A hydrocarbon is a chemical made up of hydrogen and carbon and fossil oil and natural gas are rich in hydrocarbons. Saudi Arabia, Qatar, Iran, UAE, Iraq, Libya, Kuwait, Algeria, are rich economies of the world for no other reason but that they enjoy a huge windfall from their massive and easily exploitable hydrocarbon reserves. Saudi Arabia is the largest crude oil producer / exporter on the planet and the largest economy as well in the Arab world. Similarly Qatar is the biggest liquefied natural gas (LNG) exporter in the world. Exclusively relying on oil and gas for long decades, 70% to 80% state revenue of these OPEC member countries come from the hydrocarbon sector. Saudi Arabia is pumping over 10 million, Iraq 4 million and Iran 03 million barrels / day of surplus crude oil to world market. After 68 years of independence, Pakistan’s oil production reached an all time high of 1 lac barrels/day (1 barrel = 42 gallons = 159 liters). Pakistan can be termed as an oil and gas deficit country.

At present Pakistan’s conventional natural gas production stands at 4 BCFD (billion cubic feet per day) while the country’s daily gas demand particularly in the winter months when the demand of natural gas goes up is estimated at 8 BCFD which is twice the local production. Gas still has 90% share in Pakistan’s total hydrocarbon production basket. Pakistan has proven conventional resources of gas equal to 23 TCF (trillion cubic feet) but exploration and production (E&P) activities are slow to tap into these resources. The gas production may come down to 1.6 BCFD in 2020 as existing deposits are depleting fast and gas demand could touch 13 BCFD in the same year. Country’s total energy consumption is 59 million tons of oil equivalent (TOE) and about 50% of this demand is met by natural gas followed by oil, hydel and nuclear.

The causes of our gas crisis are listed below:

1. Depleting gas reserves:

The production of indigenous natural gas is declining and the rate of new discoveries in KPK and Sindh do not match the surging gas demand. At a recently held petroleum conference in Islamabad it was apprised to the participants that gas discoveries made during the past 5 years could not meet the country’s gas demands even for a few days.

2. Law and order situation:

The foreign well equipped E&P companies remained reluctant to undertake exploration and development of new gas fields in Baluchistan, KPK and Sindh due to the worst law and order situation prevalent till recent past. Exploration and production projects are time and capital intensive as gas treatment plants are first to be installed to treat and purify the explored gas before being injected into the system.

3. New connections / rising

consumer data base:

Due to the increasing trend in the population shift from rural to urban areas and boom in the construction of housing schemes in large cities across the Pakistan has increased the gas connection demand many fold notwithstanding the fact that gas connection fee for domestic and commercial purposes has been increased substantially.

4. Failure to curb gas theft /UFG:

About 40% of the gas lost by SNGPL and SSGCL is attributable to theft conveniently called UFG (unaccounted for gas). UFG is calculated as difference between total volumes purchased and sold to consumers by gas utility companies during a given fiscal year. The two utility companies have failed to control and reduce UFG losses which are 10 plus percent against the international UFG standard 4%. However UFG was increased from 5% to 7% by OGRA board in 2009. 1% UFG loss translates to a revenue loss of Rs. 3.55 billion annually.

5. Natural gas shift to CNG sector:

The government of former president Pervez Musharraf promoted the use of CNG in private vehicles to lesser the import of oil into the country. The country has now over 3.5 million vehicles running on CNG and more than any other country in the world. It was not a prudent decision of the government particularly in a country whose gas fields are on depleting mode.

The government has no option but to rely on expensive imported gas transported by ship and pipeline. Regassified LNG is pumped to the gas networks of SNGPL and SSGCL. While Iran-Pakistan and TAPI gas pipeline are two key projects to bridge demand and supply gap of natural gas but it will take years to transform these projects into operation phase. Till that time we will continue to suffer the consequences of gas shortfall.

Which brings us to oil; aka liquid gold. With the surging influx of means of transportation such as two wheelers, three-wheelers, cars, wagons, buses, trucks, trailers plying on the roads across the country and its use in power sector for generation of electricity and domestically by uninterruptable power supply (UPS) machines, oil requirement is rising fast and oil imports have become heavy burden on country’s external balance.

An aggressive exploratory programme to exploit the oil potential in Kohat division of KPK is in place. Oil discoveries were made and resultantly a UAE based petroleum firm has signed an MOU to set up an oil refinery in KPK. But these oil discoveries do not match the demand of oil that continues to grow exponentially.

Ours is a dense populated country where demand of hydrocarbons is growing like geometric progression and resources are developing like arithmetic progression. There is a dire need to exploit untapped oil and gas potentials on a fast tract basis. It is high time to revisit the petroleum policy and frame such incentives that may attract foreign companies to come over here and explore and develop new oil and gas fields to help mitigate our dependence on imported and expensive hydro carbons. On top of that we have to make Pakistan a terrorism free country.

Pakistan has proven conventional resources of gas equal to 23 TCF (trillion cubic feet) but exploration and production (E&P) activities are slow to tap into these resources.