Worsening Gas and Electricity Crises in Pakistan

Hagler Bailly, a global management consulting firm with an office in Islamabad, warned in a 2006 study that Pakistan is going to witness gas shortage starting in 2007, and the imbalance will grow every year to cripple the economy by 2025, when shortage will be 11,092 MMCFD (Million standard cubic feet per day) against total 13,259 MMCFD production. The Hagler Bailly report added that Pakistan's gas shortage would get much worse in the next two decades if it did not manage any alternative sources. It appears that we are seeing the beginning of the crisis that HB predicted back in 2006.

Recent Growth in Gas Demand:

Demand for natural gas in Pakistan increased by almost 10 percent annually from 2000-01 to 2007-08, reaching around 3,200m cubic feet per day (MMCFD) last year, against the total production of 3,774 MMCFD, according to Pakistani official sources. But, during 2008-2009, the demand for natural gas exceeded the available supply, with production of 4,528 MMCFD gas against demand for 4,731 MMCFD, indicating a shortfall of 203 MMCFD. This winter, Sui Northern Gas sources have reportedly told the media that the company is dealing with a shortfall of 700 MMCFD of gas due to increasing use of heaters and geysers.



Energy Shortages:

The potentially devastating effect of the gas shortage on the nation can be gauged by the fact that Pakistanis heavily depend on gas for their energy needs, much more so than neighboring Indians. With a gas pipeline network stretching around 56,400 km, pipeline density of 1044 km/mmscmd (million metric standard cubic meter per day) and a 31,000 km distribution network to serve its domestic and commercial consumers and nearly 3000 CNG stations, the gas consumption in Pakistan is much higher than its bigger South Asian neighbor. India relies more heavily on its vast coal reserves for energy.

According to BMI, gas is the dominant fuel, accounting for 47.5% of Pakistan's primary energy demand (PED) in 2007, followed by oil at 30.7%, hydro-electric energy at 12.9% and coal with a 7.9% share. Regional energy demand is forecast to reach 4,859 million tonnes of oil equivalent (toe) by 2013, representing 24.9% growth from the estimated 2008 level. Pakistan’s estimated 2008 market share of 1.52% is set to ease to 1.45% by 2013. The country’s estimated 2.5TWh of nuclear demand in 2008 is forecast to reach 5.0TWh by2013, with its share of the Asia Pacific nuclear market rising from 0.49% to 0.75% over the period.

In terms of overall energy requirements, here is a more complete picture for per capita energy consumption in South Asia and China, using Nationmaster, with 2006-2007 figures and rankings:

Pakistan per capita gas consumption 187 cu meters(ranked 73)
India per capita gas consumption 36 cu meters (ranked 99)
China per capita gas consumption 53 cu meter (ranked 95)

India per capita electric consumption 466 KWhr (ranked 160)
Pakistan per capita electric consumption 430 KWhr (ranked 164)
China per capita electric consumption 2,179 KWhr (ranked 91)

India coal consumption per capita 0.3 ton (ranked 23)
Pakistan coal consumption per capita 0.03 ton (ranked 35)
China coal consumption per capita 1 ton (ranked 16)

India oil consumption per day per 1000 people 2.4 barrels (ranked 165)
Pakistan oil consumption per day per 1000 people 2.2 barrels (ranked 169)
China oil consumption per day per 1000 people 5.7 barrels (ranked 144)

There is strong correlation between energy availability and level of any nation's development. The nations topping the list of human development rankings are also the largest per capita consumers of energy.

Per capita energy consumption in Pakistan is estimated at 14.2 million Btu, which is much higher than Bangladesh's 5 million BTUs per capita but slightly less than India's 15.9 million BTU per capita energy consumption. South Asia's per capita energy consumption is only a fraction of other industrializing economies in Asia region such as China (56.2 million BTU), Thailand (58 million BTU) and Malaysia (104 million BTU), according to the US Dept of Energy 2006 report. To put it in perspective, the world average per capita energy use is about 65 million BTUs and the average American consumes 352 million BTUs. With 40% of the Pakistani households that have yet to receive electricity, and only 18% of the households that have access to pipeline gas, the energy sector is expected to play a critical role in economic and social development. With this growth comes higher energy consumption and stronger pressures on the country’s energy resources. At present, natural gas and oil supply the bulk (80 percent) of Pakistan’s energy needs. However, the consumption of those energy sources vastly exceeds the supply. For instance, Pakistan currently produces only 18.3 percent of the oil it consumes, fostering a dependency on imports that places considerable strain on the country’s financial position. On the other hand, hydro and coal are perhaps underutilized today, as Pakistan has ample potential supplies of both.

Energy Projects:

Pakistan and Germany have initiated serious discussions of German funding of eight ongoing and new hydropower projects worth billions of dollars. These talks have takien place in Islamabad between German Minister for Economic Co-operation and Development Ms. Heidemaire Wiegoreak Zeul and Pakistani Prime Minister's Adviser on Finance Mr. Shaukat Tarin, according Business Recorder newspaper.

In addition to megaprojects such as 1000 MW Neelum-Jhelum hydropower project, a number of community-based micro hydro projects are being executed with the help of the Agha Khan Foundation in Pakistan's Northern Areas and NWFP. Within this region, out of a total of 137 micro-hydro plants, the AKRSP has established 28 micro-hydros with an installed capacity of 619kW. Initially, in 1986, these plants started as research and demonstration units. These projects were extended to Village Organizations (VOs) and became participatory projects. A Village Organization (VO) is a body of villagers who have organized themselves around a common interest.

Pakistan has vast reserves of coal. But there is very little energy produced by burning coal. China has now agreed to invest about $600 million for setting up an integrated coal mining-cum-power project in Sindh. The project will produce 180 million tons of coal per year, which is sufficient to fuel the proposed 405 MW power plant. Pakistan is currently world's seventh largest coal-producing country, with coal reserves of more than 185 billion tons, ranking as the fourth of fifth largest coal reserves in the world. Almost all (99 percent) of Pakistan's coal reserves are found in the province of Sindh. Pakistan's largest coal field is Thar coal field which is spread over an area of 9100 square kilometers, and contains 175 billion tons of coal. So far this coal field has not been developed but efforts are underway.

In addition to the coal project, China has agreed to build several other power plants in Pakistan to help the South Asian nation deal with its worsening electricity crisis. When completed over the next several years, these plants, including Nandipur (425 MW, Thermal), Guddu(800 MW, Thermal) and Neelam-Jhelum(1000 MW, Hydro), Chashma (1200 MW, Nuclear) will add more than 3000 MW of power generating capacity for the energy-hungry country. Pakistan is currently facing a deficit of 4,000 to 5,000 megawatts, resulting in extensive load-shedding (rolling blackouts) of several hours a day.

China has already installed a 325-megawatt nuclear power plant (C1) at Chashma and is currently working on another (C2) of the same capacity that is expected to be online by 2010. The agreements for C3 and C4 have also been signed. The United States has objected to China supplying C3 and C4 on the grounds that any Pak-China nuclear cooperation would require consensus approval by the NSG, of which China is now a member, for any exception to the guidelines. The US is applying double standards since it supported and got approval for such an exception from NSG for its own nuclear deal with India.

Beyond the power generation capacity expansion projects, Pakistan must also pay attention to modernizing its national grid. The country's creaky and outdated electricity infrastructure loses over 30 percent of generated power in transit, partly due to theft, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south.

In terms of the cost of renewable sources such as wind and solar, the cost of not empowering the poor rural communities is far greater than the cost of providing a Grameen Shakti type solar system, or Agha Khan Foundation's microhydro or the gearless wind microturbines that are beginning to show up on the rural landscape in Pakistan.

Given the unresponsive nature of "democracies" and incompetent and corrupt governance in India and Pakistan, many of the poor rural communities far away from the national grid will probably never be electrified unless there are community-based local green initiatives pursued with the help of NGOs.

Compressed Natural Gas (CNG) Industry Growth:

According to International Association of Natural Gas Vehicles, as of December 2008, Pakistan has the world’s highest number of vehicles running on compressed Natural Gas (CNG). The number is 2 million. Pakistan also has the World’s largest number of CNG refueling stations, 2941 as of July 29, 2009.

Just as the worst electricity crisis of its history is currently gripping the nation, it appears that the gas crisis has begun to rear it ugly head, with recurring reports of low gas pressure, CNG station closures and rationing, and gas "load shedding" for businesses and consumers. The blame game has already started and there appears to be little relief in sight on either the electricity or the gas fronts. One of the reported effects of the gas shortage is delay in the availability of power from the rental power plants which are expected to operate on gas. It appears that the attempt to solve the electricity crisis has made life even more difficult for the people by spawning a gas crisis at the same time.

Citizens and industries in Lahore have been particularly badly hit, resulting in angry protests widely reported in the media. The All Pakistan Textile Mills Association (APTMA), the textile industry group, has claimed that it suffered losses of about Rs 1 billion in December due to lack of smooth gas supply to the industry. Pakistan's CNG industry is also feeling the pinch after rapid growth in the last few years.

Rental Power Plants (RPPs):

A story in Pakistani newspaper the News is alleging that "these expensive rental power plants, which were being installed with tall claims to address the energy crises in the country, were said to have now become one of the major reasons behind a new sorts of energy crises in Pakistan, as their gas requirements are bound to hit other sectors of economy running on gas supplies".

Solutions For Gas Shortage:

The best solution to alleviate the gas shortage is to build a pipeline to import over a billion cubic feet of gas a day from Iran, but such a project will take many years to implement even on an accelerated schedule. In the meantime, Pakistan's Sui Southern Gas Company (SSGC) is working on completing a project, dubbed Mashal LNG Project, that was started three years ago to import 500 MMCFD of LNG from Qatar by 2010. But even that won't happen till October 2011. The second phase of this project will add an additional 500 MMCFD of LNG by 2013.

In response to the alarming gas situation, there are reports that Pakistan is finally going ahead with the multi-billion dollar Iran-Pakistan Gas Pipe Line Project and has initiated the process of arranging financing of US $1.245 needed for laying 800 Km long pipe line from Pakistan-Iran border to Nawab Shah. Pakistan will also import 1.05 billion cubic feet of gas per day from Iran at 78 percent of crude oil parity price. Pakistan and Iran have already signed Gas Sales Agreement (GSPA) for importing 750 million cubic feet gas per day which will be used to generate 4500 MW of electricity and would be a cheaper alternative to the presently expensive imported furnace oil used in the existing thermal power houses. Another 250 million cubic feet of Gas per day is also envisaged to the purchased for development projects at Gawadar in Balochistan. Considering the magnitude and strategic nature of the Gas Line Project, the government has adopted a private-public partnership approach for financing the project with debt equity ratio of 70:30 under which the Pakistan government will provide 51 per cent equity. This equity financing would be provided upfront through selected Public Sector Entities like OGDCL, Pakistan Petroleum Limited , Government Holding Private Limited, Employees Old Age Benefits Institution and State Life Insurance Corporation. The debt will be sourced from the market backed by the government guarantees for transportation tariff. Any gap in raising the required debt from the market, the funds will be available by PDSP allocations.

The current completion date for Iran-Pakistan gas pipeline project is June, 2014, if things go smoothly. There is significant investor interest. Russia's Gazprom is very keen on the project. "We are ready to join the project as soon as we receive an offer," Russia's deputy energy minister Anatoly Yankovsky has been quoted as saying by the media. Another top Russian government official has said Moscow sees the pipeline as a means to divert Iranian gas from competing with Russian exports on the European market.

Iranian Consul General in Pakistan, Masoud Mohammad Zamani has told Pakistani news site the Dawn that Iran has completed major portion of work on Iran-Pakistan gas pipeline project and within couple of months the pipeline will be at Iran-Pakistan border. Hopefully, by 2013 Iran gas will be used in Pakistan, Iranian envoy explained during a meeting with members of Karachi Chamber of Commerce and Industry.

India, too, needs to import gas to meet its growing energy needs. But it pulled out of the pipeline project after the US-India nuclear deal. If and when India does come back to the table, the pipeline built from Iran to Nawabshah in Pakistan can be extended to support additional capacity for India.

Current Issues:

As the nation's attention turns to the gravity of the worsening gas energy crisis, the growing supply-demand gap for electricity is still unaddressed. The government's attempts to fill the gap with rental power have raised many questions and drawn serious corruption charges from the opposition parties and the media. Analysts at Center for Research and Security Studies are asking why have some private power producers completely shut down? And why are other private power producers operating well below their full capacity? It is being alleged that the reasons for buying rental power to fill the electricity gap rather than pay the outstanding dues of the independent power producers (IPPs) to fully utilize exiting installed capacity have to do with the kickbacks offered by the rental power operators. According to Reuters, Finance Minister Shaukat Tarin almost resigned after failing to persuade the cabinet against renting, an option he considered expensive and inefficient.

There have been widespread complaints in Islamabad, including by Mr. Tarin, that the government had solutions to improve the power output but was refusing to implement them in order to benefit a handful of power plant operators, such as those supplying rental power, while the IPPs are not being paid for supplying power from currently underutilized installed capacity. Requests for information by Transparency International Pakistan regarding rental power contracts have been ignored by the Ministry of Water and Power. There are widespread corruption allegations against President Asif Ali Zardari personally who has allegedly influenced the award of the 783 MW rental power contracts to a former governor of Oklahoma and his Pakistani partner.

