Natural gas plays a major role in the energy matrix of Pakistan. It accounts for almost 32 percent of the total primary energy supply mix in Pakistan and Pakistan is 20th largest gas consumer of the word, with an established natural gas industry. Pakistan’s gas consumption is nearly the same as in France, which is a developed and industrialized country. This shows how much gas Pakistan is misusing or wasting. There was a time when Pakistan was self-sufficient in gas, however, increased demand fostered by lack of alternative fuels and price subsidies coupled with diminishing production constrained by unattractive fiscal terms have resulted in systematic and power shortages.
Pakistan had paid USD 4.3 billion for the crude oil imports and over USD 2 billion for gas (LNG) during 2018 as imported crude and refined petroleum products make 82-83 percent of Pakistan’s consumption. As per a statement given by the officials of Petroleum Division in the Senate Committee; Pakistan’s oil and gas reserves will finish after 10 to 13 years. Pakistan has 1197 million barrel of oil reserves with the current speed of consumption. Out of this, 865 million barrels have been extracted while 332 million barrels remain as reserves. Out of the total 57 trillion cubic feet of gas discovered, 36 million has been extracted. The rest 21 million remains in the reserves that will be able to satisfy the demand for the next 13 years. The current demand for gas stands at 1,000 million cubic feet per day which are expected to go up to 3,600 by 2030. As for petroleum products, domestic production only meets 15 percent of the total demand. The country used 26.4 million tons of petroleum products in 2016-17 with 85 percent of it being imported. Pakistan has a total of 8.8 million gas consumers with an annual addition of 0.5 million consumers.
Pakistan has also now developed LNG system in the country and importing LNG from Qatar. By way of background, Pakistan first issued a tender in 2006 for the development of an integrated terminal/LNG supply (the Mashal Project). The tender was subsequently stayed by the Supreme Court in 2011 following allegations of irregularities. In 2012 Pakistan issued two new tenders for the delivery of 400 mmcfd of re-gasified LNG each at Port Qasim, Karachi. Pakistan State Oil (PSO) import LNG from Qatar to meet the country’s growing energy needs and LNG is being importedfrom Qatar under the government to government arrangement.
No modern society can run smoothly without oil and gas. This is why these products are very important today. Essentially, the demand for oil and gas exceed their production. This also explains the reason why countries with a huge deposit of crude oil and gas are among the richest nations of the world. Oil and gas are highly demanded in industries as well as for commercial and domestic purposes. The oil and gas industry is essentially subdivided into three phases and these include; Upstream, Midstream and Downstream sector.
Oil and gas sector in Pakistan is facing a real challenge of shortage. There is a need to increase the production of liquid fuel in the upstream sector. The rising demand for oil and gas can be met by diversifying the transport fuel mix with hi-tech technologies. The models being used by the oil and gas industry today are becoming obsolete whereas new models have been invented. The downstream sector can finance the upstream sector in order to achieve greater operation. By ensuring better integration, the oil and gas industry can balance its upstream and downstream operation and hence reduce volatility and risks.
Economies of scale and access to technology are not enough to solve the problems faced in the upstream sector. Some of the challenges faced in the upstream sector today are caused by the structure of the downstream sector and investors.
[ads1]
There is an intense problem of demand and supply in the upstream sector of the oil and gas industry. It is quite obvious that the demand is greater than its supply. Ongoing tensions in the Middle East and economic uncertainty are two main areas of concern. Due to population and economic growth, the energy demand may be double in next few years. Environmental pollution is a major issue in the upstream oil and gas sector as there is lots of oil and corroded pipelines still used today resulting to leakages ad spill which degrades the environment.
The lack of skilled personnel and manpower or main operations requiring high tech processes in the oil and gas industry is also a challenge in Pakistan especially in the upstream sector of the industry. Processes in the upstream sector such as exploration and production require high technicality and therefore there is a need for skilled manpower. This has limited many operations in different fields in Pakistan. This problem can be solved by attracting and encouraging more talented young professionals in the oil and gas industry. Training have to be made highly efficient in various parts of the world especially in the information technology aspect to help young people understand how to manage the operations.
Economic uncertainty is another risk faced by the oil and gas sector, which has led to the slow movement of some firms in the upstream sector. Most people will not classify economic uncertainty as a challenge or risk but on carefully analyzing, it will become very obvious that this is a challenge. It can be defined as an unknown prospect or possibility of gain or loss. Whether this factor is quantified as a risk or not, it has a direct impact on employment, income aspects and communication among the various companies and firms in the value chains of the oil industry. Pakistan’s economy is in crisis or not, for me it is a meaningless debate unless it is supported by the authentic numbers and facts. It’s an old management technique where new management always put blame on the outgoing management for the mess and claim turn-around in the affairs after a few months.
This perfectly fits in our culture, every new government always blame the last government for the economic crisis, this happened in 1999, 2008, 2013, and now we see this in 2018. For this purpose, “they” even fudge numbers and openly blame the previous government of fudging numbers without realizing that state of Pakistan and machinery of the state would be discredited. Governments come and go but the machinery of the state remains the same.
There should be monitoring of gas leakages in the processing plants and gas companies should set up appropriate alarm systems and notifications. Many state-of-the-art technologies can be used in monitoring rig activities at real time so as to ensure all-round efficiency in the process and overcome the challenges. The high-end data management and analytics available today can be used towards solving the current challenges. The requisite data can be analyzed, archived, digitized and defined appropriately.
The upstream and downstream value chains of the oil and gas industry of Pakistan face lots of challenges. These challenges have constrained lots of activities in the oil and gas industry and crippled lots of processes. It is becoming quite clear that the latest technology including sophisticated softwares are highly needed to solve these challenges in the oil and gas industry. The latest technologies for data management, analysis, relaying and dissemination can be channeled towards ensuring effectiveness in the various value chains of the oil and gas industry. In order for the oil and gas industry to make headway in the next phase, information technology should be used as a strong backbone to the industry.