[GGP] LNG vs natural gas - competing modes of energy supply

Energy Security is an area which is of great importance for both energy rich and energy deficient countries. For energy deficient countries it of importance because they have to ensure cheap safe secure and reliable sources for energy to keep their country running. And for energy rich countries of the twenty-first  century, it is of even greater importance, to keep the energy flowing from their source of origins to the ones who need them. Therefore, it is important to form a connection that can not only generate a valuable portion of revenue for the economy to form a relation among the buyer and seller countries but a connection that also uplifts the profile of the seller country, which can use it for the expansion of its deliveries.

There is a lot of hype being created about the LNG vs Natural Gas Order. The US and Russia are going to promote their own models to lure the energy deficient countries of the world; both orders are infrastructure based, a huge sum of money will be spent on the resurrection of this infrastructure, forcing nations to stick to one particular order of energy. What is LNG and Natural Gas order, and what is the hype all about? Russia was sarcastically labeled as a huge gas station by the US Senator John McCain, because it has the largest gas delivery infrastructure, which is expanding with lightning speed in other regions of the world as well. Europe is the main buyer of this natural gas and there is a modern infrastructure passing through various countries like Ukraine and power many European countries. The new entry into this mega pipeline infrastructure is China-Russia, Power of Siberia pipeline inaugurated in 2014. There are some European sponsored projects like the Southern gas corridor which will deliver Azerbaijani gas from Shah Deniz gas fields via various sections of pipelines, which are shared by many countries and with a final destination in Europe.

The LNG order is the one built by United States, where they are hell-bent to flood the world with US LNG. The recent Putin Merkel Summit highlighted the importance of new gas pipeline, called Nord stream 2, the pipeline which will clearly give advantage to natural gas order over LNG, and is thus strongly opposed by the US. Many small European countries and Baltic States are now operating LNG terminals mostly built with the help of US assistance to decrease its dependence on Russian energy. The trend was pursued vigorously by the Obama administration, but the LNG policy seems to be a priority for every president that has assumed office and will so in the future. Therefore, for a president like Trump, whose main focus is on international trade to ensure that the US benefits and is superior; thus the energy policy is pursued more aggressively, by calling their European allies to promote the LNG order over the natural gas one.

Russia also has an advantage of exporting LNG because of its Yamal LNG plant, and thus can also benefit from the export of the US LNG. In Pakistan a wave of criticism was unleashed by the opposition politicians and experts, that is why Pakistan opted to form LNG deal with the Qataris. However, the LNG accord was challenged by the opposition politicians, marking the first time ever objections were raised on the vitality of LNG exports, and Pakistan’s reliance on it, since our gas need are astronomical and only LNG supply can meet it. Pakistan needs uninterrupted gas supplies via the pipeline as well. Iran-Pakistan-India gas pipeline deal was briefly derailed and affecting Pak-Iran relations when the PML-N Government shunned the idea and opted the LNG deal. Pakistan need fast reliable and cheaper natural gas. Recently, Pakistan’s ambassador to the US which was assigned by the PML-N Government in its final months, said that Pakistan needs to buy more LNG, and will also consider to buying a large chunk from the United States. However, the PTI led Government may abandon such a possibility.

The LNG order is the one built by United States, where they are hell-bent to flood the world with US LNG. The recent Putin Merkel Summit highlighted the importance of new gas pipeline, called Nord stream 2, the pipeline which will clearly give advantage to natural gas order over LNG, and is thus strongly opposed by the US

The US is threatening many countries including its allies and China, to beef up LNG supplies. After the first shot of trade war was fired by the US president Donald Trump, he suggested that China sign up for US LNG supplies and that will decrease the fear of a trade war. China has a robust energy transport system, didn’t appreciate the idea and followed with its own tariffs on US good, discouraging any such agreement. Pakistan needs to be realistic in meeting its Energy demands, relying on the Qatari LNG is not feasible nor reliable for heavily debited countries like ours. The newly formed Government after the 2018, elections needs to explore ways and diversify its energy supplies, also keeping in mind its uninterrupted flow. Moreover, Pakistan is naturally placed to sign on the pipeline order. Any political pressure from the US and its acceptance will further delay the dream of Energy Security for Pakistan, and it will have to follow a disconnected model like LNG. LNG can be a part of the energy mix of the overall consumption to meet the country’s demand, and be in the League of Nations that can handle the super chilled fuel, but switching solely to the LNG, will leave Pakistan at the mercy of its suppliers.

Waqas Jan

Waqas Jan holds a Masters in Strategic Studies from Dept of Strategic Studies, From National Defence University. He can be reached at janwaqas03@gmail.com First published by the Daily News.

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