Rental power is not an issue by itself. While it does provide some relief, it does not address the core problem of making sure that government departments, politicians, businesses and all consumers pay for power they use to make it attractive for private investments in the power sector.

Currently, most IPPs in Pakistan are operating well below capacity because they are not being paid billions of rupees owed to them. Paying them should be the first step toward filling the supply-demand gap by fully utilizing current capacity, and restoring order in the power market. Unless this done, the electricity rates will keep rising because the honest consumers end up footing the power bill for the many deadbeats and power thieves.

Meeting Energy Demand Growth:

BMI forecasts Pakistan real GDP growth averaging 3.98% a year between 2009 and 2013, with the 2009 estimate at 2.50%. The population is expected to expand from 161mn to 177mn, with per capita GDP and electricity consumption increasing by 20% and 11% respectively. Power consumption is expected to increase from an estimated 81TWh in 2008 to 99TWh by the end of the forecast period, which provides are relatively stable theoretical generation surplus (before transmission losses, etc.), assuming 4.3% annual growth in electricity generation.


Between 2008 and 2018, BMI is forecasting an increase in Pakistani electricity generation of 59.2%,which is mid-range for the Asia Pacific region. This equates to 27.2% in the 2013-2018 period, up from25.1% in 2008-2013. PED growth is set to increase from 19.1% in 2008-2013 to 25.8%, representing 49.9% for the entire forecast period. An increase of 49% in hydro-power use during 2008-2018 is a key element of generation growth. Thermal power generation is forecast to rise by 52% between 2008 and2018, with nuclear usage up 380% from a low base.

Summary:

The failures of successive Pakistani governments in tackling the growing energy crisis are shameful. Inaction at this point would be criminal. The Iran-Pakistan gas pipeline project has to be accelerated to avoid significant further harm to the country. At the same time, the shortages of electricity and gas need to be managed actively and fairly to minimize the impact on the consumers and the businesses to help the economy recover from the current slump. The issue of unpaid electricity bills and the rampant power theft should be confronted head-on to restore investor confidence in long-term energy projects in the country. Since the federal government is the biggest dead beat, followed by the four provincial governments, FATA, the KESC and the KW&SB, it is an opportunity for the current leadership in Islamabad to lead by example by paying off their outstanding utility bills, and resolving the circular debt issue in energy sector expeditiously.

Related Links:

Pakistan's Electricity Crisis

Pakistan's Gas Pipeline and Distribution Network

Pakistan's Energy Statistics

US Department of Energy Data

China Signs Power Plant Deals in Pakistan

Pakistan Pursues Hydroelectric Projects

Water Scarcity in Pakistan

Energy from Thorium

Comparing US and Pakistani Tax Evasion

Zardari Corruption Probe

Pakistan's Oil and Gas Report 2010

Circular Electricity Debt Problem

International CNG Vehicles Association

Lessons From IPP Experience in Pakistan

Correlation Between Human Development and Energy Consumption

BMI Energy Forecast Pakistan

Comments

Riaz Haq said…
Here's a UPI report about the implications of Iran-Pakistan gas pipeline for US policy to sanction Iran:

TEHRAN, March 19 (UPI) -- As Iran braces for another broadside of economic sanctions over its nuclear program.........
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U.S. energy analyst Gal Luft said the pipeline could also "have profound implications for the geopolitics of energy in the 21st century and for the future of South Asia."

Iran and Pakistan signed an agreement for the construction of the 560-mile, $7.5 billion pipeline .........

The project is crucial for Pakistan's growing energy requirements. Iran will supply 750 million-1 billion cubic feet of gas per day by mid-2015.

The project was first mooted in 1994. It was intended to carry gas through Pakistan to India in a 1,724-mile pipeline. But India, under intense pressure from the United States, withdrew in 2009, citing disputes over prices and transit fees. There was also deep misgivings in New Delhi about dealing with its longtime foe Pakistan.

India has invested instead in nuclear power to meet its ever-rising demand for energy in its burgeoning economy. It signed a landmark deal with the United States in 2008 for nuclear equipment.

There has been no official explanation about why the Americans would allow Pakistan to go ahead and sign a pipeline agreement with Iran at a time when Washington is striving to isolate the Islamic Republic and paralyze its economy.

But the Americans cannot afford to antagonize Pakistan at a time when Washington needs Islamabad's support to fight al-Qaida and the Taliban. Pakistan is already suffering serious energy shortages with an electricity shortfall of 3,000 megawatts. These cause politically troublesome long and frequent blackouts.

The United States had been pressing for a pipeline to South Asia from gas-rich Turkmenistan in Central Asia via Afghanistan that would bypass Iran. But the security situation in Afghanistan made such a project unlikely.

India hasn't closed all doors to the project and may still rejoin. It is expected to require 146 billion cubic meters of gas per year by 2025 and its options are limited.

China, ever hungry for energy to fuel its mushrooming economy, has indicated that it might sign on and run an extension of the pipeline from Pakistan.

It may provide financial assistance to Islamabad for the project, which would provide an overland energy corridor less vulnerable to interference by the United States -- or others -- than the long tanker route from the Gulf across the Indian Ocean to the Pacific.

China is the main obstacle preventing the United States mustering the U.N. Security Council behind new sanctions on Iran. Sanctions would cut 10-12 percent of China's oil imports and jeopardize oil contracts worth hundreds of billions of dollars.

Iran desperately needs this project.....

But U.S.-led sanctions have prevented it from exploiting this through high-volume exports. The pipeline to Pakistan, and possibly the massive markets in India and China as well, could change all that and immunize Tehran from U.S. pressure.

The geopolitical implications of the Iran-Pakistan pipeline going through are immense. If the Americans relent, they may secure concessions from Iran and would certainly win influence in Pakistan by helping it out of a worsening energy crisis.

"By connecting itself with the world's second largest gas reserves, Pakistan would guarantee reliable ....

"If the pipeline were to be extended to India it could also be an instrument of stability in often tense Pakistan-India relations as well as a source of revenue for Islamabad through transit fees." One estimate puts that at around $600 million a year.
Riaz Haq said…
Despite Iran and Pakistan signing on an ambitious gas pipeline deal with its possible extension to India, the multi-billion project is unlikely to take off, according to the text of an American diplomatic cable released by WikiLeaks.

A source, whose name has been removed, in the cable confided to the US diplomat in a private conversation on June 4, 2009 that he viewed near-term implementation of the Iranian-Pakistani gas link project as "very unlikely", the cable said.
Riaz Haq said…
Pakistan plans to add ten new nuclear power plants by 2030, according to a Dawn report:

KARACHI: Ten nuclear power plants will be established in the country by 2030 to help resolve the worsening electricity crisis, said Pakistan Atomic Energy Commission (PAEC) Chairman Dr Ansar Parvez on Tuesday.

He added that the government had assigned to the PAEC a target of generating around 8,800 megawatts by 2030. “We are optimistic about achieving this target within the stipulated period as all the requisite projects and plans are in place for this purpose,” he said.

Dr Parvez expressed these view while speaking as a chief guest at the 11th annual convocation-2011 of the Karachi Institute of Power Engineering in the vicinity of the Karachi Nuclear Power Plant.

He said that the PAEC was striving hard to enhance its role in power generation, while in the area of defence, “we are following a well-defined path that ensures that the country has a strategic capacity which is strong enough to deter and frustrate the evil designs of anyone”. He added that an immense contribution had been made by the graduates of Pakistan Institute of Engineering and Applied Sciences (PIEAS) and Karachi Institute of Power Engineering (KINPOE) to the country’s strategic programme.

In addition to the defence and power sectors, the PAEC had also been contributing to the socio-economic sector, he said. It had 14 medical centres in different cities and four more were being built. “Similarly, our agricultural centres and bio-technology institutes are also making a contribution towards the agriculture sector,” he added.

Dr Parvez, who is also the chairman of the board of governors of the PIEAS, later conferred MSc degrees in nuclear power engineering on 49 graduates along with medal and merit certificates to the position holders. He congratulated all graduating students and hoped that they would play their due role in the country’s development.

Earlier, PIEAS Rector Dr Mohammad Aslam said that the degree-awarding institute being run by the PAEC offered masters and PhD programmes in nuclear power engineering, material engineering, health physics and information technology. He said around 10 students were completing their PhD every year from the institute.

KINPOE Director Najmus Saqib traced the genesis of the institute which started as the Karachi Nuclear Power Training Centre in the early 80s and was upgraded to the masters level in 1993. He said this was KINPOE’s first convocation after its affiliation with the PIEAS.—APP/PPI
Riaz Haq said…
Here's a report in The News on how Pakistan's Engro company sees the economy:

KARACHI: Engro Corporation remains unsure about Pakistan’s economic trajectory as the country battles militants and tries to contain a growing fiscal deficit, a top company official said on Tuesday.

“Nobody knows what will happen in the coming months,” said Ruhail Mohammad, Engro’s Chief Financial Officer. “I have my numbers worked out. I know where sales and profit will be. But things are changing so fast that being sure remains almost impossible.”

Political and economic events of the past six months that saw the government retreating on key reforms such as raising taxes and cutting borrowing from the central bank have left businesses without a firm outlook, he said.

Although Engro posted a 79 percent rise in yearly profit to Rs6.8 billion in 2010, it continues to face problems, he said. “The policy of gas curtailment to fertiliser-makers is unjustified. The government has given us a commitment for uninterrupted supply, especially for the new plant.”

Expansion of Engro’s flagship fertiliser plant completed last year. The corporation can now produce 2.3 million tons of urea annually.

Mohammad, who was briefing journalists a day after the announcement of corporation’s financial results, said that Engro has no problem with increase in the price of gas that is used for making fertilisers. “The government must increase the price of fertiliser. We have been saying it for the last two years,” he said. “The agricultural products such as cotton, rice and wheat have seen a substantial increase in price. Farmers have the capacity to absorb rise in cost of urea.”

He, however, said that contractual obligations must not be breached once it comes to the additional capacity of 1.3 million tons, which the corporation has recently added. “For this project, we were offered gas at concessional rates for making the investment.”

The price of feedstock gas, which is used for making fertiliser, is subsidised by the government through a controversial method of making textile and other industries pay a higher price for the fuel. This has been a bone of contention for years.

“The government will be giving Rs37 billion in subsidy on urea in 2011,” he said. “There is no justification for this at all.”

On the other hand, curtailment of gas, which is basically a raw material for fertiliser, brings down production and leaves the manufacturers with no option but to raise prices to make up for the lost sales, he said.

He said the corporation plans to list Engro Foods, Engro Energy and Fertilisers at the stock exchange this year.

Mohammad said that work on Engro Energy’s venture into mining of coal at Tharparkar, Sindh, for power generation continues. “China is showing a lot of interest in the project. Financing won’t be an issue.”

The corporation will need between $300 million and $350 million for the Thar project by the end of 2012, he said.

“We have been cited as a heavily indebted group but if you look at the books closely we generate Rs35 cash for every Rs100 of debt. I think that gives us a lot of room to easily pay off the loans.”
Riaz Haq said…
Here's a Feb 2011 report on "Iran gas pipeline to Pakistan on hold"
by Robert M Cutler in Asia Times:

MONTREAL - The bilateral Iran-Pakistan gas pipeline project is now officially suspended, as the IRIB (Islamic Republic of Iran Broadcasting) website on Sunday quoted Ali Reza Gharibi, the Iran Gas Engineering and Development Company's managing director, as saying that "construction of the ... gas pipeline for export of natural gas from Iran to Pakistan will continue as of next spring", without giving a reason for the suspension.

Events, or their absence, have confirmed the skepticism that in some quarters met rumors of the deal even before the signature of the inter-governmental agreement last May on the basis of an
Iran gas pipeline to Pakistan on hold
By Robert M Cutler

MONTREAL - The bilateral Iran-Pakistan gas pipeline project is now officially suspended, as the IRIB (Islamic Republic of Iran Broadcasting) website on Sunday quoted Ali Reza Gharibi, the Iran Gas Engineering and Development Company's managing director, as saying that "construction of the ... gas pipeline for export of natural gas from Iran to Pakistan will continue as of next spring", without giving a reason for the suspension.
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The US-Indian civilian nuclear accord of 2008 is often considered as the carrot that finally tempted New Delhi to cancel its interest in the IPI pipeline, but this interpretation glosses over Iran's severe bargaining maladroitness, which took its toll. The Indian negotiators got tired of Teheran's representatives trying continually to reopen closed chapters of negotiation, insisting on providing a low-quality rather than a high-quality product, and proposing to charge liquefied natural gas prices for gas delivered overland.

The Iran-Pakistan pipeline, supplied by gas from the South Pars field, is planned to begin in Iran's Assalouyeh Energy Zone in the south and run over 1,100 kilometers before crossing the border with Pakistan. Initial capacity is said to be 22 billion cubic meters per year (bcm/y) with a possible final-stage volume of 55 bcm/y.

However, this seems unrealistic in any definite future, as recent statements by Iranian officials involved in the project have made clear that the "final-stage" volume would be achieved only by Pakistan's laying a pipeline inside Iran parallel to the one whose construction has just been suspended.

