Gas for Power Generation or for Industry - A case for Pakistan
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Transcript of Gas for Power Generation or for Industry - A case for Pakistan
1In the name of Allah, The Most Beneficent,
The Most Merciful
Impact of Diversion of Gas from Industrial to Power Sector
Presented by: Bilal Khan Pasha, Commerce & Trade GroupSponsor DS: Mr. Javaid Iqbal
NATIONAL INSTITUTE OF MANAGEMENT, ISLAMABAD14th Mid Career Management Course
Current Issue Presentation
November 28, 2012
on
2
o Statement of Problem
o Introduction & Genesis of Issue at hand
o Broad Contours of the Issue
o Problems & Challenges
o Analysis
o Results & Future Scenario
o Conclusion
o Recommendations
o Questions & Answers
Sequence of Presentation
3
4
Statement of Problem
The diversion of precious and scarce natural Gas resource from
Industrial to Power Sector in Pakistan has resulted in the
emergence of sharp divisions amongst Power Producers,
Industries and Consumers – A case of Catch-22 for the Federal
Government
5
Sources for Presentation
o Economic Survey of Pakistan 2011-12
o Pakistan Energy Year Book 2011-12
o Ministry of Petroleum & Natural Resources
o Ministry of Industries
o Ministry of Production
6
Sources for Presentation
o Planning Division
o Oil & Gas Regulatory Authority (OGRA)
o All Pakistan Textile Mills Association (APTMA)
o Karachi Electricity Supply Company (KESC)
o International Energy Agency (IEA)
7
Natural Gas in Pakistan – Brief Facts
o Natural Gas – Gift of Nature & Precious Resource
o Use of Natural Gas
o According to IEA, global natural gas proven reserves are 300 trillion
cubic meters
o Pakistan has proven reserves of 840 billion cubic meters (28 TCF) with
an Annual Consumption of 40 billion cubic meters (1.3 TCF)
o No uniform international natural gas prices
65 Million TOE
Pakistan’s Primary Energy Supplies 2011-12
Natural Gas50.5%
Oil30.7%
Electricity12.5%
Coal6.3%
Value of Local Crude: $2.4 billion(67,000 Barrel/Day)
Oil Import Bill: $14.5 billion(36% of total imports)(380,000 barrels/Day)
Value of CoalLocal: $ 0.2 billionImported: $ 0.5 billon
Value of Natural Gas: $4.3 billion(4 BCFD)
Source: Economic Survey of Pakistan 2011-128
Sui
Indi
a
BALOCHIS
TAN
SIND
PUNJA
B
KPK
Karachi
Sukkur
Quetta
Multan
Faisalabad
Lahore
Islamabad
Peshawar
JAM
MU &
KASH
MIR
AC1X-SUI
Iran
GAS FIELDS (156)
SSGC LINES
SNGPL LINES COMPRESSORSTATIONS (17)
MAJOR LOAD CENTRE (5)
Pakistan’s Natural Gas Infrastructure
9
Consumers: 6.7 Million (1.6 million)Transmission Network: 11,045 Km (879Km)Distribution Network: 128,758 Km (38,828 Km)No. of Cities/Towns on gas: 307No. of Villages on gas: 4,989
Source: Ministry of Petroleum & Natural
Resources
Province Wise Gas Supply and Consumption (2011-12)
10
10
MMCFDGas Supply: 3,862 MMCFD
Gas Consumption: 3,511 MMCFD
Punjab; 182; 5%KPK3609%
Sind, 2649.29, 69%
Baloch.66718%
Punjab, 1531.351369863
01, 43.6%
KPK; 175; 5%Sind,
1562.924931506
85, 44.5%
Baloch.; 242; 7%
Source: MPNR
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11
Province
Gas Supply Gas Consumption
MMCFD % share MMCFD % share
Punjab 182 4.7 % 1531 43.6 %
KPK 362 9.4 % 175 5.0 %
Sind 2649 68.6 % 1563 44.5 %
Baloch. 669 17.3 % 242 6.9 %
Total 3862 100 % 3511 100 %
Province Wise Gas Supply and Consumption (2011-12)
Source: MPNR
Province Wise Gas Consumers as on 30.06.2012
12
12
Province / Type
SNGPL SSGCL
Total Punjab KPK Sindh
Balochist
an
Domestic
3,594,93
7
516,87
1
2,239,7
31 223,853
6,575,3
92
Commercial 47,149
8,757 22,296
2,200
80,402
Industrial 5,798
830
4,077
56
10,761
Total
3,647,8
84
526,45
8
2,266,1
04
226,109
6,666,5
55 Source: MPNR
Sector Wise Gas Consumption
(2011-12)
Power, 992.46630136
9863, 28%
Domestic, 708, 20%
Commercial, 108, 3%Transport , 324, 9%
Fertilizer, 578, 16%
General In-dustry, 801,
23%
Gas Consumption - 3,511 MMCFD
13Source: MPNR
Gas Demand & Supply Projections
Demand
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
MM
CFD
14Source: MPNR
Project Volume (MMCFD) First FlowTransnational pipelinesIran-Pakistan 750 2015TAPI 1,325 2016
2,075Liquefied Natural Gas (LNG)Fast Track 200 June-2013Long Term-1 400 Q1-2015Long Term-2 400 Q2-2015
1,000LPG Air-Mix (SNG)SSGC 100 Q2-2013SNGPL 150 Q3-2013
250Total 3,325
Measures to Augment Gas Supplies (Imports)
15Source: MPNR
S.No Category of Consumers Priority1. Domestic and Commercial Sectors First
2. I) Fertilizer Sector; andII) Industrial Sector to the extent of their process gas Second
3. Independent Power Plants as well as WAPDA and KESC’s Power Plants having firm gas supply commitment under GSAs Third
4. General Industrial, CNG Sector and Captive Power Producers of export oriented Textile Industry Fourth
5.I) WAPDA’s and KESC Power Plants other than those listed
against S.no. 3 aboveII) Captive Power Sector
Fifth
6. Cement Sector Sixth
Gas Allocation and Management Policy, 2005
16There is no gas load management in Khyber Pakhtoonkhwa and Balochistan
Current Load Management
Presently, following curtailment policy is being observed:-
•Two gas holidays per week are being observed by Industrial Sector
•Three gas holidays per week are being observed by CNG sector
•No curtailment in any sector in KPK in light of decision of Peshawar High Court under Article 158 of the Constitution
•No curtailment in the Domestic and Commercial sectors
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Why the Use of Gas So Desirable ?
