subsidiary of Kuwait’s state-owned oil company. Premier Oil (LON: PMO) holds small stakes in these fields as well.

Riaz Haq said...

Below is Pakistan energy report published by Contd

Problems and Opportunities

For companies like OMV and Eni, Pakistan offers an interesting opportunity. The demand for natural gas is huge. In fact, the country is starved for new sources of gas, creating a captive market for operators.

But Pakistan is riddled with problems and is a tough place to do business. Energy is one area where the country faces a serious crisis. Pakistan is woefully deficient in reliable electricity, and power outages shave 2 percent off of GDP. It pays a dear price for imported energy. Millions of Pakistanis resort to wood for heat and fuel, plaguing the country with a massive deforestation problem.

The Pakistani government has implemented some measures to incentivize shale development. However there are several problems holding back investment. First, the geography is complex and infrastructure is inadequate. That raises the cost of development. Second, Pakistan regulates the price of natural gas in order to insulate the public, but that discourages investment as producers can’t realize adequate compensation.

To make up for the shortfall in natural gas, Pakistan constructed an LNG import terminal in Karachi, and the country signed a deal with Qatar to import 200 mmcf/d of LNG.

Outside Interests

Pakistan is desperately trying to solve its energy shortfall, which creates opportunities for drillers. But it is also looking abroad with the help of some outside entities, not all of which are primarily concerned with Pakistan’s wellbeing.

Pakistan is at the crossroads of some geopolitical jockeying. Two competing pipeline projects have been on the drawing board for years but are inching forward. The U.S. backed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline would connect Caspian Sea natural gas through Southeast Asia. There is also the Iran-Pakistan pipeline, which, following the nuclear deal with Iran and the pending removal of sanctions, is also in the works. The U.S. opposes the Iran-Pakistan project, but China is helping push it forward. Both projects would help ease the natural gas deficit in Pakistan, but the country will have to navigate competing pressure from China, the U.S., and Iran.

The government of Pakistan appears to prefer the Iranian route, due to its lower cost. The project could provide enough gas to erase the country’s electricity generation deficit. Also, Pakistan has a close alliance with China, making the project the obvious choice. China is planning an array of infrastructure projects, including roads, rail networks, deepwater ports, and pipelines.

The Asian Development Bank (ADB) is supporting infrastructure development in Pakistan, providing the country with $1.2 billion in financial assistance each year between 2015 and 2019. The investment will focus on energy, transport, agriculture, natural resources, water, and urban infrastructure.


Pakistan has large natural gas reserves, albeit reserves that are in decline. The pent up demand in the country is massive. With millions of people without access to modern forms of energy, natural gas is sorely needed. Pakistan is also the second largest market in the world for natural gas vehicles, so demand for gas is not just for electricity and industrial purposes. Right now, blackouts are a regular occurrence, and shortfalls are made up from imports of LNG. But if the country can help E&P companies to develop domestic gas resources, the demand is a certainty.

Still, infrastructure constraints are real, and will hold back development. So will the high cost of production, coupled with regulated prices that cap returns on investment. This report did not even touch on the security concerns facing Pakistan, which throw up yet more red flags.

But a lot is about to change. New pipelines are in the works. Pakistan has no choice but to move rapidly to try to expand access to energy, as the security of the country depends on it.

Riaz Haq said...

#Pakistan’s discoveries add 50 million cubic ft per day (mmcfd) of #gas, 2,359 barrels per day (bpd) of #oil levels.

Pakistan has made the highest number of oil and gas discoveries in the current month as exploration companies found fresh hydrocarbon deposits in six wells that will add 50.1 million cubic feet per day (mmcfd) of gas and 2,359 barrels per day (bpd) of oil to the existing production levels.

Of these, major discoveries have been made in Sindh that already has a big share in total gas output in the country.