The tenuous nature of the project's planning is further indicated by the fact that, although Iran says that it has already completed construction of much of the pipeline on its own territory, even the approximate route of the pipeline through Pakistan remains in doubt. Inside Pakistan, it is planned that the pipeline would transit Balochistan and Sindh, but officials there candidly state that the route could change if China's general expressions of interest take more definite shape.

So it is still not certain where the gas will go if it ever gets from Iran into Pakistan. One strong possibility for a long time was that it would go to Pakistan's port at Gwadar in the country's southwest Balochistan, for liquefaction and transport by sea to China. That port opened a little over two years ago following a massive Chinese contribution of both capital and labor to its construction.
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Riaz Haq said…
Pakistan's president has finally realized and stated that US presence in Afghanistan is destabilizing Pakistan in an interview with the the Guardian newspaper:

"Just as the Mexican drug war on US borders makes a difference to Texas and American society, we are talking about a war on our border which is obviously having a huge effect. Only today a suicide bomber has attacked a police compound in Baluchistan. I think it [the Afghan war] has an effect on the entire region, and specially our country," Zardari said.

Asked about harsh criticism of Pakistan's co-operation in the "war on terror" published in a White House report last week, Zardari said Pakistan always listened to Washington's views. But he suggested some members of Congress and the US media did not know what they were talking about when it came to Pakistan.

"The United States has been an ally of Pakistan for the last 60 years. We respect and appreciate their political system. So every time a new parliament comes in, new boys come in, new representatives come in, it takes them time to understand the international situation. Not Obama, but the Congress, interest groups and the media get affected by 'deadline-itis' [over ending the Afghan war]," Zardari said.

"I think it is maybe 12 years since America has become engaged in Afghanistan and obviously everybody's patience is on edge, especially the American public, which is looking for answers. There are no short-term answers and it is very difficult to make the American taxpayer understand."
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"Our emphasis has been on security rather than our commerce and we need commerce for our survival.

"We have all the gas in the world waiting to go through to markets in India and the Red Sea but it cannot be brought in until Afghanistan is settled. So Afghanistan is a growth issue for us. I think most of the time, the quantification of the effect of the war is not calculated [by the US].
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According to senior intelligence officials, the "war on terror" has cost the Pakistani economy approximately $68bn (£42bn) since 2001.

More than 33,300 Pakistani civilians and military personnel have been killed or seriously injured. Last year's record-breaking floods added to the strain on the economy.

Zardari said the security situation was also undercutting efforts to strengthen democratic institutions bypassed or overturned during the military rule of his predecessor, General Pervez Musharraf. "Democracy is evolving. It's a new democracy. It takes time to bring institutions back. Destroying institutions during a decade of dictatorial regime is easy ... So there is a political impact as well as an economic impact."

Pakistani officials say relations with the US reached a "low ebb" following the recent row over Raymond Davis, a CIA contractor who shot dead two Pakistanis; a CIA drone attack in Pakistan's tribal areas last month that accidentally killed dozens of civilian elders meeting in a jirga (council), and Pakistan's suspicions that it is being excluded from discussions about an Afghan peace deal.

Zardari, who is expected to visit Washington next month, said he would ask Obama to share drone technology with Pakistan so future attacks could be planned and directed under a "Pakistani flag". Although this request had been turned down in the past, he said he was hopeful the Americans would be more receptive this time, given the huge anger and rising anti-American feeling that the drone attacks were causing.

Zardari and other senior government officials said all parties felt a sense of growing urgency about forging an inclusive peace settlement in Afghanistan, but the process must be "Afghan-led". Pakistan was ready to play its part, consistent with its national interest, they said.
..
Riaz Haq said…
Pakistan's prime minister set up an energy council to tackle the current energy crisis, according to Radio Pakistan:

.. He said a team effort was required for a mutually rewarding and strategic partnership between the government and the energy sector as he firmly believed that the industry was capable of turning the tide and delivering results.
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The Prime Minister said “Fuelling the Future” therefore requires finding new oil and gas reserves through aggressive exploration activities, optimizing production from existing fields by applying cutting-edge technology, enabling gas imports from across the borders via regional pipelines and LNG shipments.

He said the Government was encouraging foreign investments in energy infrastructure development and in a broader context, development of alternate sources of energy and energy conservation, for a sustainable energy supply.
He said Pakistan was an energy-deficit country, meeting nearly 90% of its oil requirement through imports.
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He said the government was struggling to keep up with an increasing energy import bill which has adversely affected country’s trade deficit and pointed that it was difficult for the government to pass on the full impact of the rising international oil prices to the people.
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He said development of local energy sources, including hydel projects and the Thar coal-fields, also remains a high priority for this government.
He said the government has already added 1700 MW in the national electricity grid during last three years and many more power projects were at various stages of development.
“We have even resolved the basic problem which had held us back in utilizing the vast coal reserves in Sindh for producing energy,” he said.
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He said the share of natural gas as one of the primary energy source has increased from 40 percent in 1999 to 60 percent in 2010 and currently the entire domestic natural gas production was being consumed while providing for approximately 50 percent of total energy requirements.
The Prime Minister said holding of the international event being clearly indicated the priority accorded to highlighting the country’s energy issues by the Petroleum Institute being the representative body of the most important public and private sector companies in the oil & gas sectors of the country.
He said Pakistan today faced a number of challenges including security issues arising from its fight against terrorism and a growing trade deficit as a result of rising energy prices globally.
The Prime Minister said though the challenges have caused financial constraints in the country, the government was however determined to face these in the same way as was being done in the political arena.
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He said the Energy Conference that will have working sessions on oil & gas exploration & production, LNG imports, development of Thar coal-fields, power sector progress, oil infrastructure development and safety recommendations for the energy sector.
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The event also saw the formal launch of the 2011 Pakistan Energy Outlook Document.
The conference while noting the almost 80 per cent growth in Pakistan’s energy requirement in the past 15 years from 34 million tons oil equivalent (TOE) in 1994-95 to 61 million TOE in 2009-10 would deliberate on ways to find a way out to find cost effective solutions.
The country’s energy supply currently comes primarily from indigenous natural gas which is 45% of the energy mix and oil imports at 35% of the energy mix, with the balance from hydel at 12%, coal at 6% and nuclear at 2% of the mix respectively.
Chief Executive Officer of Petroleum Institute of Pakistan (PIP) Saleem Piracha presented an overview of the Pakistan Energy Vision 2011-2026, while Chairman PIP Zaiviji Ismail, Country chairman of Shell Pakistan spoke about the energy need, demand and the measures being taken to meet the shortfall.
Riaz Haq said…
Here's Business Monitor International (BMI) 2011 report on power sector in Pakistan:

The new Pakistan Power Report forecasts Pakistan will account for 1.12% of Asia Pacific regional power generation by 2015, with the chance of possible generation surplus if investment rises and the country’s substantial transmission losses can be brought under control. BMI’s Asia Pacific power generation assumption for 2010 is 7,761 terawatt hours (TWh), representing an increase of 5.1% over the previous year. We are forecasting a rise in regional generation to 9,901TWh by 2015, representing growth of 21.2% in 2011-2015.
In 2010, Asia Pacific thermal power generation totalled an estimated 6,187TWh, accounting for 79.7% of the total electricity supplied in the region. Our forecast for 2015 is 7,704TWh, implying 18.6% growth that reduces the market share of thermal generation to 77.8%. This is thanks largely to environmental concerns promoting renewable sources, hydro-electricity and nuclear generation. Pakistan’s thermal generation in 2010 was an estimated 64.2TWh, or 1.04% of the regional total. By 2015, the country is expected to account for 0.83% of regional thermal generation.
Gas is the dominant fuel in Pakistan, accounting for an estimated 50.9% of primary energy demand (PED) in 2010, followed by oil at 31.0%, hydro-electric energy at 9.6% and coal with a 6.9% share. Regional energy demand is forecast to reach 5,508mn tonnes of oil equivalent (toe) by 2015, representing 20.0% growth from the estimated 2011 level. Pakistan’s estimated 2010 market share of 1.54% is set to ease to 1.51% by 2015. Pakistan’s estimated 2.9TWh of nuclear demand in 2010 is forecast to reach 7.0TWh by 2015, with its share of the Asia Pacific nuclear market rising from an estimated 0.53% to 0.90% over the period.
Pakistan now shares eighth place with Malaysia in BMI’s updated Power Business Environment Ratings, thanks to its relatively high level of renewables (mostly hydro) usage and healthy energy demand growth prospects. Several country risk factors offset the industry strength, but the country is in a good position to keep clear of the Philippines below.
BMI now forecasts Pakistan real GDP growth averaging 3% a year between 2011 and 2015, with the 2011 growth assumption being 1.5%. The population is expected to expand from 173mn to 194mn, with GDP per capita increasing by 24% and electricity consumption per capita rising by 5%. Power consumption is expected to increase from an estimated 75TWh in 2010 to 87TWh by the end of the forecast period. After power industry usage and transmission losses, there is scope for a supply surplus by 2015 of around 4TWh, assuming 2.9% average annual growth in electricity generation during 2011-2015.
Between 2010 and 2020, we are forecasting an increase in Pakistani electricity generation of 32.3%, which is below average for the Asia Pacific region. This equates to 15.3% in the 2015-2020 period, up from 14.8% in 2011-2015. PED growth is set to increase from 20.5% in 2011-2015 to 22.4%, representing 47.4% for the entire forecast period. An increase of 50% in hydro-power use during 2011- 2020 is a key element of generation growth. Thermal power generation is forecast to rise by just 8% between 2011 and 2020, with nuclear usage up 314% from a low base. More details of the long-term BMI power forecasts can be found at the end of this report.
Riaz Haq said…
Pakistan Petroleum is seeking tenders to develop oil and gas resources in Pakistan, according to Oil Voice:

Exploration in these licenses is expected to convert conventional and unconventional hydrocarbon resources in to reserves. There are stratigraphic traps, tight gas, shale gas etc.
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Dera Ismail Khan Block Overview:
The block lies in the Suleiman Foredeep with Sargodha High in the East, Khishor & Marwat Ranges in the North, Suleiman Foldbelt in the West and the Zindapir anticlinorium in the South. The development of Suleiman Foredeep is related with an uplift of the Suleiman Range, which is believed to be related to early and late Tertiary inversion of extensional and trans-tensional basins along the northwest margins of the Indian continental plate.
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The block contains the stratigraphic play at Eocene and Paleocene levels. The Sembar Formation (Cretaceous) is the proven source rock in the nearby Dhodak & Salsabil Gas Fields, which lies in the Gas window in the West of D. I. Khan block. The primary reservoir targets are the Stratigraphic pinch out of Habib Rahi Limestone (Eocene) and the truncations of Lower Ranikot Formation (Paleocene). The Secondary target is the Pab Sandstone (Cretaceous). The seal is comprised of Intra Eocene Shales and the Shales of Chitarwata Formation (Oligocene) above the Base Oligocene unconformity. The Lower Ranikot and Pab Sandstone are the proven Gas/Condensate reservoir in the Dhodak and Salsabil Gas Fields.

The Kamiab-1 well (Amoco, 1974) drilled in the East encountered the significant Gas shows in the Lower Ranikot Formation.
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Sirani Block Overview:
The Sembar Formation (Lower-Cretaceous) is the proven source rock in the area. Sands of Lower Goru Formation (Lower Cretaceous) are producing in nearby fields and have good reservoir quality. Shales of Upper Goru & intraformational shales provide the seal. Tilted Faults Blocks are expected in the Block.
• Four leads identified on vintage seismic data. New seismic likely to yield more leads
• Proximity to the producing Badin Oil fields to the west
• Possibility of finding additional leads in southern marshy area where no seismic data has been acquired. Good shows encountered in some wells in the block
• Nearby existing infrastructure
• Low cost drilling operations as minimum problems are expected.
• Early production through Extended Well Testing (EWT)

Naushahro Firoz Block Overview:
The Naushahro Firoz block lies in a zone with a proven petroleum system from different reservoirs. The Zamzama gas condensate discovery (2.3 Tcf and 12 MMbo)) from Late Cretaceous Pab sandstone lies to the west and Sawan gas discovery (1.5 Tcf) from Lower Cretaceous Lower Goru sandstone lies to the East of the block. Sui Main Limestone (SML) of Eocene age is a proven reservoir in a number of discoveries (over 2 Tcf reserves) located in the north of the block. The reservoir quality of SML is also proven by the Sagyun-01 well drilled in the block and wells drilled in the surrounding area. One lead and a possibility of another lead identified at SML level on sparse vintage data.
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Jungshahi Block Overview:
The Jungshahi block lies to the east of two gas discoveries. An untested surface lead is separated from a gas field by a broad syncline. The Block is close to the Kitchen area. Untested surface anticlines are present in the block. Proven reservoir rocks of Paleocene and Cretaceous are present. Significant gas shows have been observed in Lower and Upper Ranikot formations in the wells drilled in the block. The Block is located close to an existing gas pipeline / infrastructure and commercial hub at Karachi. Early production is expected through EWT.
Riaz Haq said…
Pakistan improves incentives in new tight gas exploration policy, according to platts.com:

Pakistan has approved a new tight gas exploration policy with improved incentives as compared with its 2009 policy, to overcome the country's gas shortfall and attract foreign investment, a petroleum ministry official said Wednesday.

