Pakistan’s Gas Import From Iran

8/11/2019 Pakistans Gas Import From Iran

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Pakistans Gas Import

Pipeline Projects

Energy Charter TreatyEnergy Charter Treaty

Meeting on Transit and TradeMeeting on Transit and Trade

Syed Hassan NawabSyed Hassan NawabManaging Director

INTER STATE GAS SYSTEMS (PVT) LTD.

A Joint Venture of SSGC & SNGPL

Brussels October 26 & 27, 2006


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2

World Natural Gas Proved Reserves

1,547

4,804

Iran

15%

Qatar

14%

Saudi

Arabia

Russia27%

NigeriaAlgeria

Venezu

ela

Iraq

USA

UAE

Total: 6,351 TCFTotal: 6,351 TCF

Top TenCountries

Rest of theWorld

1. More than 75% of world gas reserves are held by the ten countries, which represent 40%

of the total natural gas exports through pipeline and/or LNG.

2. Pakistan is ranked at number 30 and represents 0.5% of world gas reserves.

Source: BP Statistical Review of World Energy June 2006


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3

Reserves-to-Production (R/P) Ratio

of Top Ten Countries by Reserves

80

307

593

99

130

10

240

52

149

Ru

ss

ian

Fe

d.

Iran

Qa

tar

Sa

udiAra

bia

UAE

USA

Nigeria

Algeria

Venezue

la

Iraq

*

1. * R/P ratio for Iraq is undefined because production was not reported

2. Pakistans R/P ratio is 32

3. World R/P ratio of natural gas is 65 compared to 41 for oil

Source: BP Statistical Review of World Energy June 2006


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4

PAKISTAN

GovernmentGovernment

Parliamentary democracy inParliamentary democracy in

federal settingfederal setting

CapitalCapitalIslamabadIslamabad

AreaArea

794,880 sq. km.794,880 sq. km.

LanguageLanguage

Urdu (national) and EnglishUrdu (national) and English

(official)(official)

PopulationPopulation

152 million152 million

IndependenceIndependence

August 14, 1947August 14, 1947

MacroeconomicMacroeconomic

GDP / Capita (US$): 717GDP / Capita (US$): 717

GDP growth 2004GDP growth 2004--05: 8.4%05: 8.4%

Export (US$bn) : 14.41Export (US$bn) : 14.41

Imports (US$bn) : 20.62Imports (US$bn) : 20.62

Purchasing Power Parity: US$Purchasing Power Parity: US$

2,2002,200


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5

Real GDP Growth Rate

6.6

4.7

3.1

1.8

4.9

6.1

8.6

7.5

0

1

2

3

4

5

6

7

8

9

10

1980 1990 2002-1 2001-2 2002-3 2003-4 2004-5 2005-6

P

Source: Economic Survey of Pakistan 2005-06

Percentage(%)


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6

Pakistan Energy Overview

2.2Import/(Export)

-Import/(Export)

175Import

19Generation Capacity Giga WattsPower:Power:

4.2Consumption

86Generation TWh

15Energy Supply Per Capita MMBtu

3,303Proved Res. MM TonnesCoal:Coal:

2Production MMTOE

1,345Production BCF/Year

1,345Consumption

262Refining Capacity

29Proved Reserves TCFNatural Gas:Natural Gas:

Crude Oil:Crude Oil:

241Consumption

66Production 000 Bbl/day

309Proven Reserves MMBbl

Source: Pakistan Energy Yearbook 2005


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7

Pakistan Primary Energy Mix Trend

Percentage(%)