Gas utilities: World Bank recommends single transmission firm

Petroleum and Natural Resources Minister Shahid Khaqan Abbasi, while speaking during a meeting of the National Assembly Standing Committee on Petroleum and Natural Resources chaired by Bilal Ahmed Virk on Tuesday, said four discoveries were made in Sindh and the remaining two in Khyber-Pakhtunkhwa.

Of these, Oil and Gas Development Company made two finds, MOL Pakistan two and Petroleum Exploration Limited and United Energy Pakistan one each. The discoveries have shown presence of 31.6 mmcfd of gas and 339 bpd of crude oil in Sindh and 18.5 mmcfd of gas and 2,020 bpd of oil in K-P.

Sui Northern Gas Pipelines Limited (SNGPL) Managing Director Amjad Latif warned that the country’s gas reserves were depleting and no gas was available for the domestic consumers in Punjab. He pointed out that the purchasing cost of gas for domestic consumers stood at Rs510 per million British thermal units (mmbtu) but the consumers coming under the first slab were receiving it at Rs110 per mmbtu.

Eighty-five per cent of domestic consumers were paying less than 50% of the cost of gas and the industrial and commercial consumers were cross-subsiding the domestic consumers, he said.

However, now industrial and commercial consumers were being provided imported liquefied natural gas (LNG), so the burden of cross-subsidy had been shifted to SNGPL that was feeling the strain on its finances.

Though the gas production was declining, Latif told the committee that the company would lay pipelines over 8,000 km in the current year. At present, 1.5 million applications for new gas connections are awaiting approval of the company.

The country was facing gas shortages as politicians were using it as a tool to win elections.

During the meeting, National Assembly member Mian Tariq Mehmood, who belonged to the ruling PML-N, alleged that SNGPL had provided 100 gas meters in his constituency to please his political rival Imtiaz Safdar Warraich, though his requests for new meters were turned down repeatedly.

He insisted that the provision of gas meters to his opponent had damaged his political image. NA Standing Committee Chairman Bilal Ahmed Virk accused Director General Petroleum Concession Saeedullah Shah of not responding to the committee for the last two years.

Sui lease extension: PPL to pay 10% bonus to Balochistan

Describing Shah’s attitude as non-sense, he said he was not cooperating with the committee and sought the record of past meetings to show response of the director general of petroleum concession.

The committee also took up for review the issuance of licences for liquefied petroleum gas (LPG) stations to the defaulters that were previously running CNG stations.

It recommended that rules of Oil and Gas Regulatory Authority (Ogra) should be amended to ensure the clearance of outstanding bills of SNGPL, Water and Power Development Authority and banks before issuing licences for setting up LPG stations.

Riaz Haq said...

Tapping #Pakistan’s wealth of #oil and #gas. #energy #LNG #pipelines #CPEC @GlobalCapNews …

Energy has long been Pakistan’s curse. This is a country whose large and rising population (the
country had 195 million people as of October 2016, according to government data, making it the
world’s sixth most populous country) has long presented its government with a complex challenge:
to tap new sources of hugely valuable energy where little, if any, had historically existed.
There is carbon here in spades. Pakistan boasts 754 billion cubic metres’ worth of gas, placing it
28th in the list of the world’s largest sovereign producers of natural gas. It has rather less oil, at
least in comparison to other countries in the region, placing it 52th on the global list.
Coal, though, is another matter. A recent find in the desert district of Tharparkar, hard by the border
with the Indian province of Rajasthan, may ultimately generate up to 185 billion tonnes of
anthracite and lignite coal. If that find yields anything near its earliest estimates, it would vault
Pakistan overnight from a ‘resource­poor’ nation into the energy­producing major leagues.