Under the new policy, exploration companies will be offered 40-50% higher prices for the gas compared with the $4.26/Btu price announced in Exploration and Production Policy 2009.

Companies which succeed in recovering gas from tight fields within two years will get 50% hike over the 2009 price and if it takes more time they will get only a 40% hike on the 2009 price.

Besides, the leases for the fields will now be for 40 years instead of 30 in the 2009 policy, the official said.

Even with the improved prices for the tight gas to be paid to the exploration companies, it is estimated that Pakistan will have to pay a maximum of $6.5/Btu for the gas compared with $12.3/Btu for gas imports.

"It [tight gas] is a more feasible option for the economy as even after giving additional incentives the cost of gas available will be less than imported gas and there will be no burden on the foreign exchange reserves for additional imports," Umer Bin Ayaz, a research analyst at JS Global Equities in Karachi, said.

Tight gas is typically stuck in very tight formations underground -- trapped in hard rock or in a sandstone or limestone formations that are unusually impermeable and non-porous.

As exploration is more difficult and the technology required more expensive, companies do not typically go in for exploration until given attractive incentives.

The country's supreme decision-making body, the Council of Common Interest, chaired by Prime Minister Yousuf Raza Gillani Tuesday evening approved tight gas policy, a government statement said.

The country had a potential 40 trillion cubic feet of tight gas. Separately, Pakistan's current recoverable gas reserves stand at around 27 Tcf.

Pakistan now faces a gas shortfall of 1-1.2 Bcf/day.

Meanwhile, the government is working on plans to import 3.5 million mt/year of LNG to tackle its energy crisis.
Riaz Haq said…
World Bank commits to helping Pakistan build energy projects, according to APP:

ISLAMABAD, Jun 10 (APP): The World Bank (WB) has assured to consider financial assistance for more mega hydro electric and wind power projects in Pakistan and to continue its assistance for ongoing water and power sector projects.Country Director World Bank in Pakistan, Rachid Benmessaoud along with a four- member delegation called on the Minister for Water and Power, Syed Naveed Qamar here on Friday.Mr. Benmessaoud said that the WB is already providing financial assistance for electricity distribution and transmission improvement project (EDTIP) which is likely to be completed within the prescribed time frame.

This will improve the transmission and distribution network in the country by replacing the existing infrastructure. Allocated funds of US$ 15.6 million for technical assistance of institutional strengthening and capacity building of power distribution companies.
A pilot project for installation of advance metering infrastructure (Smart meters) is also being funded by WB, adding that Terbela extension IV project has also signed with WAPDA which will generate additional 300 MW and completed within three years.
The Bank also fully supports the power sector reforms, he said and assured that the bank will take up more hydel and wind power projects for assistance to resolve the energy crisis,he added.
The Minister for Water and Power, Syed Naveed Qamar offered various mega projects for assistance and said that the WB support is very important for the power sector.
He said that the government is taking all possible measures to resolve the energy crisis. Recoveries are being improved, zero tolerance policy for defaulters, rehabilitation of Gencos, upfront tariff for wind power, power sector reforms are underway and operation and maintenance of Gencos through private sector.
He said that more than 2000 MW has been added in the national grid. Work on various hydro and water sector projects have started, he observed.
The Minister asked the PEPCO to immediately complete the procedure for hiring international procurement adviser and smart metering project so that the disbursement could be started at the earliest.
Riaz Haq said…
Here's an International Power announcement of Uch II power plant in Pakistan:

(London – 21 January 2011) International Power plc is pleased to announce that it has signed the financing to develop Uch II, a 375MW CCGT extension to the existing 572MW Uch plant in Pakistan. Uch II will be 100% owned by International Power.

Philip Cox, CEO of International Power, said, "Uch II represents an excellent opportunity for International Power to add new capacity adjacent to our existing Uch site and help tackle the issue of power shortages in the country. A key attraction of this investment is that it will also use domestic gas to produce competitively priced power."

The total project cost is estimated at US$480 million (£300 million), which will be funded by debt and equity in a 75:25 ratio. International Power’s equity investment of US$120 million (£75 million) will be funded from current liquid resources. The US$360 million (£225 million) of debt will be provided by multilateral and bilateral agencies that include the Asian Development Bank, International Finance Corporation, Korean EXIM and the Islamic Development Bank.

The electricity generated from Uch II will be sold through a 25-year US$ indexed power purchase agreement with the National Transmission and Despatch Company, which is wholly owned by the Government of Pakistan. Gas will be supplied from the existing gas field under a gas supply agreement with the Oil and Gas Development Company of Pakistan.

The Uch II project will be constructed under an EPC contract with Hyundai Engineering Company and Descon Engineering. It will comprise two GE9E gas turbines and one steam turbine. The plant is expected to be operational in 2013 and will be operated by the existing Uch facility under an Operations and Maintenance agreement.
Riaz Haq said…
Two new power plants add 390MW to national grid, according to The Express Tribune:

Two private sector power projects, having cumulative net capacity of 390 megawatts, have been added to the national grid in the last one month.

This was told in a meeting of the Private Power and Infrastructure Board (PPIB) held on Monday under the chairmanship of Minister for Water and Power Syed Naveed Qamar, said a press statement.

One was a gas-based independent power producer (IPP) named Fauji Daharki Power Project with a capacity of 176.6 MW and was commissioned on April 22 and the other was 213.8MW Hubco-Narowal Power Project which started commercial operations on May 16.

Participants of the meeting said that another three IPPs were in construction phase which included 209MW Bhikki Power Project, which is expected to be commissioned soon, 84MW New Bong Hydropower Project and 375MW Uch-II Power Project based on gas, expected to be completed by 2013.

Qamar said that the government believed in the policy of facilitating investors and removing hurdles in processing of projects, adding the Power Generation Policy for 2002 was being reviewed to make it more investor-friendly, in consultation with public and private sector stakeholders.

He added that in order to make electricity affordable, the concept of converting existing thermal IPPs to cheaper fuels like coal, LNG, etc was being seriously considered.

Appreciating the role of PPIB in bringing investment in the power generation sector, the minister asked PPIB to focus on the development and implementation of power projects based on water and coal for medium and long-term needs.
Riaz Haq said…
The European Union has signed an agreement to provide 225 million euros for development projects in Pakistan, according to The News:

The agreement was signed by the Finance Minister Dr Abdul Hafeez Shaikh and German Federal Minister for Economic Cooperation and Development Dirk Niebel and European Commissioner for Development Andris Piebalgs at the finance ministry.

The money will be spent from 2011 to 2013 on developing programmes for rural and natural resource, education and human resource, governance and trade development.

Under the arrangement, the EU has committed an annual grant of 75 million euros. Over the three-year period, 90 million euros will be spent on rural development and natural resources management, 70 million euros on education and human resource development, 50 million euros on governance and 15 million euros on trade development.

Briefing newsmen about the meeting, Shaikh appreciated the EU and Germany for their support to economic development in Pakistan.

The minister discussed the current economic situation and measures taken by the government for stabilising and increasing revenue through tax reforms.

The minister said that despite narrow fiscal space, Pakistan has not compromised on social and poverty-related spending and is pursuing a strategy to promote growth.

“As a result of the initiatives to stabilise economy, indicators have shown improvement and the economy is able enough to withstand challenges,” he added.

The minister thanked Germany for supporting Pakistan’s efforts to get access to the EU markets.

The visiting dignitaries appreciated Pakistan’s commitment for sustaining the ongoing economic reforms programme and reaffirmed their support to Pakistan in this regard.

They expressed hope that Pakistan would continue with the reform process.

Niebel said that under the recently concluded bilateral negotiations, Germany had committed additional 78 million euros for education, energy, health and governance besides assuring 12 million euros for the Multi Donor Trust Fund.

Out of the 78 million euros committed by Germany, 48.5 million euros will be spent on energy, 13 million euros on health, 9 million euros on governance, one million euros on education and 6.5 million euros outside these priority areas.
Riaz Haq said…
Sindh govt allocates Rs. 3.7 billion for Thar coal development in 2011-12 budget, according to Dawn:

KARACHI, June 11: Tormented by the power shortages the Sindh government focuses on developing indigenous coal reserves. In the next Annual Development Plan it has earmarked Rs3710.937 million for Thar coal project.

For energy sector a total of Rs1214.499 million has been kept in the ADP 2011-12. This include Rs1100 million for the coal gasification project.

Sindh Finance Minister Syed Murad Ali Shah while explaining salient features of the budget for 2011-12 said: “Thar coal reserves of 175 billion tons are ample for provision of cost-effective energy for centuries”.

He said that once the reserves were properly exploited they could help in generating 20,000MW by 2020.

Recently, in international competitive bidding, two Chinese companies, an Australian company, and Pakistan Petroleum Limited participated.

As a result, two Chinese companies have been selected to undertake coal exploration, power generation and establishing petro-chemical complex at two blocks of Thar.

He said the bankable feasibility study for joint venture project of the Sindh government and Engro was created to boost the potential in a record period of eight months.

The Sindh government and the federal government have included this project in the list of projects to be taken up with the Pak-China Joint Energy Working Group (JEWG) formed during the last visit of the Chinese prime minister to Pakistan, he said.

Leading Chinese companies have shown strong interest in executing this project. The mining and power generation from this project is expected in 2015-16 depending upon the financing arrangements for the project.

The test burn at Underground Coal Gasification (UCG) is expected during coming financial year. After successful testing, the project will be scaled up to produce 2x50MW electricity.

He said the government has made serious efforts to provide critical infrastructure for development of Thar coal.

A scheme for bringing water to Thar from Makhi Farash has been approved by ECNEC, feasibility studies for effluent disposal and laying of broad-gauge railway line are to be completed in June, 2011.

Work on improvement and widening of road for movement of heavy machinery from Karachi to Mithi-Islamkot is expected to start in next year.

According to rough calculations an amount of $1.20 billion is needed over a period of next five years to develop the required infrastructure for Thar.

Serious efforts are also in place to exploit the Gharo-Keti Bandar wind corridor.

During the Sindh chief minister`s recent visit to South Korea an MoU to generate 2000MW of wind energy was signed with Korea Southern Power Company.

The issue of electric power is of great priority for Sindh. The CCI has given approval to the removal of a limit on the ceiling of 50MW, which was earlier set at which provinces could construct power plants.

The Sindh government has signed a letter of intent with the Three Gorges Project Corporation, China`s premier electricity producer, to help explore the hydro power potential in Sindh.

A team from CWE, a subsidiary of the Three Gorges, recently visited Sukkur Barrage to gauge the potential for constructing a power plant.

Under the village electrification programme 446 villages were provided electricity during 2010-11, while the process for providing power to 350 more villages is underway.
Riaz Haq said…
Pakistan is ready to approve a Norwegian company’s request to build a 150-megawatt wind farm, the first part of a $1 billion plan that could boost by a third the announced capacity for clean-energy power plants, according to Bloomberg News:

Pakistan is seeking to diversify its energy supplies away from oil and gas and boost electricity production. The nation has a power deficit of 3.6 gigawatts a day, or more than the output of two nuclear reactors, triggering 12-hour blackouts that cause riots and close factories in cities nationwide.

The Alternative Energy Development Board is willing to allow a project proposed by NBT AS, a Lysaker-based clean energy company that plans to build the facility in the Sindh province “wind corridor” north of Karachi, according to Said Arif Alauddin, chief executive of the government agency.

“They came to us saying they have got the money and relationship with the Chinese and they want to invest,” Alauddin said from the port city of Karachi. “As soon as they pay the fee, we will issue that letter to them. We will be able to give them the land if we can see they can deliver.”

Pakistan has almost 1 gigawatt of projects under construction or with financing agreed and 498.5 megawatts more of wind programs announced, according to Bloomberg New Energy Finance data. Only 6 megawatts of wind energy facilities are operating in the nation. It’s the ninth-poorest in the Asia- Pacific region with a 2009 gross domestic product per capita of $2,609, according to Bloomberg data.
Chinese Financing

NBT Chief Executive Officer Joar Viken said he plans to tap financing for his project from one of three Chinese turbine makers that his company is talking with about supplying machinery for the facilities.

“We think Pakistan is a very good environment and has a very good framework,” Viken said in a phone interview from New York. “Because we get everything in U.S. dollars, we don’t have a huge currency risk.”

Viken said NBT would issue a tender to Goldwind Science & Technology Co., Sinovel Wind Group Co. and China Energine International Holdings Ltd. (1185) to supply the turbines. Each of the companies have credit lines with the China Development Bank Corp., a state-owned lender.

“Goldwind now is actively seeking more cooperation opportunities with domestic as well as foreign wind farm developers to expand Goldwind’s presence in overseas markets,” Thomas Yao, a spokesman for the company, said in an e-mail. “Norway’s NBT AS is among the international opportunities we are currently considering.”

A spokesman for China Energine, who asked not to be named in line with company policy, said he doesn’t know about the talks and can’t comment. Officials at Sinovel couldn’t be reached.
Financing ‘Feasible’

The financing arrangements are “feasible” because the Chinese turbine makers would not develop the projects themselves, said Eduardo Tabbush, an industry analyst at Bloomberg New Energy Finance in London.

“This is something we’ve seen happening more and more,” Tabbush said.