MTOE: 43.18MTOE: 43.18 MTOE: 55.53MTOE: 55.53


43.4 43.4

40.8 38.3

29.9 29.4

40.5 41.4

42.7 43.8

49.7 50.7

4.5 4.9 5.4 6.5 7.6

10.79.2 10.0

11.3 12.7

11.0

4.7

0.2 1.1 1.2 0.9 0.8 1.2

0

10

20

30

40

50

60

2000 2001 2002 2003 2004 2005

Oil Gas Coal Hydro Nuclear


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8

Pakistan Gas Consumption By Sector

Industry

19.5%

Fertilizer

16.4%

Power

43.7%

Transport

2.1%Domestic

14.8%Commerc

ial

2.3%

Cement

1.2%


FY 2004-051,161 BSCF1,161 BSCF

Industry

19.0%Fertilizer

24.9%

Power

31.9%

Transport

0.4%

Domestic

19.6%Commerc

ial

3.0%

Cement

1.2%

FY 1999-00712 BSCF712 BSCF


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9

Growth in Demand for Energy

Primary energy supplies grew at an ACGR of over 5% in the last 5 years

Demand for oil and liquid petroleum products declined at an ACGR of around

3% during the same period

Pakistan produces nearly 66,000 barrels per day of crude oil, which meets 27%

of national crude oil requirement

Natural gas supplies grew at an ACGR of 10% over last 5 years

The relative share of gas in primary energy supply increased from 40% to 50%in the last 5 years

Share of natural gas in primary energy mix is expected to be maintained at

around this level in the next 5 years


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10

Afghanistan

Pakistan

Iran

India

Karachi

Multan

Faisalabad Lahore

Islamabad

Peshawar

Quetta

SNGPL :

SSGC :

Bahawalpur

Gujranwala

Abbottabad

Pakistan Gas Transmission InfrastructureJammu

&

Kashmir

247,90062,600185,300Compression, BHP

4.551.862.69Customers, Million

2,5369701,566Sales, mmcfd (Avg. Day)

9,2573,0626,195Transmission, km

TOTALSSGCSNGPLITEM


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11

Pakistan Natural Gas Market

0

2000

4000

6000

8000

10000

12000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

MMcfd

Figures in MMcfd at 1000 btu/scf

SNGPL & SSGC Supplies

Independent Supplies

Anticipated Supplies

10,9618,1436,5386,2536,0605,8195,5075,1134,4343,522Demand

2,0842,7383,7673,8834,0674,2014,2624,2844,0723,639Indigenous Supplies

117

FY06

(362)

FY08

(5,406)

FY20

(2,771)

FY15

(1,993)

FY13

(2,370)

FY14

(8,877)(1,618)(1,245)(829)Shortfall

FY11 FY25FY12FY10

Demand & Supply Data Source: Hagler Bailly Pakistan

0.8 Bcfd 2.8 Bcfd

5.4 Bcfd8.9 Bcfd


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12

Pakistan Natural Gas Sourcing Strategy

0

2000

4000

6000

8000

10000

12000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

MMc

fd

1st LNG (2010): 500 MMcfd

1st Import Pipeline (2012): 2,100 MMcfd

2nd Import Pipeline (2016): 3,200 MMcfd

Figures in MMcfd at 1000 Btu/scf

SNGPL & SSGC Supplies

Independent Supplies

Anticipated Supplies

2nd LNG (2012): 500 MMcfd

10,9618,1436,5386,2536,0605,8195,5075,1134,4343,522Demand

2,0842,7383,7673,8834,0674,2014,2624,2844,0723,639Indigenous Supplies

117

FY06

(362)

FY08

(5,406)

FY20

(2,771)

FY15

(1,993)

FY13

(2,370)

FY14

(8,877)(1,618)(1,245)(829)Shortfall

FY11 FY25FY12FY10

Demand & Supply Data Source: PWC/Hagler Bailly Pakistan


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Iran-Pakistan-India (IPI)

Gas Pipeline Project


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14

IPI Route Options

Barmer

Jaisalmer

IPIIPI--Central RouteCentral Route

IPIIPI--Coastal RouteCoastal Route


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IPI Gas Pipeline Project

7.4

4.0

3.2

0.2

2191

1092

999

100

Coastal Route

Assaluyeh (Iran) to Barmer (India)