Coal would help diversify the
country’s energy mix. Pakistan is
heavily reliant on natural gas and
oil to meet its primary energy
requirements. The country’s gas
deficit currently runs at between 2
billion and 4 billion cubic feet per
day, depending on the season and
the time of day. Total local crude oil
production, meanwhile, has long
lagged: Pakistan currently has to
import around 87% of its oil needs,
mostly from the United Arab
Emirates and Saudi Arabia


In September 2016, Shahid Khaqan Abbasi, Minister of Petroleum and Natural Resources, told
Pakistan’s National Assembly that the oil and gas sector had received investments totaling
$15.3bn since the start of 2013, adding that the country had made 82 oil and gas discoveries over
the same period.
Analysts are impressed by what they are seeing. “Lucrative policies on gas pricing, stability
resulting from improving law and order, and vast arrays of unexplored territory, have created
attractive propositions for exploration and production companies, who are well positioned to deploy
the excess cash on their books,” notes Farrukh Sabzwaria, director of regional equities sales at
Credit Suisse in Singapore. “Oil & gas exploration has made up 30%­40% of foreign direct
investment over the past few years — and four multinationals are firmly entrenched, and should
continue to bring in FDI for exploration and development activities.” In other words, Pakistan, once
a minnow in the fields of energy production and exploration, is well on its way to becoming a major
player in the field, thanks to far­sighted government policy


In September 2016, Finance Minister Ishaq Dar said that three south­north pipelines, stretching
from Gwadar to western China, were under construction, with the first set for completion by the
end of 2016. “The second,” the finance minister added, “would be a parallel north­south pipeline
built [with] Russian investment, while the third pipeline is planned between the towns of Gwadar
and Nawabshah” in the easterly province of Sindh.

Then there are the country’s untapped reserves of carbon. In November 2015, petroleum ministry
advisor Zahid Muzaffar said Pakistan’s total oil and gas reserves, including unexplored offshore
wells and fields, were greater than all Central Asian states combined. If true — and given that
Central Asia includes one major gas producer, in Turkmenistan, and one major oil produce, in
Kazakhstan — it would place Pakistan’s energy sector and the wider economy in a highly
promising position.

Riaz Haq said...

Joint #US-#Pakistan #energy collaboration at #ASU energizes entrepreneurial aspirations 4 #Pakistani scholars

A second cohort of Pakistani engineering scholars has completed their entrepreneurship course of study at Arizona State University as part of the USPCAS-E program. In addition to entrepreneurship, the students are also studying engineering and policy in an effort to improve their country’s energy prospects.

U.S.-Pakistan Centers for Advanced Studies in Energy is a U.S. Agency for International Development project focused on applied research relevant to Pakistan’s energy needs. The project, which is a partnership between Arizona State University and two leading Pakistani universities, aims to produce skilled graduates in the field of energy.

ASU entrepreneurship professor Kenneth Mulligan said: “The intention of the program is to improve availability of clean, reliable power in Pakistan. Strategic innovation and entrepreneurship provides a pathway for widespread implementation of their innovative technical solutions.

“Pakistan is subject to rolling blackouts that impede stability, progress and business. The problems faced in Pakistan are not easy problems, which is why coming up with solutions that reside outside the box are so critical,” said Mulligan, who has taught and mentored both cohorts so far.

“They get to use causative thinking, systems analysis and technical feasibility to solve complex technical problems in energy generation and distribution. However, this problem-solving approach and skillset is insufficient in the development of innovative and disruptive products and technologies.”

Riaz Haq said...

#Pakistan's new PM charges ahead with reforms. #energy, #economy, #civil #military ties, - Nikkei Asian Review

As soon as he became chairman of the Economic Coordination Committee, or ECC, the government's highest decision-making body for economic policies, Abbasi founded Ministry of Energy by merging of Ministry of Petroleum and Natural Resources and the Ministry of Water and Power to accelerate construction of the power infrastructure so essential for economic growth.

The new prime minister appointed former Minister of Planning and Development Ahsan Iqbal, one of his most able cabinet members in the area of economic reform, as minister of interior. Abbasi is also keeping a close eye on security, especially in preventing terrorism and deterring organized crime.

The business sector has welcomed the new prime minister. If he follows the previous government's policies that proved moderately successful in implementing reforms and achieving high economic growth, the ruling Pakistan Muslim League (Nawaz), or PML-N, could likely overcome the Sharif scandal and do relatively well in next summer's general election.