NBT envisions developing as much as 650 megawatts of wind power in Pakistan over the next few years. It already has purchased land suitable for 50 megawatts in Sindh province and is seeking a partnership with Zulfikar Ali Bhutto Institute of Science and Technology, a university in Karachi, for land for the other 100 megawatts, Alauddin said.
Support Mechanism
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The country’s electricity shortfall reaches as much as 3,628 megawatts per day, according to demand-supply data available on the ministry of power and water website.


http://www.bloomberg.com/news/2011-07-13/pakistan-set-to-approve-1-billion-plan-to-boost-wind-energy-production.html
Riaz Haq said…
Here's an Express Tribune report on hydrocarbon production in Pakistan being flat for three years in a row:

Challenging security environment, notorious circular debt and delay in some projects due to litigation have adversely affected the country’s hydrocarbon production activities in fiscal 2011, according to a Topline Securities research note. During the outgoing year, hydrocarbon production remained almost flat, at 769,000 boepd (barrel of oil equivalent per day), for the third consecutive year despite the growing energy appetite of the country.

Contrary to the industry trend, Pakistan Oilfields (POL) on the back of its working interest in the Tal block showed a significant improvement of 39 per cent in its production while production of other major listed companies Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company (OGDC) crawled up 0.5 per cent and 3.4 per cent, respectively.

POL and PPL benefit from Tal and Naspha

POL, benefitting from its working interest in the Tal block, witnessed increase of 11.2 per cent and 39.3 per cent in oil and gas production to 4,578 (barrels per day) bpd and 86 million cubic feet per day (mmcfd), respectively.

Furthermore, PPL’s oil production propelled by a massive 48.8 per cent to 7,419 bpd on account of its working interest in both Tal and Naspha block, while the same blocks improved gas performance to cover the reduced production from other major fields including Sui, Khandkhot, Sawan and Miano.

On the other hand of the spectrum, OGDC’s oil production declined by 1.6 per cent while gas production increased by 3.4 per cent compared with last year.

Another year of depressed performance

The country’s hydrocarbon production is expected to show a mere decline of 0.6 per cent to 769,000 boepd in fiscal 2011.

However, gas production decreased by 0.6 per cent to stand at 4 bcfd while oil production show a minor increase of 0.9 per cent to 66,00 bpd.

Major culprits behind the reduced gas production are Sui (-4.4 per cent), Qadirpur (-2 per cent), Zamzama (-23.1 per cent), Sawan (-1.1 per cent), Kandkhot (-5.5 per cent) and Miano (-4.8 per cent), which contribute approximately 48 per cent to the country’s gas production. Moreover, the natural floods was another major factor behind the decline trend, says the note. The only notable increase was witnessed in Manzalai field production, up a massive 67 per cent.

Yielding the maximum from existing fields

In addition to subdued production numbers, sector exploration activity remained muted as well, says the note. However, this conservative approach will be covered if the industry yields the maximum from its existing reservoirs and fast track its few delayed projects.


http://tribune.com.pk/story/209807/oil-and-gas-sector-production-remains-flat-for-third-straight-year/
Riaz Haq said…
Pakistan's oil and gas sector titled "Pakistan Economy 1947-2011":

KARACHI: Oil and gas sector in Pakistan has seen phenomenal growth since the independence in 1947, as till now 791 wells have been drilled by various local and international exploration companies with over 250 oil and gas discoveries, official data revealed.

The data suggests that these discoveries have brought the gas reserves to 29 trillion cubic feet (TCF), whereas the crude oil recoverable reserves are estimated at 304 million barrels.

At the time of independence, the oil quantities produced were scarce and at that time there was no gas production. Over these years the petroleum industry has played a significant role in the national development by making large indigenous gas discoveries and inviting huge investments, both local and foreign, in the sector.

An investment of $810 million was spent in drilling activities with 30 new wells drilled during the last year.

After the independence of Pakistan, the government promulgated Regulation of Mines and Oilfields and Mineral Development (Government Control) Act, 1948 and issued rules there under in 1949.

The aim of the act was to provide regulatory certainty for exploration and production business that was essential to encourage and accelerate petroleum exploration activities.

Thereafter BOC and AOC established local companies, Pakistan Petroleum Limited (PPL) and Pakistan Oilfields Limited (POL), respectively and transferred exploration activities to these companies.

In 1952, a well drilled on the Sui structure in Central Indus Basin, made the maiden discovery of large reserves of natural gas in the Sui Main Limestone of Early Eocene age.

The original recoverable gas reserves were estimated to be over 10 trillion cubic feet (TCF) equivalent to about one billion barrels of oil.

The discovery of Sui Gas Field was the first major milestone in the search for hydrocarbons in Pakistan.

Following the natural gas discovery at Sui, several foreign oil companies took active interest in carrying out exploration in Pakistan. This led to further exploratory drilling in prospective areas.

The government of Pakistan then decided to undertake the search for oil and gas directly and established the state oil exploration company.

The Oil and Gas Development Corporation was established in September 1961, subsequently, incorporated as a joint stock company with the listing at the local stock exchanges under the name of the Oil and Gas Development Company Limited (OGDCL).

OGDCL’s first success was the small gas discovery at Sari Singh in Sindh in 1965.

Pakistan remains an active and prospective exploration country. Significant finds continue to be made in the existing producing areas, as well as in less-explored regions.

The proven rate of exploration success and a sizeable domestic oil and gas market present promising investment opportunities.

In order to remain attractive in highly competitive global exploration market, the government has been making progressive changes in the investment polices and regulations at regular intervals. With first E&P policy of 1991, Pakistan caught the attention of international petroleum industry.

Further subsequent improvements through policies of 1993, 1994, 1997 made Pakistan an attractive location for upstream investment.

Pakistan overhauled the policy in 2001 and then in 2009. On account of combination of factors such as improved returns on investment based on new fiscal incentives, transparent and open regulatory environment, induction of market reforms and technological advances, the government expects positive influence on local upstream market and hopes that forward momentum will be maintained.
Riaz Haq said…
Pakistan will unveil a new renewables feed-in tariff (FIT) next month as it looks to narrow its economically-crippling energy gap, according to rechargenews.com:

The Pakistani government first launched a FIT in 2006, but the package bore little fruit and the country still has just 6MW of operational wind capacity.

The new FIT is aimed at jump-starting renewables in a nation that faces a 3-4GW energy shortfall, made worse by the devastating floods in 2010.

In sharp contrast to Pakistan’s paltry wind portfolio, neighbouring India had more than 13GW installed at the end of 2010, according to the Global Wind Energy Council.

While Islamabad has not spelled out the new FIT rates, a spokesman for the state-run Alternative Energy Development Board says investors will be able to net internal rates of return of up to 18% under the new support regime.

The government has already given the go-ahead to 1.5GW of projects, with several developers near to reaching financial close. These include Turkish utility Zorlu Enerji and China International Water & Electric.

Zorlu Enerji’s 49.5MW project near Hyderabad will be Pakistan’s first privately-owned wind farm.

In 2010, for the first time, more wind capacity was added in emerging economies than in the traditional wind markets in the OECD countries.

Industry figures say attitudes towards wind energy have shifted dramatically in developing countries like Pakistan in recent years, as officials come to grips with the immense opportunity wind brings for rapidly adding generation capacity.

Pakistan has a target of a 5% share of power from renewables by 2030.


http://www.rechargenews.com/business_area/politics/article274782.ece
Riaz Haq said…
Here's an excerpt of a report in The Nation about an International Coal Conf in Karachi:

The international conference was told that Thar region of Sindh province is endowed with mammoth coal (lignite) reserves estimated to be 175 billion tonnes which can produce 100,000MW of electricity for next 300 years and can be a key to energy security and economic prosperity.
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“The government has started working on the policy of retrofitting 5300MW of furnace oil based power plants to coal-based initially on imported coal and then on indigenous coal when available,” he (Minister Naveed Qamar) informed the audience.
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Removing the misconceptions about Thar coal, Dr Marcos Leontidis, mining expert from Greece, said that the stripping ratio in Thar is around 6.6: 1, which is much better than many lignite mines in the world including Greece.
Dr Larry Thomas, coal expert from United Kingdom, said that sulphur content in Thar is acceptable being at 0.7%, which is lower than found in many other lignite resources already being used in the world and its moisture levels are same or even less than found in most of the lignite mines in the world. He further said the coal from Thar although may not be exportable to other countries but can be transported to be used in other parts of the province after drying.
Nigel Pickett from SRK-UK in his presentation said renewable energy cannot provide Pakistan reliable energy supplies due to its seasonal and cyclic nature. It has to be part of our energy mix to meet the peak demands and reduce fossil fuel consumption. Volatility of oil prices in 2007 brought heavy stress on the economy and indigenous coal provides the only option to achieve energy security for the country.
Zubair Motiwala, Chairman Sindh Board of Investment, briefed the forum about investment potential of Thar coal and said many international companies from China, South Korea, Germany, Czech Republic, Australia, UK and Turkey have shown their interest in investment in coal mining and power generation in Thar coal and also in the infrastructure projects. He also informed that the Government of Sindh is conducting 3rd International Competitive Bidding for blocks VIII, IX and X of Thar Coalfield and also blocks in Sonda and Badin for attracting international companies to develop coal mining and power generation projects in Sindh.
Mohammad Younus Dagha, Provincial Secretary Coal and Energy Development Department/MD Thar Coal and Energy Board stressed the need to create an ideal energy mix by replacing imported furnace oil to indigenous coal for power generation.


http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/23-Oct-2011/5300MW-plants-will-be-converted-to-coal-Qamar
Riaz Haq said…
Pakistan planning to purchase two nuclear power plants from China, reports The Express Tribune:

ISLAMABAD:

Pakistan has planned to purchase two nuclear power plants with a combined capacity of 2,000 megawatts from China, which will be utilised for setting up Karachi Nuclear Power Plant-2 (Kanupp-2) and Kanupp-3 and help mitigate the energy crisis.

According to documents available with The Express Tribune, China National Nuclear Corporation (CNNC) and Pakistan Atomic Energy Commission (PAEC) are likely to enter into an agreement to conduct a joint study to finalise design modifications, which would enable Pakistan to acquire two nuclear power plants, each having power generation capacity of 1,000 megawatts.

After completion of this project, a contract for establishing Kanupp-2 and Kanupp-3 will be negotiated.

The Planning Commission has said CNNC may be asked to grant intellectual property rights for the existing 1,000-megawatt plant and suggest steps which could help Pakistan avoid violation of property rights.

China has three state-owned corporations, which can own and operate nuclear power plants, including China National Nuclear Corporation (CNNC), China Guangdong Nuclear Power Holding Company (CGNPC) and China Power Investment Corporation (CPIC).

CGNPC currently operates four nuclear power plants of 3,758 megawatts in China and also involved in 16 other projects having capacity of 25,000 megawatts, which are under construction. The company’s focus has been on three-loop 1,000-megawatt plants.

The Planning Commission also questioned whether PAEC had approached the three nuclear power plant developers in order to ensure fair competition in offering the plants. “Moreover comparison of intellectual property rights of other nuclear power plant vendors may also be brought out,” the commission said.

In an attempt to increase power generation capacity, the government focuses on developing nuclear energy on a relatively bigger scale. Accordingly, the Energy Security Action Plan has envisaged increasing the share of nuclear power by installing 8,800-megawatt nuclear power plants by 2030.

The import of nuclear power plants will lead to electricity generation at cheaper rates compared to the thermal source, contributing to tackling the power crisis. About a month ago, power shortages reached their peak at around 8,000 to 8,500 megawatts, forcing long hours of outages across the country.

The load-shedding has disrupted industrial activity, denting overall economic growth of the country, which stood at 2.4 per cent last fiscal year.


http://tribune.com.pk/story/289908/energy-requirement-pakistan-to-buy-two-nuclear-power-plants-from-china/
Riaz Haq said…
Here's a Business Recorder report on Pakistan's growing power requirements:

SLAMABAD: Former Water and Power Minister Raja Pervez Asharaf on Thursday told the Supreme Court that Pakistan need an addition of 1200 MW every year as the power requirement would enhance to 1,30,000 MW by the year 2030.

Appearing before a two-Judge bench of Chief Justice Iftikhar Muhammad Chaudhry and Justice Khilji Arif Hussain on suo motu case regarding alleged corruption in setting up Rental Power Projects, he defended himself and said that Pakistan's power shortage solution was in hydel power generation and not in thermal which was costly.

"Thermal generation is not our future because we can't afford it for being too expensive," he said, adding "We need to exploit hydel and coal assets.

"The run of the river project can alone have the potential of 7,500 MW while we have 187 million tones of coal reserves in Thar."

He said that unnecessary vilification campaign had led to develop a perception of a scam and swindle that hampered the installation of power plants.

"Even harsher mudslinging and denigration was the order of the day when the government of Benazir Bhutto introduced the Independent Power Producers (IPPs) in 1994," he added.

He said resultantly the big players shied away from investing in Pakistan's power sector when fingers were pointed at them. He also referred to the application of PML-Q legislator and Housing Minister Makhdoom Fasial Saleh Hayat who had levelled charges of corruption and mismanagement in setting up RPPs.

"The concept of RPPs as a stop-gap arrangement was introduced by the previous government of which Faisal Saleh Hayat was the minister and for being the cabinet member was equally responsible if wrong policy was pursued," Raja Ashraf recalled.