Natural Gas
Power SectorCheap fuel
Assured Supplies
Industry incl. FertilizerFeedstock for
manufacturingOnly raw material for
productionOptimal use of scarce
resource Domestic Consumers
Uninterrupted powerCheap fuel for heating
& transportation
Gas Sale Prices Effective from July 1, 2012
A. Domestic Sector Monthly consumption Level Sale Prices Cess FinalPrice
S l a b Cubic Meter MMBTU Rs/MMBTU Rs/MMBTU 1st 0-100 0 - 3.5494 100 - 100 2nd 101-300 3.5495 - 10.6482 200 - 200 3rd 301-500 10.6483 - 17.747 500 - 500
501-700 17.7471 - 24.8458 500 - 500 Bulk Domestic 500 - 500
B. Commercial Consumer 600 - 600 C. Industry including Captive 460 50 510 D. Power (WAPDA/KESC) 460 100 560 E. Independent Power Plants (IPPs) 460 100 560 F. Cement 700 - 700 G. CNG
Zone-1 (KPK, Baluchistan & Potohar Region 618.5 263.6 882.1 Zone-2 (Sindh & Punjab (Excluding Potohar)) 618.5 200 818.5
H. Fertilizer-Feed Stock Old Plants 116.3 197 313.3 New Plants/Addl. Volume for BMR 60.7 - 60.7
I. Direct Sales to WAPDA Kandhkot/Sara/Sui/Mari to Guddu 460 100 560
19Source: OGRA
Diversion of Gas from Industrial to Power Sector
• Gas is being supplied to Power Sector as per commitments of gas supply agreements.
• During Energy Conference held in April 2012, it was decided to divert 207 mmcfd gas to Power Sector till September 2012 to address the severe electricity shortfall during summer.
• The gas was diverted from Fertilizer Industry from SNGPL system.
• However, the general Industry has agreement of gas supplies on nine months basis and will run on alternate fuels during winters.
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Impact of Diversion of Gas from Industrial to Power
SectorPower Sector
Industrial Sector
Lack of industrial production related to gas as feedstock
Textile industry short of captive
power plant production
Fertilizer industry on verge of bankruptcy
Less import of furnace oil
Slight improvement in
electricity generation
21
Impact of Diversion of Gas from Industrial to Power Sector
22
Pow
er S
ecto
r
• Depleting gas allocation (504 to 337 BCF)
• Higher dependence on imported furnace oil ($ 7 billion)
• High cost of electricity & tariffs (Rs. 16/- per unit)
• Circular debt (Rs. 300 billion +)
Ferti
lizer
Indu
stry
• Lack of committed gas supply causing huge production losses (2.7 million tons)
• Import of fertilizers (Rs. 140 billion)
• A highly leveraged industry (Rs. 150 billion) Te
xtile
Indu
stry
• 90% industry dependent on CPP
• $ 14 billion exports in 2011-12
• Gas cuts causing 30% redundant production capacity
• 15 million employed workers
• Natural decline in production of existing fields
• Heavy reliance on gas because of policy distortion
• Delays in import projects – LNG, IP, LPG
• Delays in linking new discovered fields with the supply
network
• Massive and uneconomic expansion of distribution
network in domestic sector
Issues in Gas Sector
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• Unattractive economic and financial returns for the
exploration companies
• Pricing of competing fuels
• Theft, sabotage and UFG
• Circular debt
Issues in Gas Sector
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Economic Evaluation of Natural Gas Use
Pakistan Integrated Energy
Model
• International Resource Group + Asian Development Bank + Energy Wing of Planning Commission
Model to examine the
economic impacts of
changing gas priority
• Setting up reference scenario for studying the energy mix of Pakistan
Gas has a higher economic value
for fertilizer production
compared to power sector
• Simulation, assessment and conclusion
25
Recommendations
Expediting Import of Gas & Gas Exploration
No Gas Allocation to
Inefficient Power Plants
Performance Audit of SSGC & SNGPL viz-a-viz Gas Allocation
Policy
Strict Adherence to Prioritization
of Gas Allocations
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We need an all-inclusive policy that
revitalizes every sector of the economy,
not just a few individuals or industrial
groups. Fortunately, we have the solution
to the present energy crisis. We only
need our decision makers to take the
right step now, before it is too late !
28
Thank You
Questions & Answers