ISLAMABAD - Majority of experts consider the Liquefied Natural Gas (LNG) agreement between Qatar and Pakistan a game changer, which will help in increasing power generation, reducing loadshedding and improving gas supply to the industrial sector.
However, others have different views, who see a very little impact of the agreement on domestic gas consumers and loadshedding. The split opinion came when The Nation contacted the energy experts , Petroleum and Planning ministry officials for comments on $16 billion (LNG) import agreement, signed between Pakistan and Qatar. According to the agreement, the cost of gas for the upcoming month of March is estimated to be $4.78per mmbtu.
The experts discussed various aspects of the agreement, and its impact on the lives of ordinary citizens Barring few, almost all the experts acknowledged the agreement’s role in increasing power generation in the country.
Former secretary petroleum and an energy expert, Gulfaraz Ahmad, forecasted a big change, in the next six to eight weeks, in the lives of ordinary citizens due to improvement in the power production.
He said that starting from March, Pakistan would be receiving 400 mmcfd of gas, which was about 20 percent of the gas shortage. “The demand-supply gap in Pakistan is approximately 2 billion cubic feet per day; the import would plug about 20 percent of that gap,” he added.
He said that in the coming month, the country would see positive changes in terms of availability of gas, mainly due to two reasons: firstly due to reduction in its demand and secondly due to increase in the LNG supply. “Due to reduction in gas demand in the coming days, our gas availability will be further increased by 10 to 15 percent,” he said.
On the agreement’s effects on the power sector and load shedding, Gulfaraz said that the agreement would ensure smooth supply of gas to the power sector. “There are four modern turbines, 200 mw each, in Punjab, which are working on diesel, he said, adding, “these are 50 percent more efficient.” “The use of LNG in the power sector will reduce the cost of the power generation, which, in turn, will deflate the electricity bills, he elaborated. A power expert in the Planning Commission, who requested not to be named, said that the deal would increase power generation and reduce load shedding.
“All the HSD operated power plants will be converted to LNG in the short-term, and in long run, it will add 3,600 mw RLNG operated power to the national transmission system,” the official said adding, “Around 600-700 megawatt RLNG–based electricity has already been added to the national grid.” “Similarly three RLNG-based power projects of 1,200 MW each are in advanced stages and will be able to start adding energy to the system by the end of 2017,” he explained. He added that currently the share of thermal in the total electricity production was about 70 percent and the provision of LNG would help in improving the energy mix
KPOGCL Chief Executive Officer Razziuddin said the agreement was a win-win situation for the country “Though LNG is expensive, but it is the best available option in the current scenario,” he elaborated.
Razziuddin said that LNG was always cheaper than Furnace Oil, and its price difference with diesel was huge. ”Besides it is much efficient in power generation than furnace oil, he explained.
He said that by using 100 mmcf day gas in 9FB series gas turbine the country can produce 800MW electricity, while using it in the old turbine will generate 500 MW electricity. The import of LNG will reduce the use of diesel in power generation which will result in reduction the cost of production. It will also provide some relief in loadshedding reduction in the country.
Though in long run the imported LNG is expensive than the natural gas but “We don’t need to think of LNG as just a fuel for burning but a value additive to our industrialization,” Raziuddin said. For example Japan is doing 52 times value addition with the imported LNG . He said that the agreement with Qatar will ensure the continuity of LNG supply which is a must for attracting investment in the country’s industrial sector. Investors are not going to come if they have any doubt about the energy supply, Raziuddin said.
The central leader of the All Pakistan CNG Association, Ghayas Paracha, while talking about the impacts of LNG agreement, said that the government-to-government deal will open the venue for the private investment in LNG procurement. “Earlier investors were doubtful about the LNG future and that’s why they were hesitant to invest in the sector but now the uncertainty was removed and private companies will enter in LNG procurement business,” Ghayas Paracha said. The country’s CNG sector will also get benefit from the deal as it will ensure the continuity of supply and will bring the customer back to the CNG stations. The unavailability of gas to the CNG sector, particularly in Punjab, has brought it to the verge of collapse but now LNG will give a new life to it. It will bring new investment to the CNG sector which will help in creating more jobs. CNG association has now the options to either buy it from the government or procure it by its own, Paracha added.
But some officials of the Ministry of Planning are not ready to buy the government claim for getting credit for getting low prices for the LNG . The planning experts , who were not officially allowed to talk to media, said on the condition of anonymity that it is not because of the government efforts but instead it is the international downward trend in LNG market which has provided Pakistan the opportunity to get cheaper rates.
According to these officials in 2013, Japan and Korea was paying $15 to $16 a million British thermal units for LNG purchase but these days its roaming around $5 per million British thermal units which is further forecasted to come down to less than $5. According to them, today LNG prices seem cheaper than the average prices of domestic natural gas and Iran-Pakistan pipeline but in long run the imported LNG will be much expensive. The energy expert in Planning Commission was of the view that LNG can never directly benefit the domestic consumers as it cannot be provided directly to the households. The line losses in domestic gas supply are over 11 percent and the charging of such a huge line losses from the domestic consumers will make LNG much expensive for them. LNG will be sold only to the bulk consumers or CNG sector, the official said, adding that the line losses to the bulk consumers are just 0.5 percent while CNG sector has already agreed to bear 10 percent losses. However the domestic consumers can save some amount for the electricity bills, the official said. Regarding its benefits to the farmers, the official said that the farmers, who are running their tube-wells on diesel, are unlikely to get any respite from the LNG import however those who are using electricity may get some relief in their monthly bills. The official however said that the quality of imported LNG is about 10-12 percent superior to the local gas. The quality of pipeline gas is 980 BTU while of the imported gas is 1100 BTU, the official added.
When asked whether there is any chance that LNG supply to the fertilizer industry will reduce the prices of fertilizer, the official said ‘no’. As compared to the local gas the cost of the imported LNG is about 590 percent higher for the old fertilizer plants and 1100 percent for the new fertilizer plants, the official said. The price for the local gas to the new fertilizer plants is Rs 70 per mmbtu, for the old fertilizer plants is Rs123 per mmbtu, while the imported LNG will cost them about Rs 850per mmbtu, the official explained. With such a huge price difference it will be hard for the fertilizer companies to sell their products on cheaper prices.
Federal minister and his cronies have already termed the deal as a ‘game changer’, under which Pakistan will import 3.75million tonnes of LNG from Qatar. LNG will be supplied to the power, industrial and CNG sectors. The government claims that the use of LNG in power generation will bring down the electricity bill. According to government estimates, the country’s LNG requirements will reach around 15 MTPA in next five to six years.
The spokesman of the ministry of petroleum and natural resources, as usual was not available for comments, however another official close to the development said on the condition of anonymity that there are four major benefits which the country will get immediately from the LNG agreement.

The official said that the LNG agreement will help in adding 2000MW RLNG-based electricity to the national grid. He said that LNG will reduce loadshedding by at least by four hours.
Secondly the use of LNG will help in reducing the oil import bill, the official said, adding that Pakistan is the second largest importer of crude oil. Thirdly, the provision of LNG to industries will revive the industrial sector, the official said, adding that its supply to fertilizer plants will reduce the country’s reliance on imported fertilizer. The local fertilizer will be cheaper than the imported one which will help in reducing the farming input cost, the official said. Finally LNG is much cleaner fuel than diesel or any other oil which will help in reducing pollution in the country, the official maintained.