Justifying why Makhdoom Hayat was chasing him, Raja Asharaf said, being PPP's secretary general he was very vocal in criticizing Makhdoom Hayat's contesting the elections on his party's ticket and then joining Musharraf's government to become a minister in dictatorial regime.

He also announced that the current power situation in Karachi, the main business hub, would end in few days as the government had developed a mechanism.

Not a single investor or unsuccessful bidder ever raised allegation that he being the minister devoured the money in the grant of license to develop RPPs, he said and brushed aside the impression that he owned a palatial house in London.

The government of Musharraf paid no heed despite repeated warnings of a looming power crisis, he said, resultantly not a single mega watt of electricity was added to the national grid that crippled our industry.

The electricity shortfall which was at 1000 MW in 2005 surged to 5000 MW in 2008 when he assumed the office of the water and power ministry, he said adding he inherited the circular debt of Rs 400 billion..........


http://www.brecorder.com/pakistan/business-a-economy/36432-pakistan-requires-1200mw-power-every-year.html
Riaz Haq said…
Here's a Business Recorder report (Part 2) on Pakistan's growing power requirements:

....."We had no solution to reduce the shortfall even when some fast track projects in the pipeline got delayed for over two years," he said.

He said "still we exempted our textile industry the main source of $35 billion foreign exchange earning from load shedding even during the difficult days".

The bids were invited for the commissioning of IPPs but no response came because of law and order situation even for the hydel plants.

"We are fast moving towards a different (darker) era," he feared and recalled that today Pepco was facing a shortfall of Rs 170 billion in subsidy for providing uninterrupted power supply to 6.5 million life line consumers when the total number of consumers were over 10 million.

"The World Bank had suggested us to go for long term policies instead of wasting money on subsidies and overcoming load shedding as a short term", he added.

Referring to the question why Pakistan was not developing its own power generation units, he said such investment required Rs 1.2 to 1.4 billion per MW which they could not afford.

He also compared the situation in India which was faced with 40,000 MW of shortfall, while the situation in Bangladesh was worst, Sharjah also experiencing load shedding where consumers in London were paying different tariff for each hour per day.

"Availability and affordability of power is an uphill task though it may not be true for long term projects," he added.

Meanwhile Khawaja Tariq Raheem, representing Pepco, warned that the hydel generation the production of which would dip by 1000 MW in the next decade, would be stalled from the next month because of annual canal closure.

"We would need a prompt production of 500 to 600 MW of electricity which the existing machinery could produce," he informed.


http://www.brecorder.com/pakistan/business-a-economy/36432-pakistan-requires-1200mw-power-every-year.html
Riaz Haq said…
"Clean" and "green" are words not usually associated with the streets of Lahore, but a garbage collecting business is changing the image of the Pakistani city.

And it is making millions of dollars in the process, by turning waste into liquefied petroleum products and fertiliser for farmlands.

Al Jazeera's Kamal Hyder reports from Lahore, Pakistan.

http://www.aljazeera.com/news/asia/2011/12/201112193155297451.html
Riaz Haq said…
Here's an Express Tribune update on Neelum-Jhelum hydroelectric project:

ISLAMABAD: As Water and Power Development Authority (Wapda) completes 28 per cent work on the 969MW Neelum-Jhelum Hydropower Project, the cost of which has gone up from Rs84 billion to Rs333 due to inordinate delay, Pakistan is pushing China to release the promised $500 million loan to bridge the shortfall of funds.

The cost of the project has increased after it was redesigned in the wake of the 2005 earthquake. Work on the project is progressing but the shortfall of funds and issues in land acquisition are still problems that need to be addressed to complete the project.

Wapda has also had to procure two Tunnel Boring Machines (TBMs) at the cost of Rs17 billion to overcome the delay of two and half years. “We will be able to reduce implementation time by two years by using TBMs that are expected to reach Karachi by January 25, 2012,” sources said.

Average completion level on the project is 28%. Some areas are progressing better, like the powerhouses, which are at 40% completion.

In the powerhouse, four turbines with a capacity of 242MW each will be set up. A separate plant of 45MW will also be set up at the diversion tunnel which was completed on October 15. A total of 60 kilometres of tunnels have to be completed including 35.6 kilometres of tunnels needed to push water to drive the turbines.

“As much as 17 kilometres have been completed,” sources said adding that work was underway on the coffer dam that is expected to be completed by February next year.

Sources said that a consortium of six banks including Exim Bank of China is providing financing for the project. “We are pushing Exim Bank of China to extend a $500 million loan to bridge the shortfall of funds,” sources said adding that other banks in the consortium were also being asked to extend additional $700 to $800 million loans.

The project cost has escalated on different accounts including Rs38 billion due as interest on loan, Rs45 billion on account of depreciation of rupee against dollar, from Rs45 to Rs86. Further cost increases were because of rate of land acquisition and procurement of two TBMs that cost Rs17 billion.

The government is to procure total 3,900 kanals of land out of which about 68 kanals is still outstanding, including the crucial portion of about 18 kanals for which payment of Rs1.2 billion has already been made to the AJK government.

“Despite payment, local people are reluctant to hand over land which may further delay the completion of the project,” sources added.


http://tribune.com.pk/story/302326/neelum-jhelum-project-pakistan-pushes-china-to-release-promised-500m/
Riaz Haq said…
Here's a report in The Hindu saying India and Pakistan are the only two countries starting up nuclear power plants in 2011:

India and Pakistan are the only two countries starting construction of a nuclear power plant in 2011, even as plants are being shut down in many countries and nuclear power generation has declined.

It may be a little too early to predict the long-term decline of nuclear energy; but analysis indicates that countries are turning to other energy sources as a result of high costs, low demand and perceived risks from recent disasters.

Despite reaching record levels in 2010, global installed nuclear capacity - the potential power generation from all existing plants - declined to 366.5 gigawatts (GW) in 2011, from 375.5 GW at the end of 2010.
Fall in production

“Due to increasing cost of production, a slowed demand for electricity and fresh memories of disaster in Japan, production of nuclear power fell in 2011,” the Washington DC-based Worldwatch Institute said in its report recently.

Much of the decline in installed capacity is the result of halted reactor construction around the world, the report pointed out adding in the first ten months of the current year, as many as 13 nuclear reactors were closed, thereby reducing the total number of reactors in operation around the world from 441 at the beginning of the year to 433.

It is also interesting that while construction of 16 new reactors began in 2010 — the highest number in over a decade — the number fell to just to two in 2011. The two countries to start construction are India and Pakistan.

Pointing out that China is an exception to the global slump in nuclear electricity generation in terms of both the number of plants being built and capacity of planned installations, the report added that the US too does not seem to be abandoning its nuclear power just yet.
Prominence to decline

Although nuclear power remains an important energy source for many countries, including Russia and France, it is likely that its prominence will continue to decrease.

To maintain current generation levels, the world would need to install an additional 18 GW by 2015 and another 175 GW by 2025. In the aftermath of Fukushima and in the context of a fragile global economy, an increase that sharp is improbable, the independent research organisation pointed out.

China, India, Iran, Pakistan, Russia, and South Korea have together contributed around five GW of new installed capacity since the beginning of 2010. During this same period, nearly 11.5 GW of installed capacity has been shut down in France, Germany, Japan, and the UK.


http://www.thehindubusinessline.com/opinion/columns/g-chandrashekhar/article2695407.ece?homepage=true
Riaz Haq said…
Here's a NY Times story on India benefiting from plummeting prices of solar panels and solar energy:

Over the last decade, India has opened the state-dominated power-generating industry to private players, while leaving distribution and rate-setting largely in government hands. European countries heavily subsidize solar power by agreeing to buy it for decades at a time, but the subsidies in India are lower and solar operators are forced into to greater competition, helping push down costs.

This month, the government held its second auction to determine the price at which its state-owned power trading company — NTPC Vidyut Vyapar Nigam — would buy solar-generated electricity for the national grid. The average winning bid was 8.77 rupees (16.5 cents) per kilowatt hour.

That is about twice the price of coal-generated power, but it was about 27 percent lower than the winning bids at the auction held a year ago. Germany, the world’s biggest solar-power user, pays about 17.94 euro cents (23 American cents) per kilowatt hour.

India still significantly lags behind European countries in the use of solar. Germany, for example, had 17,000 megawatts of solar power capacity at the end of 2010. But India, which gets more than 300 days of sunlight a year, is a more suitable place to generate solar power. And being behind is now benefiting India, as panel prices plummet, enabling it to spend far less to set up solar farms than countries that pioneered the technology.

In its solar power auctions, moreover, NTPC is not creating open-ended contracts. The last auction, for example, was for a total of only 350 megawatts, which will cap the government’s costs. The assumption is that the price of solar power will continue to decline, eventually approaching the cost of electricity generated through conventional methods.

Most Indian power plants are fueled by coal and generate electricity at about 4 rupees (7.5 cents) per kilowatt hour — less than half of solar’s cost now. In this month’s auction, the recent winning bids were comparable to what India’s industrial and commercial users pay for electricity — from 8 to 10 rupees. And solar’s costs are competitive with power plants and back-up generators that burn petroleum-based fuels, whose electricity costs about 10 rupees per kilowatt hour.

“At least during daytime, photovoltaic panels will compete with oil-generated electricity more than anything else” in India, said Cédric Philibert, a senior analyst at the International Energy Agency in Paris. “This comparison is becoming better and better every month.”

In addition to the federal government, several of India’s states like Gujarat, where Khadoda is located, are also buying power at subsidized rates from solar companies like Azure Power.

Analysts do not expect India’s solar rollout to be problem free. They say some developers have probably bid too aggressively in the federal auctions and may not be able to build their plants fast or cheap enough to survive. Consequently, or because their bids were speculative, some developers are trying to sell their government power agreements to third parties, analysts say, even though such flipping is against the auction rules.


http://www.nytimes.com/2011/12/29/business/energy-environment/in-solar-power-india-begins-living-up-to-its-own-ambitions.html?pagewanted=2&_r=1&ref=todayspaper
Riaz Haq said…
Here are some gas production & consumption stats by Pak provinces as provided by Minister of Petroleum Asim Husain on National TV:

Sindh produces 69% and consumes 41%

Balochistan produces 17% consumes 7%

KPK produces 10% consumes 7%

Punjab produces 4% consumes 45%
Riaz Haq said…
Gas crisis in Pakistan will subside by 2013 claims Federal Minister of Petroleum and Natural Resources, according to News Pakistan:

Thursday, January 12, 2012: The Federal Minister of Petroleum and Natural Resources, Dr Asim Hussain, has painted a rosy picture for Gas crisis in Pakistan. The minister during the inauguration of Kunar-Pasakhi
gas field in Tandojam claimed that by the end of 2013, Gas shortfall in the country will subside.

Asim declared that a total of 2.6 billion cubic feet of gas will be pumped up into the system; the promised increase will include 1,058 million cubic feet per day of gas produced locally and over 1.5 bcf of imported gas from projects
which are yet to materialise.

Kunar-Pasakhi gas field, which was inaugurated by by Prime Minister Yousaf Raza Gilani at Sui Southern Gas Company office in Deh Bukhari, Hyderabad, has a production capacity of 100 mmcfd.

The cost of project is estimated to be Rs1.49 billion. The SSGC and Sui Northern Gas Company Limited will share 50 mmcfd each from the supply. The inflow of 50 mmcfd gas will ease shortage in Punjab, which has been struck the hardest.

The Prime Minister of Pakistan at the inauguration said, “We inherited an energy crisis when we came to power but we will ensure that the next governments do not face the same. Pakistan is endowed with all kinds of natural resources;
the need is to harness them at the right time.”

The Kunar-Pasakhi field was discovered some eight years ago but work was delayed due to lawsuits. According to Azeem Iqbal Siddiqui, SSGC Managing Director, the project will benefit up to 2.5 million consumers and produce 387 tons
of liquefied petroleum gas (LPG) and 400 tons of liquefied natural gas (LNG).

The natural resources minister said the present government will give a plan of action for five and ten years for energy production. According to him, current projects under development in Sindh and Balochistan will contribute over
1,058 mmcfd in the next two years. He expects another 1 bcf from Iran over the next year besides LNG import of 500 mmcfd.


http://www.newspakistan.pk/2012/01/13/Gas-crisis-in-Pakistan-will-subside-by-2013-claims-Federal-Minister-of-Petroleum-and-Natural-Resources/
Riaz Haq said…
Toby Dalton, Director, Carnegie Endowment for International Peace, said here on Monday evening that the economic future of Pakistan was interlinked with its energy future, according to The News:

He made the observation at a roundtable discussion on ‘Political Future of Pakistan and International Community’ at a local hotel. The roundtable discussion was organised under the auspices of Centre for Peace, Security and Development.

Carnegie Endowment for International Peace, he said, was a global think tank. “We think the dynamism that exists in Pakistan on its own terms, not in US terms,” he said.

“We understand issues such as circular debt, CNG issue and other issues being faced by Pakistan,” Dalton said.

The real issue was how Pakistan formed political consensus, how different political parties were brought together, he said.

“The fundamental problem is to bring confidence to bring investment,” he said.

“Energy is fundamental to the future, just as economy is fundamental to the future,” he emphasized.

