The Friday Times: Shale gas: Pakistan’s lifeline

With the American LNG reservoirs coming into the picture, as a cheaper – $10 per million British thermal units (mmBtu) – gas purchase option, a Pakistani delegation rushed to Washington recently vying to queue up behind the likes of China, India, South Korea and Japan. A rather rude awakening awaited them when they were told that 25 applications for US gas were already pending, and Islamabad’s turn to import gas from Washington might not come before the year 2030. Back to square one it was then, on the energy front.

LNG Lure

Pakistan’s current gas production is 4 billion cubic feet per day (bcfd), with the shortfall being around half of that. Bridging that deficit through gas pipelines via Iranian and Turkmen gas seems to be a pipedream, with Iran-Pakistan (IP) pipeline succumbing to Islamabad jumping aboard the Saudi bandwagon in the Middle East, and Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline being a delusion owing to the security situation in Afghanistan. This seemingly leaves LNG import from Qatar as the only viable solution for Pakistan’s gas troubles, especially since it’s the only country among the 17 LNG exporting nations whose gas isn’t sold out and is within shipping distance from Pakistan as well.

Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, meanwhile, despite not having negotiated LNG price with Qatar reiterated that Islamabad would get the best possible deal. “We haven’t negotiated the LNG price with Qatar yet, but it will be done in a transparent manner.  We will make sure the LNG price is kept 30 percent below petroleum price,” Abbasi said.

Shahid Abbasi has also confirmed that the first LNG terminal would be installed by November this year, further affirming Pakistan’s lure towards LNG, as its earmarked gas solution. Now all that remains is the small matter of finalising the gas price, which is predicted to be around $18 per mmBtu. Also, if Islamabad succumbs to Doha’s demands of signing a 15-year contract with gas price fixed for the next decade and a half as a percentage of Brent, it will leave Pakistan’s economy at the mercy of global crude prices and Qatar’s obviously self-seeking demands. MORE

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