Assaluyeh to Pak-Iran Border

Pak-Iran Border to Pak-India Border

Pak-India Border to Barmer

7.4

4.42.7

0.3

2037

1136757

144

Central Route

Assaluyeh (Iran) to Jaiselmir (India)

Assaluyeh to Pak-Iran BorderPak-Iran Border to Pak-India Border

Pak-India Border to Jaiselmir

Capital

Cost*, $ billionLength

Km

Total off-take volume: 55 Bcma (India: 33 Bcma, Pakistan: 22 Bcma) 2x56 inch, Class 600, X-70, Compression Ratio 1.40


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IPI Gas Pipeline Project

Bilateral Iran-Pakistan Joint Working Group (JWG), was constituted and the

first meeting was held in December 2003 in Islamabad

An MOU was signed on July 7, 2005 to include India in the Project.

A Term Sheet was signed between Iran and Pakistan on November 16,

2005. The Term Sheet provides for gas supply of 2.1 Bcfd for a period of 30

years

Iran would deliver gas to Pakistan at the Iran-Pakistan border, and to India

at Pakistan-India border, under supply contracts

The project envisages two parallel 56 inch pipelines carrying up to 150

MMcfd (5.3 bcfd) of which 60 MMcfd (2.1bcfd) is for Pakistan and 90 MMcfd

(3.2 bcfd) is for India


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IPI Project Status

The transaction envisages sale by Iran of Pakistan volumes at Iran-

Pakistan border and Indian volumes directly to India at Pakistan-India

border

Discussions underway on :

Gas pricing and GSPA Route selection Project Structure and Inter-Governmental Agreement


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IPI Project Structure

M/s. Allen & Overy, the Legal Advisors hired by ISGSL have proposed a

trilateral project structure based upon the following principles:

Iran would deliver gas to Pakistan at the Iran-Pakistan border, and toIndia at Pakistan-India border, under a supply contract

Supply contract to be backed by Iranian Government Guarantee(NIGEC is currently proposing to offer an NIOC guarantee)

Iran does not allow foreign ownership of upstream field development,processing or pipeline assets. It does have buy back arrangements forupstream field development and production

The Indians prefer a single ownership structure, under which a

consortium should own and operate the whole pipeline in the threecountries.

Based upon above, the project structure proposed by Allen & Overy is

attached


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IPI Separate Pipeline Ownership

*Same International Oil Company to be appointed in the three countries

90%

MSA = Management Services AgreementSA = Shareholders AgreementBBA = Buy Back Arrangement

IRAN

Iran(NIOC?)

IranPipeco

10%

InternatCo*

Pakistan

Iran? Others

PipeHoldco

India

SA

90% 10%

50%10%40%

PakistanPipeco

IndiaPipeco

MSA

Owners andownership

Contracts andcounterparties

Owners andownership

Contracts andcounterparties

PAKISTAN INDIA

Field / Processing Pipeline

SA

MSA

InternatCo*

BBA


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IPI Way Forward

Project planned to be undertaken by private investors on BOOT basis

Prefeasibilty study undertaken by PriceWaterhouse Coopers lead Financial

Advisory consortium

Land/ROW to be acquired by ISGSL/GoP to expedite process ISGSL/GoP to take 10% equity share in pipeline company

Lead sponsor/Consortium to be appointed to setup pipeline company, to

undertake

Detailed Feasibility Engineering, Procurement Financing Construction and Operation


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Project Road Map


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Turkmenistan-Afghanistan-Pakistan (TAP)

Gas Pipeline Project


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TAP Pipeline Route Options

Barmer

Jaisalmer

TAPTAP


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TAP Project Technical Highlights

Design Features

Capacity, Bcfd: 3.2

Diameter, Inches: 56

Pressure, Psig : 1,450

Specifications : Class 600, X-70

Length, km

145

735

555

1,435

Southern Route*:

