E conomy Gas Outages in Pakistan
by Tariq Iqbal Khan
P
akistan is at present deficient in energy resources. Since it does not produce sufficient crude oil, it needs some other resource to meet its energy requirements. During the 60’s, Pakistan had much better energy mix as hydroelectric power was the major source of electricity. Due to political expediencies, no further progress could be made for additional hydro electric resource generation. After discovery of gas reserves, gas was also used for generating electricity. In 1973, PPL being the major producer of natural gas, would charge 84 paisas per MCFD (it was measured in cubic feet at that time). The natural gas supply side remained strong up to 2004. Whereafter there was a gradual decline. The estimate was that from 2008 onward, the Sui field of PPL would supply negligible natural gas. This proved to be correct. The main users of natural gas are: Industrial • General Industries • Power generation by CNG Vehicles WAPDA and IPP’s Commercial consumers • Fertiliser Domestic consumers • Cement The WAPDA power plants were installed in the 60’s and at that time the supply side was quite strong, but transmission lines did not have sufficient capacity to transport that quantity. Some of the IPP’s are on gas and some are on fossil fuels. The IPP’s on gas planned during the 1990’s was not a very good idea as the shortage of gas was very obvious. Fertilisers. It is generally said, perhaps due to lack of awareness, that we should stop the production of fertilisers and the gas thus saved may be allocated to other industries and power production. The first plant on the main grid of the gas pipeline was installed in the early 60’s viz NGFF (Natural Gas Fertilizer Factory) Multan. Subsequently it was expanded and the name was also changed to Pak Arab Fertilisers Ltd. The next plant was Dawood Hercules Chemicals installed near Lahore. Susequent plants installed on the main source of PPL were: 3. Pak China Fertilisers 1. Daudkhel 4. Hazara Phosphate 2. Lyallpur Chemicals 5. Fauji Fertiliser Bin Qasim and Fertilisers The recent new plant of Engro (Plant No.3) is also based on supply from the National Grid. The following plants are based on Marri Gas Field. 1. Engro – Plant No.1 & 2 2. Fauji Fertiliser Plant No.1, 2 & 3 3. Fatima Fertilisers Marri Gas Field was developed by ESSO Standard Eastern Inc., and the same company was the owner of Exxon (which subsequently became Engro Chemicals upon divestment by ESSO and Exxon). ESSO also disinvested their holding in Marri Gas field. Natural gas derived from Marri Gas is low BTU gas and cannot be used for general industry. Major
fertiliser industry was developed and installed on this low BTU gas which was not otherwise usable except for specially-designed industries or consumers. Two power generating plants (designed specifically on low BTU) of WAPDA were also installed on this field. When Fatima Fertiliser was being planned, the sponsors took care that they would get the allocation from this field which is a dedicated field, as this gas cannot be pumped into the system of the National Grid since, due to this act, the average BTU would go down and generate lower heat energy. The sponsors no doubt had to pay for the cost of the pipeline from Marri Gas Fields to Rahim Yar Khan but due to this additional cost on a separate pipeline, this fertiliser plant would not face gas shortages in the winter. The biggest failure of the policy makers was that they could not understand the long-term implications of getting the allocation of gas from the National Grid. (For Engro, it can be termed as greed also, because at that time they could use their political clout to get this allocation sanctioned from Qadirpur field and did not, or for that matter could not, visualise the long-term implications). This additional allocation from Qadirpur field for this expansion of Engro would have an adverse effect on gas availability to the general consumers and Engro as well, because the depleting gas resources would be detrimental to the general consumers and Engro. Now this third plant of Engro remains closed for 90 days each winter and in the coming years its elosure duration may be even longer. Had this plant been planned on Marri Gas, the gas being allocated to Engro would have been used by the general industry. According to Ministry of Petroleum, 65% of the Fertiliser Industry is based on Marri Gas, hence the argument to close down the fertiliser industry is flawed. It is possible that 35% of the fertiliser industry may be closed down and gas thus saved be the made available to the general industry. Another alternative could be that for the fertiliser industry based on the National Grid, gas required for their raw material purposes (known as Feed Gas) may be allocated from the National Grid and for gas required for heating purposes, they may shift to fossil fuels. This can save further 17% of the gas used by the fertiliser industry, as approximately half of the gas consumed by fertilisers is for raw material.
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August 2012