Key ministries merge

Merging government offices in charge of energy policy had been discussed in order to deal with the massive power shortage, which has exceeded 5000 megawatts. But the merger failed to materialize due to lack of political will within the ruling party and the government.

Since his days as minister of petroleum and natural resources, Abbasi has been pushing for construction of liquefied natural gas terminals and development of gas fields. The creation of the ministry of energy jibes with his long-held view that the country should expand gas-based power generation to address energy shortages.

Finance Minister Ishaq Dar, who oversaw economic and fiscal policies, was the key player in the previous cabinet. But he gave up ECC chairmanship to Abbasi because of a Supreme Court order to investigate allegations that he illicitly amassed personal wealth. This clearly shows that the power center has shifted within Pakistan.


In mid-August, Abbasi met prominent business leaders in the country's commercial hub of Karachi, where he personally answered their questions and addressed concerns. "[We are] really impressed they are overcoming the damage by the disqualification of the former PM and [are] much more united," said one of the participants. "[Abbasi's] business practice is much better than his predecessor."

Pakistan's economy is projected to achieve growth of more than 5% in the fiscal year that ended in June, due in large part to support from the International Monetary Fund, projects related to the China-Pakistan Economic Corridor, expansion of foreign investment, and a recovery in personal spending. This would be the highest growth rate in 9 years.

The fiscal deficit is moderately expanding due to pork-barrel projects ahead of the general election, and exports aren't growing as expected. But investors at home and abroad are showing more faith in the government because of the improved energy and security situations.


"The new prime minister is a businessman turned politician, having run the state airline and set up a low-cost carrier," says Ehsan Malik, CEO of the Pakistan Business Council, a leading think tank on economic policies. "He has deep understanding of business and economic priorities. He is also a good listener and a quick decision-maker."

Malik is also optimistic about the ruling party's recovery from the Sharif scandal. "Notwithstanding the change of leadership, the PML-N government will complete its five-year term," he says.

Riaz Haq said...

'Spectacular' drop in renewable energy costs leads to record global boost
Falling solar and wind prices have led to new power deals across the world despite investment in renewables falling

Renewable energy capacity around the world was boosted by a record amount in 2016 and delivered at a markedly lower cost, according to new global data – although the total financial investment in renewables actually fell.

The greater “bang-for-buck” resulted from plummeting prices for solar and wind power and led to new power deals in countries including Denmark, Egypt, India, Mexico and the United Arab Emirates all being priced well below fossil fuel or nuclear options.

Analysts warned that the US’s withdrawal from the Paris climate change agreement, announced last week by Donald Trump, risked the US being left behind in the fast-moving transition to a low-carbon economy. But they also warned that the green transition was still not happening fast enough to avoid the worst impacts of global warming, especially in the transport and heating sectors.

The new renewable energy capacity installed worldwide in 2016 was 161GW, a 10% rise on 2015 and a new record, according to REN21, a network of public and private sector groups covering 155 nations and 96% of the world’s population.

The new record capacity cost $242bn, a 23% reduction in investment compared to 2015, and renewables investment remained larger than for all fossil fuels. Subsidies for green energy, however, are still much lower than those for coal, oil and gas.

New solar power provided the biggest boost – half of all new capacity – followed by wind power at a third and hydropower at 15%. It is the first year that the new solar capacity added has been greater than any other electricity-producing technology.

“A global energy transition [is] well under way, with record new additions of installed renewable energy capacity, rapidly falling costs and the decoupling of economic growth and energy-related carbon dioxide emissions for the third year running,” said Arthouros Zervos, chair of REN21.

Riaz Haq said...

Pakistan Energy Mix: Overview of Gas Sector (Upstream)
Pakistan imports almost 80% of its energy sources (oil, gas and LNG). GVS brings out a detailed report on Pakistan’s upstream sector to analyze country’s mammoth challenges. It examines how innovative policy making, better management and vision can still make a difference.