Turkmenistan Segment

Afghanistan Segment

Pakistan Segment (up to Multan)

Total

Northern route through Mazar-e-Sharif, Kabul, Peshawar and then to Lahore and

onward to India is also being considered. This southern route however is shorter, and

follows relatively easy terrain

Capital Cost US$ 3.3 Billion (Penspen Estimate 2003). Recent estimate close to $4

billion


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Project Overview

Aimed to supply gas from the Dauletabad gas fields in Turkmenistan close

to the Turkmenistan-Afghanistan border to Pakistan and possibly India

Gas Pipeline Framework Agreement between Governments of

Turkmenistan, Afghanistan and Pakistan signed by the Heads of States in

December 2002

Project envisages a 56 diameter, 1,435 km pipeline up to Multan for a flow

of 3.2 Bcfd; shortest cross-border pipeline to Pakistan gas load centers.

Feasibility study completed in 2004 needs to be updated; ADB is providing

grant funds to update the study


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TAP Project Issues

Gas Reserves Availability and Dedication to the Project

Russia reportedly claims priority over Turkmenistan gas reserves

Security of Pipeline in Afghanistan is a serious concern but could be

mitigated through remedial measures

Updating of Feasibility Study

Indian Participation


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TAP Issues-Gas Reserves

Turkmenistan provided an Executive Summary of the 2003 Audit Report ofDaulatabad Field Reserve Certification by DeGolyer & MacNaughton (D&M) of USA.

Based on the D&M report, the proven plus probable plus possible gas reserves of thefield are nearly 1.43 TCM against the TAP requirements of 0.92 TCM over 30 years.

Daulatabad gas field has been in production since 1982. Cumulative production up toDecember 2003 is 488 BCM and annual production is 27 BCMA which is reportedlygoing to Russia

The proven and probable reserves can support a production level of 40 BCMA from2007 to 2014, which then declines to less than 20 BCMA by 2022

TAP requirement of 33 BCMA can not be met after 2017 even at proven plusprobable production level

At the 9th SC meeting held in February 2006, Turkmenistan stated that additionaldrilling at Dauletabad field increased the estimated gas reserves from 1.4 TCM (49CF) to nearly 4.5 TCM (159 TCF). The production level can also be consequentlyincreased to meet the TAP requirements over its 30 years life

Turkmenistan therefore assured Pakistan that it will be able to comfortably meet itscommitment to the TAP Project, and invited Pakistan to sign a GSPA


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TAP Issues-Pipeline Security

TAP pipeline has to traverse war ravaged Afghanistan. The area faces serious

security challenges.

A Security Study of the project was undertaken by Pacific Strategies & Consulting of

UK in 2005.

The report concluded that while the TAP Project faces serious security concerns,

they can be mitigated by:

commitment of considerable resources by deploying additional men and materialto patrol the pipeline route

innovative physical security measures by employing advanced SCADA systems,satellite surveillance, etc.

a dynamic social outreach program by providing employment, vocational trainingand health services etc, to the inhabitants along the pipeline route

Efficient and professional management of Security Administration


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Indian Participation

India attended the 9th Steering Committee Meeting at Ashgabat as an

observer

India has requested to join the TAP project, and confirmed that it could take

around 2.5 Bcfd of gas, totaling nearly 26 Tcf over 30 years

Pakistan welcomes Indian participation in principle subject to availability of

adequate reserves in the Dauletabad gas fields to meet the combined

demand of the two countries


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TAP Feasibility Study Revision

Feasibility study was done by M/s Penspen in 2004

Study was sponsored by Asian Development Bank (ADB), which indicated

that it has $40,000 left in its budget for the TAP Project.

Technical consultant to be hired after dedication of gas reserves andagreement on gas pricing is reached.

ADB is arranging funds for the study


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Pakistan’s Gas Import From Iran

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