The visit could lay the groundwork for Russia to build a pipeline to transport natural gas from Karachi to Lahore.
Pakistani Prime Minister Imran Khan Arrival in Russia It was overshadowed by the Russian forces entering Ukraine.
geostrategic implications for Pakistan two day visit The first meeting in Moscow by a Pakistani prime minister in 23 years will likely be analyzed through the hardened stances of many actors in the current conflict.
However, the long-term results have pretty much everything to do with the future of natural gas.
Khan’s visit comes just after Germany, the biggest consumer of Russian gas. stopped certification of a new Nord Stream 2 pipeline. Russia recently reached an agreement. 30 years The gas supply contract to China coinciding with President Vladimir Putin’s visit to the Beijing Winter Olympics.
Russia is looking for new customers construction technology and fossil fuels, and with Pakistan desperate for a safe and cheap supply of gas, the visit could lay the groundwork for Russia to build a pipeline to transport natural gas from Karachi to Lahore.
Russia is the world’s second largest natural gas producer. Meanwhile, Pakistan, with its dwindling gas reserves, big supply problem since gas still makes up a significant part of the energy mix.
Pakistani Energy Minister Hammad Azhar Third PoleHe said the trip was merely an opportunity to “learn the technology” of laying a gas pipeline from the Russians, which he said was the best in the business.
Pakistan wants to build a 1,100 kilometer gas pipeline, known as the Pakistan Stream Gas Pipeline Project, from Port Qasim in Karachi in Sindh to Kasur in Punjab. The $2.5 billion project is tentatively scheduled to begin next year, but the first deal was signed first in 2015 and the second in 2021.
“We don’t have the expertise of the scale and size required for this project,” Azhar said. “The project will have the majority share” [74 per cent] From the Pakistani side so it can be a win-win,” he said.
Former prime minister Shahid Khaqan Abbasi, who conceived the project in 2013 when he was oil and natural resources minister, held a similar view. Abbasi said the project remained idle due to various “financial bottlenecks”.
“My fear is that this government will face the hurdle we faced and will not be able to justify the build-operate-transfer price structure of how much it will pay the Russians for the amount of gas flowing through the new pipeline,” Abbasi said. refers to a model in which major projects are financed and developed through public-private partnerships.
Increasing demand, decreasing supply
Pakistan’s natural gas production peaked in 2009, but gas has continued to increase steadily as a percentage of total energy supply since then, according to the International Energy Agency. This led to a slow-moving crisis as Pakistan sought to close the gap.
Major cities are increasingly facing prolonged gas cuts, which is straining residents and businesses alike. In December last year, the government said The country will soon run out of local gas and hence the dependency on expensive imported gas will increase.
As a former energy minister, Abbasi saw importing liquefied natural gas (LNG) as a quick solution to the energy crisis caused by the decline in domestic gas production.
“We tried to bring gas through a pipeline from Iran, but that was subject to US sanctions and another one from Turkmenistan, but even that couldn’t happen for security reasons as it had to go through Afghanistan,” he said. Third Pole.
“We need this pipeline because we need more LNG,” said current energy minister Azhar. “It’s a project that all my predecessors struggled to build. Although the current government will not rush, it will not hesitate to be determined either.”
Former prime minister Abbasi is no longer sure whether Pakistan needs a gas pipeline.
“Domestic gas has decreased a lot and existing terminals are operating at 60pc capacity. “The existing pipeline network is sufficient to transport domestic and imported gas for now,” he said.
Weak infrastructure, interrupted supplies
The real question is whether Pakistan will continue to invest in gas infrastructure. That’s why a trip to Russia and a possible deal is very important for Pakistan’s energy future.
“Today, 60 percent of LNG is used by three power plants and the remaining 40 percent is used by the industrial sector,” Azhar said. As local gas was depleted, “a number of new customers”, including fertilizer and cement plants, began to rely on LNG.
right now, 4.5 million tons of LNG It is imported every year from Qatar Energy, which Pakistan has long-term agreements with. The country is buying more from Italian oil and gas giant ENI and commodity trader Gunvor.
This is still not enough for Pakistan.
Azhar said that as gas reserves have decreased by nine percent a year over the past few years, more and more import industries are turning to LNG to continue operating their factories.
There is demand, but there is no infrastructure to meet it.
Pakistan has two LNG terminals: Engro Elengy Terminal Limited (EETL) and PGP Consortium Limited (PGPCL), built in Port Qasim in 2015 and 2017 respectively.
With the elections approaching in 2023, the government’s desperation to end the gas shortage has made it difficult for the prime minister to It has been ordered the energy ministry will build a third terminal by the end of 2023.
But Pakistan’s problem does not end there.
This winter, after two long-term contract suppliers – ENI and Guvnor – defaulted on deliveries, Pakistan was forced to buy at a great price. $30.6/mmbtu To meet the demand from Qatar Energy.
“We will continue to face a major gas shortage due to domestic depletion, so we should look to LNG for relief. Khurram Hussain, a prominent business and economics journalist, said it is the biggest primary fuel for Pakistan after all, adding that “that’s why the pipeline is important to the country.”
Forgetting a green energy future
However, in the race to tackle the gas shortage, the government seems to have forgotten its promise to run the country in a cleaner and greener way.
While it made sense to invest in LNG in the past, it is too expensive today, said Vaqar Zakaria, president of environmental consulting firm Hagler Bailley Pakistan.
He said LNG used to be “the cheapest and cleanest of fossil fuels” and Pakistan has a ready-to-use gas infrastructure.
But Pakistan added that he didn’t realize that with coal and oil having a “bad reputation”, the world would turn to gas to replace relatively more polluted fuels and that the price of gas would naturally rise with the rise in global demand. .
He said it’s time to take advantage of the country’s “potential for wind and solar” and not rely on imported gas for electricity generation.
It will also cost much less to switch to sun and wind.
Haneea Isaad, a research fellow at the Institute for Energy Economics and Financial Analysis, has calculated that the cost of an offshore floating LNG terminal would be between $ and $.400–500 million.
“I don’t take into account operating expenses and imported fuel costs,” he said. Third Pole.
By contrast, at $600,000 per megawatt (MW), he said, installing a 1,000 MW solar power plant would cost nearly the same as a single LNG terminal.
On top of that, life-cycle greenhouse gas emissions from wind and solar are only a fraction of those associated with LNG. “Not to mention the added advantage of being in the domestic market and having negligible marginal costs,” Isaad said.
Claims that LNG is cleaner coal According to Issad, caution should be exercised.
“In the short term, if we look at things from a life-cycle perspective, it may actually prove to be more harmful than coal,” he said, adding the entire LNG supply, from the well to the burning of actual fuel in power plants. chain leads to emissions of either carbon dioxide or methane.
“In a 20-year period, methane could be 80 times stronger than carbon dioxide,” he said.
For resource-poor Pakistan, it may still not be too late to withdraw money from LNG and invest in climate-friendly renewable energy sources.