The country used 28.1 million TOE of petroleum products in FY18, with 85 percent imported. Currently, Pakistan has a total of 9 million gas consumers in the country, with an annual addition of 0.5 million consumers. Sindh by far has the country’s largest gas production at 943,644 MCFt (65%), Balochistan at 310,535 MCFt (22%), KPK at 151,178 MCFt (10%), and Punjab 53,580 MCFt (3%).

Sindh also has three of the current largest fields producing gas, Mari, Qadirpur, and Kandhkot. Sui gas field in Balochistan, discovered in 1952, was Pakistan’s first and largest gas field found so far, had around 13 TCF of gas. It currently only has one TCF remaining and is nearing the completion of its life. These five fields represent over 50 percent of Pakistan’s recoverable reserves.

Gas Consumption
Pakistan has experienced major energy crises in the past decade as a result of expensive fuel sources, suffering from chronic natural gas shortages in the winter and electricity shortages in the summer, all exacerbated by the circular debt, and insufficient transmission and distribution systems over the past several years.

Roughly, 50 percent (about 105 million people) of Pakistan’s population still use biomass for cooking because of low electricity and gas supply. Natural gas plays a significant role in the energy matrix of Pakistan. In 2018, natural gas accounted for an estimated 30 percent of Pakistan’s primary energy consumption, petroleum at 35 percent, and coal at 16 percent.

Pakistan is the 20th largest gas consumer of the world, with an established natural gas industry since the 1950s. However, ironically Pakistan’s gas consumption is nearly the same as in France, which is a developed and industrialized country [with a GDP ten times bigger than Pakistan].

Natural gas consumption has increased from 1,377,307 MMCFt to 1,454,697 MMCFt. RLNG imports have increased to 313,902,345 MMBtu. There was a time when Pakistan was self-sufficient in gas. However, increased domestic demand over time, fueled by cheap mispricing of the natural resource, creation of the CNG motor vehicle industry, lack of alternative fuels, and diminishing production have resulted in increased amounts of imported gas.

In FY18, approximately 7.7 million TOE LNG gas was imported. Currently, Pakistan has over 9 million domestic consumers of gas, and these are growing by over 8% each year. The majority of domestic consumers, around 5.4 million, are based in Punjab; that account for 60 percent of the total domestic gas consumers, Sindh has 35 percent of the country’s domestic consumers at 2.6 million.

Riaz Haq said...

#Pakistan’s installed #power capacity soars. With the addition of 3,933 Megawatt (MW) in 2019-20, installed capacity has jumped from 37,402MW to 41,335MW. #Fuel mix is 49.1% from indigenous resources and 50.9% from imported fuels. #electricity #energy

With a slump in demand on account of Covid-19, Pakistan’s installed capacity of electricity would jump to 41,335 Megawatt (MW), adding more woes on account of power tariff increase due to higher capacity payments and lower plant utilisation factors.

According to energy experts, most of the power plants would remain idle due to low demand of electricity in Pakistan following coronavirus-fuelled economic recession. This situation would lead to additional burden of capacity payments in the form of hike in electricity rates.

According to Covid-19 Responsive Annual Plan 2020-21, Pakistan’s power sector may face an unusual situation because of decreased demand of electric power consumption due to the outbreak. The energy demand could be suppressed for all primary energy sources like electricity, natural gas, LNG and petroleum products during the next financial year 2020-21.

In the power sector, plant utilisation factors for power generation stations will be low, increasing the cost of electricity, reveals the Annual Plan. According to it the power sector reforms would be accelerated to improve the energy transmission and distribution performance and overall management of the power sector. Special attention would be given to reduce the power losses to bring down the cost of electricity, it added.

During fiscal year 2020-21, the power generation capacity of 3,933 Megawatt (MW) including 447MW from renewable energy will be added, which will increase the existing installed capacity from 37,402MW to 41,335MW.

An amount of Rs204.54 billion has been proposed in the PSDP 2020-21 for power sector projects of generation, transmission and distribution including government budgeted, self-finance of power sector corporations excluding IPPs.