George Perkovich, Vice President Studies, Carnegie Endowment for International Peace said Turkey was a very interesting example for growth. It was an ongoing struggle but there was so much interest to invest in Turkey, he said. Once such an environment was achieved, “the international community can come and augment,” he said.

He said we understand that many interesting things were going on in Pakistan.

He said the United States and other Western countries clearly want Pakistan to be peaceful.

“The sense of justice is very important in Pakistan and in any society,” he said. “To address injustices we need to involve the whole world,” he said.

He, however, made it clear that to bring about justice was “messy” and takes a long time but without it there could be no stability.

“We will be looking to see how Pakistan addresses these issues “internally” that were no doubt challenging, he said.

Perkovich agreed that there was growing awareness that whatever happened during the last 60 years doesn’t work and lessons needs to be learnt. Pakistan itself has these issues and “economic dynamism is the key,” he remarked.

In Afghanistan too, he said, the US was trying to bring some sort of stability. Responding to a question Perkovich said he understands Memogate but it was not the US government that should be held responsible for it.

Information Minister Shazia Marri said, “Whatever went wrong in Pakistan is not only because of Pakistanis.”

“Pakistan is not only an important country in the region; it is important in the world,” she observed.

“We need you to understand what our passions are,” she said. “Remedies need to come from friends who influence us,” she said.

“All democracies have gone through experiences,” Marri said. “We are in the learning process; probably in a more challenging way,” she said.

“We are a younger democracy which is flourishing,” Marri said. “We were gifted the world’s most terrible dictator. He had no right to rule our three generations,” she made the remark referring to military ruler Gen Ayub Khan.

“Then there was Zia who brought Kalashnikov culture,” Marri said.

“We have hardly four years of democracy,” she said. “Our children want to respect others, but it’s a two-way thing,” she said.

Faisal Siddiqui, leader of Muthahida Qaumi Movement (MQM) said extremism was not only an issue in Pakistan; it was a global issue.....


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=87901&Cat=4&dt=1/17/2012
Riaz Haq said…
India considering paying for Iranian oil in Indian rupee, reports AFP:

India said Monday it may use its own currency, the rupee, to pay for oil imports from Iran in the face of a US-led sanctions campaign aimed at forcing Tehran to abandon its nuclear programme.

India has said it will continue to import oil from Iran, joining China in refusing to bow to intensifying US pressure not to do business with Iran.

India currently routes its dollar payments for Iranian crude through a Turkish bank -- an avenue that might be closed off as Washington ratchets up pressure on the Persian Gulf state.

"There are different (payment) options which are being evaluated and discussed. We are also considering the rupee as an option," Reserve Bank of India Deputy Governor H.R. Khan told reporters.

Indian officials say the country could pay partly for its Iranian oil imports in rupees that Iran could then use to buy Indian goods.

However, they say Iranian imports of Indian goods would not cover New Delhi's entire oil purchase bill.

India pays Iran about $1 billion every month through Turkey for the 370,000 barrels a day of crude oil it buys from the world's fourth-largest oil producer.

Khan said as of now there had been no disruption in the current payment arrangement.

But the Press Trust of India quoted a senior government official as saying there were indications from Turkey's state-run Halkbank that it would have to stop settling payments on behalf of Indian companies.

The news agency did not name the official.

Iran is India's second-largest oil supplier after Saudi Arabia, providing around 12 percent of the fast-growing country's crude needs.

An Indian delegation visited Tehran earlier this month to discuss payment options.

India's Finance Minister Pranab Mukherjee told reporters in Chicago on the weekend that New Delhi would not scale down its petroleum imports from Iran despite US and European sanctions against the Islamic republic.

"We will not decrease imports from Iran," Mukherjee was quoted as saying by the Press Trust of India at the end of a two-day visit aimed at wooing US investment.

"Iran is an important country for India despite US and European sanctions on Iran.

"It is not possible for India to take any decision to reduce imports from Iran drastically."

The West fears Iran is trying to build a nuclear bomb. Tehran insists its nuclear programme is only for civilian use and refuses to abandon its uranium enrichment activities.


http://www.google.com/hostednews/afp/article/ALeqM5i06u5gQlzR9uWBHbpKWoeuU_7r8g?docId=CNG.5862125f766c04eb2281885744c3a99d.4f1
Riaz Haq said…
Here's an assessment of the impact of energy crisis in Pakistan by Sky News:

Energy shortages across Pakistan are crippling the country's economy and costing businesses millions in lost productivity.

Electricity is cut off for hours at a time, fuel is rationed at filling stations and people are forced to run expensive generators to keep their homes lit.

Pakistan is not producing enough power to meet the growing demand and economists estimate the shortages are shaving 2% off its gross domestic product.

At one time most of the world's hand-stitched leather footballs were made in the town of Sialkot in the Punjab.

It is still a profitable business, but only just.

The power cuts keep production lines idle for hours at a time, orders take longer to make, some have to be flown abroad at great expense to make their deadlines rather than shipped.

"The energy crisis has been here for the last five or six years but it has become very severe over the past couple of years, very very severe," manager Ali Sheikh told Sky News.

"At times it is as if the government is trying to shut industry down altogether. It seems deliberate at times."

Add to that rising unemployment, a negligible tax collection rate, rampant corruption and a security situation that puts buyers off from travelling to Pakistan.

Businessman Asad Bajwa believes many foreigners are now reluctant to visit his factory in Sialkot and orders are down 40%.

But do not write Pakistan off just yet, one leading economist says.

Dr Rashid Amjad , the Vice Chancellor of the Pakistan Institute of Development Economics in Islamabad, said: "The bottom line is we need to revive growth as soon as we can.

"The government has to give it the highest priority and go in for serious economic thinking to ensure macro-economic stability.

"But I still come back to the basic fact that there is a resilience in its people and a resilience in its economy.

"Everybody thinks Pakistan is going to collapse - it never has."


http://news.sky.com/home/world-news/article/16163280
Riaz Haq said…
Pakistan & Iran agree to build transnational power grid, according to Bloomberg:

Iran and Pakistan agreed to invest $718 million in a network for transmitting electricity from Iran to its eastern neighbor, Tehran Times reported, citing Energy Minister Majid Namjou.

Iran sells about 35 megawatts a day to Pakistan, and the two countries want to boost supply to as much as 4,000 megawatts, the Tehran-based newspaper said. The Persian Gulf country’s power exports will reach a total of some $1 billion in the current Iranian year ending March 19, Deputy Energy Minister Mohammad Behzad said, according to the report.


http://www.bloomberg.com/news/2012-02-19/iran-pakistan-plan-718-million-power-grid-tehran-times-says.html
Riaz Haq said…
Here's an interesting idea proposed by BioNitrogen Inc, a Florida start-up, to make inexpensive fertilizer in South Asia:

In what may become a precursor of things to come in the Urea Fertilizer Industry, local fertilizer manufacturing plants in Pakistan were forced to shut last year for over six months. These shutdowns resulted in critical shortages of fertilizer which subsequently sent the costs of fertilizer rising one-hundred forty one (141) per cent in just 2 years. Industry officials sighted the country's gas load management plan as a key component of the shutdowns. The urea production shutdowns were the result of natural gas shortages which severely hampered the manufacturing of urea thus dealing a severe blow to Country's Agriculture Sector which many believe is the backbone of the entire economy.(2) In neighboring India, there are discussions that Urea prices will be linked directly to gas prices which would increase pressure on the farmers of India to maintain economic stability in the face of rising fertilizer prices.(3)

Industry data and global production data charts for nitrogen based urea fertilizer, often correlate the price of nitrogen fertilizers is directly related to the price of natural gas (methane).(4) (5) Manufacturing one (1) ton of anhydrous ammonia fertilizer requires 33,500 cubic feet of natural gas. In other words, natural gas is used to produce fertilizer which is used to grow crops. This relationship also has a direct impact on not just the agriculture economies of the world, but also the production of wheat, the main food staple in many countries throughout the world, which also plays a strong role in producing the feed for millions of livestock in not just Pakistan but Countries around the world.

What interests Dr. Terry R. Collins, the CEO of BioNitrogen, is the news accounts coming out of Pakistan often state for the record "It is a matter of fact that there is no alternative of gas for urea manufacturers as urea manufacturing process cannot be completed without gas supply." Dr. Collins offers this perspective, "There is in fact a viable alternative to using natural gas to produce to nitrogen based urea. BioNitrogen has developed a patent-pending process which specializes in the conversion of renewable agricultural waste biomass into urea fertilizer. Our small-format production facilities are designed for implementation in local farm communities, close to their required feedstock and abundant biomass."

Adds Dr. Mario Beruvides, BioNitrogen's CTO, "BioNitrogen is excited about introducing ourselves to the world as an extremely cost-effective and ecologically friendly alternative for producing extremely high quality nitrogen based urea fertilizer. If Pakistan were using our production methods and facilities, there likely would have been no closures in their country and no economic impact. This is part of BioNitrogen's corporate mandates of not only producing urea fertilizer, but we're absolutely committed to protecting the environment and contributing to local economic development while helping to feed to our planet."

As he continued to reflect on the events in India and Pakistan, Dr. Collins concluded, "Compared to traditional urea manufacturing facilities that use natural gas as a feedstock, our BioNitrogen plants will be much smaller and can be constructed and brought online for production much more quickly. ...


http://www.marketwatch.com/story/bionitrogen-corp-pakistans-urea-fertilizer-production-issues-may-be-a-global-precursor-of-the-future-2012-02-27-71130?reflink=MW_news_stmp
Riaz Haq said…
Here's a Reuters report on award of engg contract by Pakistan to a German-Austrian firm for Iran-Pakistan Gas Pipeline:

BERLIN – ILF Consulting Engineers, a German-Austrian company, confirmed on Monday that it is providing “advice and planning” work in the technological development of an Iranian-Pakistan pipeline project.

The German-Austrian involvement may violate US and EU sanctions barring the supply of technology to the Islamic Republic.

“Advisory and planning engineers” are working on the project, Rüdiger Ophoven, a spokesman for ILF’s gas and oil department, told The Jerusalem Post on Monday. He stressed that ILF is only involved in the Pakistani side of the project.

The Pakistan paper The Nation reported on Sunday that “according to the secretary of petroleum, Pakistan has offered $250 million to a German company, ILF Engineering, for laying the gas pipeline inside its territory.

The gas pipeline would be completed till 2014, the secretary added.”

Iran’s Persian- and English-language press reported extensively on the pipeline project and Germany’s role in its development.

When asked about the value of ILF’s contract, Ophoven told the Post that such a project is “less than 10 million euros.”

He said he did not know if ILF’s legal department had examined whether the deal violated US, UN or EU sanctions.

The United States pressed Pakistan in 2009 to refrain from entering into a pipeline agreement with Iran. However, the Pakistani government moved forward with its Iranian partners.

Austria and Germany are considered by experts in Europe to be the weakest links in the enforcement of the sanctions regime targeting Iran. Germany remains Iran’s most important EU trade partner, with an annual bilateral trade of roughly 4 billion euros.

Ophoven could not confirm or deny whether German regulators had approved the deal with Pakistan.

Nasrin Amirsedghi, a leading German-Iranian intellectual and a close follower of trade relations with Tehran, told the Post on Monday that chief executive officers of companies look “for a way to circumvent” the sanctions.

She criticized ILF’s explanation that it has a contract only with Pakistan.

“Do we want to prevent an atomic catastrophe in the Middle East? Do we want to support Israel and the Iranian people? Then all European and Western governments should end their diplomatic, cultural and scientific relations with Iran — the cancer of terrorism and war in the region,” Amirsedghi said.

She added that by severing relations with the Islamic Republic, the “sanctions will have an effect.”

Ophoven told the Post that the project entails a “1.5- to 2-year phase,” and there may be additional phases. ILF is providing the Pakistanis with “state-of-the-art technology” that deals with the know-how to build the pipeline project, he said.


http://www.jpost.com/International/Article.aspx?ID=260614&R=R1
Riaz Haq said…
Here's an excerpt from an Express Tribune Op ed on water-food-energy triangle:

Food production requires water and energy, the extraction of water requires energy, and energy production requires water. Food prices are highly sensitive to energy costs – which indirectly affect the GDP of a country as high costs of processing, irrigation, fertiliser and transportation affect production and lead to lower exports.

This nexus poses a challenge to governments and population. The lack of energy security, lower agriculture yields and higher cost of relief goods is leading us towards unrest and uncertainty. This threatens our masses, our government and our business as 70 % of our country’s production is dependent on our agricultural sector.

Hunger and poverty are on the rise while we remain clueless about the future. Our reservoirs need to be secure and more dams need to be constructed faster, as draught and famine are fast turning into a possibility.

Agriculture, in Pakistan or elsewhere, consumes more than 70% of global water demand. For example, countries that produce meat require up to 20,000 litres of water for every kilogramme of meat produced, compared to at least 1,200 litres to produce a kilogram of grain. We do not realise the need for secure water resources due to illiteracy and lack of community awareness.

Climate change, in the shape of torrential rains, has also affected our country; we are one of the few countries facing a chronic food emergency today.