In year 2019-20, 1,441MW power will be added to the national grid. As a result, the installed capacity would be enhanced from 35,961MW to 37,402MW. As on June 2020, overall generation mix will consist of 49.1% indigenous resources and 50.9% imported fuels.

Regional connectivity

With a commitment to continue work, Pakistan has allocated Rs3 billion funds to execute Central Asia South Asia (CASA) power import project to import electricity from Central Asian States.

According to the budget document, an amount of Rs3 billion has been proposed in the Public Sector Development Programme (PSDP) 2020-21 for the project. The implementation of CASA will continue in 2020-21. The transmission capacity will be enhanced by 4,445MVA on 660Kv network to June 2021. Furthermore, about 94 kilometres and 880km transmission lines would be constructed on 500kv and 600kv, respectively.

An amount of Rs7.8 billion was allocated in PSDP 2019-20 for Central Asia South Asia (CASA) transmission project. Significant progress has been made on the transmission project envisaging laying 1,200km transmission lines for import of 1,300MW from hydel power generation from Tajikistan and Kyrgyz Republic through Afghanistan to Pakistan. The parties have signed core power agreements, including power purchase agreements (PPAs). Meanwhile, land possession has also been taken and security clearance at site is in progress.

Losses of power distribution companies are still higher than the global average of around 8%. Higher losses will be curtailed through power distribution companies’ enhancement projects. The government has given targets to distribution companies to reduce losses in the next financial year.

Riaz Haq said...

(Bloomberg) — As developed nations turn away from coal-fired power, Chinese funding has helped the dirtiest fossil fuel take off in Pakistan.

Coal’s surge in the South Asian nation is symbolic of the difficult choice that the region’s developing countries face as they seek affordable energy to support economic growth while trying to limit chronic air pollution. Asian demand is expected to support the commodity as its usage drops in most of the developed world in a transition to cleaner or renewable energy sources.

Is Canada's real estate forecast too optimistic?

Pakistan’s coal-fired power generation jumped 57% to a record in the fiscal year through June, according to data from the government’s National Electric Power Regulatory Authority. Coal accounted for about a fifth of total output, backed by supplies from the country’s first coal mine in its Thar region, developed as part of China’s Belt and Road plan.

Coal is set to expand further as China pushes funds into building more power plants in the country and mines to feed them. Pakistan is one of the flagship markets for China’s Belt and Road initiative, with more than $70 billion of projects including coal and liquefied natural gas fired power plants helping the nation end decades of electricity shortfalls.

“China has been cutting back on coal at home but it has no compunction about using coal in things that it funds outside of China,” said James Dorsey, a senior fellow at the S. Rajaratnam School of International Studies in Singapore. “Chinese can be willing but they need a partner to go along with them. In this case it’s the Pakistani government.”

Belt and Road progress has slowed recently with overseas energy spending last year dropping to the lowest in a decade, dogged by accusations that China is luring poor countries into debt traps for its own political and strategic gain. China’s President Xi Jinping has publicly urged more clean energy as part of the program, and the plan found new life in Pakistan recently with an agreement to build two hydro-power generation projects.

Until 2016, Pakistan had just one coal-burning power plant. It now has at least nine and more are in the making. The first target of these plants has been to replace expensive fuel oil-based generation facilities that burdened the nation’s economy with heavy costs and pollution.

The rise in coal power has come because of supplies from the Thar coal mine, Power Ministry spokesman Zafar Yab Khan said. The country will balance rising coal use with more renewable energy and its coal plants will use low-emissions technology, he said.

With the shift to coal, average generation costs dropped 11% during the fiscal year, according to data from Karachi-based brokerage Arif Habib.

“Pakistan has increased coal-based generation to make it its new base to replace its previous expensive fuel oil-powered power plants,” said Tahir Abbas, head of research at Arif Habib. “This has also helped bring down the power prices, energy import bill and increase the share of an indigenous energy source.”