Economists forecast that global demand for energy will increase by 40% by 2030, and that this energy will draw heavily on freshwater resources. Over 75% of global demand for energy from 2012-2030, will be dependant on fossil fuels – predominantly coal. The Thar coal reserves need to be developed rapidly, as this is the only way to ensure job security, resource mobilisation, income and prosperity for the population. It makes good business sense for leaders to work on this. Furthermore, we have to ensure fast-tracked building of dams between now and 2015, a failure to do so may lead us to bankruptcy, as people will lose faith in the nation’s ability to sustain itself and business will suffer colossal damages.

We need good business and we need to understand the difference between dependency on others and self reliance. Bad governance is a major issue in Pakistan, eating up business and politics and leading us to ruins. Pakistan faces risks ahead as its next big war will not be over power or money – it will be over food, water or energy. All are vital as we struggle to survive. For Pakistan, failure is not an option.


http://tribune.com.pk/story/351745/the-food-water-energy-nexus--pakistan-walking-a-tightrope/#comment-617375
Riaz Haq said…
Here's an Express Tribune report about Russia's interest in financing and building Iran-Pakistan gas pipeline after Chinese reportedly pulled out:

As a Chinese bank has backed off from financing the $1.5 billion Iran-Pakistan gas pipeline project amid pressure from the United States, Russia has caught the attention of Pakistan, which is planning to explore this viable option first.

The decision to negotiate a deal with Russia came in a recent meeting of the sub-committee formed by the Economic Coordination Committee (ECC) of the cabinet.

Earlier, Russia had offered Pakistan that it would fully finance the pipeline if its energy giant Gazprom was awarded the contract without bidding during a four-day visit of Foreign Minister Hina Rabbani Khar to Moscow in February. In order to give its assent to the offer, the government will have to waive Public Procurement Regulatory Authority (PPRA) rules – designed to ensure transparency in government dealings.

“A delegation will visit Russia soon to negotiate a deal with Gazprom,” Petroleum Secretary Ijaz Chaudhry told The Express Tribune. Recently, he said, the ECC sub-committee had considered different options for going ahead with the vital gas pipeline project.

“No decision, however, has been taken yet to award the contract to Russia, but Pakistan will discuss this option,” he clarified.

Chaudhry also dispelled perception that the Industrial and Commercial Bank of China (ICBC) had distanced itself from the project and said “we have written a letter to ICBC, asking it to clear its position as financial adviser to the project.”

The Inter-state Gas Systems (ISGS) had signed a deal with financial advisers for raising funds for the project, except for ICBC which was in the process of taking approvals.

“It is apprehended that a probable reason for not signing the agreement could be geo-political situation in the region,” said a summary tabled before ECC.

Earlier, the sub-committee had considered approaching China and Russia to seek financial assistance for the project. However, Russia now appeared to be leading the race, a ministry official said, adding the committee also studied the Iranian offer of $250 million for constructing the pipeline....


http://tribune.com.pk/story/352334/financing-needs-ip-gas-pipeline--russia-catches-pakistans-eye/
Riaz Haq said…
Here's an AFP report on World Bank loaning over a billion dollars to Pakistan for hydro energy and drip-sprinkler irrigation projects:

The World Bank said Tuesday it would fund two projects totaling $1.09 billion, in energy and irrigation, aimed at supporting Pakistan's growth agenda for reducing poverty.

The World Bank's executive board approved the projects Tuesday, the development lender said in a statement.

The $840 million Tarbela IV Extension Hydropower Project will add power generation capacity of 1,410 megawatts, contributing a crucial source of electricity for the economic growth and development of Pakistan, the World Bank said.

Only 15 percent of Pakistan's vast hydropower potential has been developed, the Bank noted.

The Tarbela IV Extension Hydropower Project will use the existing dam, tunnel, roads and transmission line for generating additional electricity in summer months when demand for electricity and river flows are high, it added.

"The beauty of this project is that it will help Pakistan reduce the gap between supply and demand of electricity by maximizing the benefits of existing infrastructure of Tarbela Dam without requiring any land acquisition or relocation of population," Rachid Benmessaoud, World Bank country director for Pakistan, said in the statement.

"The direct beneficiaries will be millions of energy users, including industry, households and farmers who would get more electricity at a lower cost and suffer fewer blackouts."

The $250 million Punjab Irrigated Agriculture Productivity Improvement Program Project is aimed at getting maximum productivity out of irrigation water by weaning farmers away from the traditional and "wasteful" flood irrigation, the Bank said.

The project will emphasize more modern methods like drip and sprinkler irrigation systems, which in turn will encourage crop diversification, it said.

The hydropower project includes a $400 million, 21-year loan from the Bank's International Bank of Reconstruction and Development that includes a grace period of six years.

The remaining $440 million of the Tarbela project and $250 million for the irrigation project are credits from the International Development Association, the World Bank's concessionary lending arm.

These 25-year loans have a 1.25 percent interest rate and a five-year grace period, the Bank said.


http://www.google.com/hostednews/afp/article/ALeqM5gC8sjJnQh2zAV1dxx-fMAZlKG0FA?docId=CNG.cc5ff6942ce75ef4fd87ae4d1d3fa477.51
Riaz Haq said…
India company prepared to sell gas to pipeline, according to Economic Times:

After fuel, India is offering to export natural gas to Pakistan to help the neighbouring country tide over its gas crisis.

State-owned GAIL's just commissioned natural gas pipeline from west coast to Bhatinda in Punjab is barely 25-km away from Pakistan border and the gas utility is proposing that the line can be extended to Lahore in no time, sources privy to the development said.

GAIL plans to import liquefied natural gas or LNG (natural gas that has been liquefied at sub-zero temperature and shipped in cryogenic vessels) at Dahej or Hazira import terminals in Gujarat. It plans to move this gas through the Dahej-Vijaipur-Dadri-Bawana-Nangal-Bhatinda pipeline to Punjab and then into Pakistan.

However, before a formal proposal is made to the Pakistani side, it needs the blessing of the ministry of external affairs, sources said.

Pakistan may experience its worst gas crisis in 2016 when shortfall is expected to hit 3.021 billion cubic feet per day as supply-demand position deteriorates, the State Bank of Pakistan had said in December last year.

Unlike India, Pakistan has till now not built a LNG import terminal and so buying gas from GAIL pipeline may make economic sense for the Islamic nation. Gas supply in Pakistan at around 5.497 bcfd in the year to June 30, 2012 is short of demand by 2.458 bcfd. Supplies, according to the State Bank of Pakistan, are likely to increase to 6.354 bcfd in 2015-16 but the deficit will expand further to 3.021 bcfd.

Sources said a LNG terminal will take a minimum of four years to build while the GAIL pipeline can be expanded into Lahore within months.


http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/energy-crisis-india-offers-gas-export-to-pakistan/articleshow/12357186.cms
Riaz Haq said…
Here's a News story of how the worst-hit Punjab industries are switching to alternate power and gas generation:

The Punjab industries are converting on alternative energy due to uninterrupted power and gas outages of six to eights hours daily, besides improving their efficiency to reduce costs and stay competitive domestically and internationally, analysts said on Tuesday.

“We are unable to compete with similar industries in other provinces that enjoy full gas supplies and lower electricity load-shedding, said Syed Nabeel Hashmi, Chairman Punjab Economic Forum.

The majority of industries are suffering from power and gas load-shedding, but some have managed to reduce the operating cost through improvement in their efficiencies.The manufacturing sector in Punjab is now using biomass (agricultural waste), solid municipal waste, coal gasifiers, liquefied petroleum gas (LPG), used tyres, rejected leather soles as alternative fuels to gas, furnace oil and diesel, he said.



In addition, Punjab industries have upgraded technology and their human resource to improve productivity, said Hashmi.Gohar Ejaz, group leader All Pakistan Textile Mills Association, said, “We would never have realised the quantum of savings that could be made through energy audits.”



German non-government organisation GIZ and Small and Medium Enterprises Authority (SMEDA) have facilitated APTMA member mills by providing free services of highly qualified foreign energy audit and management system experts, he said, adding that only through energy audit and the resultant cost-free changes in the manufacturing system 25 APTMA members gained a cumulative benefit of Rs258 million per annum.



The benefits doubled for those mills that agreed to make some minor investments, he said, adding that savings made through improvement in efficiencies did provide some relief to the mills when they used alternative energy resources.



Lahore Chamber of Commerce and Industry (LCCI) Senior Vice President Kashif Yunus Mehr, who is associated with the steel melting industry, said that larger steel melting units have imported coal gasifiers from China.



The gas produced is use to heat the furnaces, he said.“It costs 20 percent higher than the natural gas as it was the only alternative to keep the industry running as natural gas is mostly unavailable.”

These gasifiers require investment of Rs25 million that mills with small capacities cannot afford, he said, adding that the small steel melting units are using locally-fabricated small gasifiers that are highly inefficient, but serve the purpose of keeping the production intact.



Among the larger corporate sector, Nishat Group has established a 12MW biomass and solid municipal waste-run power plant at its textile processing unit in Lahore, he said.To cut its cost, it is recovering the caustic soda used in its processing mills by installing a recovery plant at its water treatment facility, said Mehr.



At its cement factory in Kalar Kahar, it is using solid municipal waste, used tyres, rubber chappals, rice husk, wheat straw, corn cob, as fuel for heating purposes.“We are not using power supplied by the Pakistan Electric Power Company (PEPCO) in most of the manufacturing facilities of our group,” said Nishat Group Chairman Mian Mohammud Mansha.



Engineering sector entrepreneur Almas Hyder said, “Unfortunately our industrial sector grew initially on protection that gave rise to huge inefficiencies.”By improving efficiencies the increase in cost of production could be absorbed to a large extent, he said.


http://www.thenews.com.pk/Todays-News-3-99810-Punjab-industries-converting-to-alternative-energy
Riaz Haq said…
Here's a report on 368 biogas plants planned for Pakistan's rural areas:

Pakistan Council of Renewable Energy Technologies (PCRET) will install 368 Biogas plants in different rural areas by the June 2012 under the project “Development and Promotion of Biogas Technology for meeting domestic fuel needs of rural areas and production of Biocfertilizer”. This project was launched in 2008 through which 2500 family size Biogas plants are to be installed in the country, out of these 2132 plants have been installed and the remaining will be installed by end of financial year 2011-12.

Biogas plant is a device used for converting fermentable organic matter, particularly cattle dung, into a combustible gas (Biogas) and fully matured and enriched organic fertilizer. A typical biogas plant consists of a digester where the anaerobic fermentation takes place, a gasholder for collecting the biogas, the input-output units for feeding the influent and storing the effluent respectively, and a gas distribution system.

Giving further details, Deputy Director PCRET, Sarfraz Khattak said as per livestock census 2000, there are 46.69 million of animals (Buffaloes, Cows, Bullocks) in Pakistan. In the year 2002-03, the domestic live stock population was estimated at 23.3 million cattle, 24.8 million buffalo, 24.6 million sheep and 52.8 million goats.

He said on the average, the daily dung dropping of a medium size animal is estimated at 10 Kg/per day. This would yield a total of 466.9 million Kg dung per day. Assuming 50% collectability, the availability of fresh dung comes to be 233.45 million Kg/ per day. Thus, 11.67 Million M3 biogas per day can be produced through biocmethanation, he maintained.

Since 0.4 M3 gas could suffice the cooking needs of a person per day, therefore 11.67 million M3 of biogas could meet the cooking needs of 29.2 million peoples. The total population of Pakistan is about 170 million, out of which 70% reside in the rural areas.

“We can meet about 30% cooking requirements of the rural masses from this source of energy (biogas) alone. Besides, producing 33.52 million Kg of biocfertilizer per day or 18.6 million tons of biocfertilizer per year, which is an essential requirement for sustaining the fertility of agricultural lands”, said Sarfraz Khattak. Giving details, Deputy Director PCRET said average family in Pakistan consists upon 5-7 members.


http://pakobserver.net/detailnews.asp?id=147107
Riaz Haq said…
Here's Bloomberg on Pakistan seeking Russian investment in Iran-Pakistan gas pipeline:

Officials from Pakistan’s petroleum ministry will travel to Russia early next month for talks with Gazprom OAO (GAZP) as the South Asian country seeks financial and technical help to revive a stalled gas pipeline from Iran.

Pakistan is exploring different options and a visit by technical experts to Russia is part of those efforts, Abdul Basit, a spokesman for Pakistan’s foreign ministry, told reporters in Islamabad today. The nation is struggling to finance the $1.3 billion pipeline, already delayed by a decade, in the face of sanctions over Iran’s nuclear program.

New sources are crucial to Pakistan’s attempts at easing its worst energy crisis as power blackouts for as long as 18 hours a day in major cities crimp economic growth and trigger street protests against Prime Minister Yousuf Raza Gilani’s government. The $175 billion economy grew 2.4 percent in the year through June 2011, one of the smallest expansions in a decade, according to official data.

The ministry of finance on March 13 said a consortium of Industrial and Commercial Bank of China and Pakistan’s Habib Bank Ltd. (HBL) is showing “less interest” in the pipeline project. The country may impose a tax on consumers, or seek government- to-government arrangements with Iran, China and Russia to build the pipeline, the ministry said the same day.
Alternative Project

Pakistan is responsible for completion of the pipeline by 2014, a deadline agreed by the two countries in 2010 after political and security concerns delayed the project. Under the agreement, Iran will provide about 21.5 million cubic meters of gas a day to Pakistan for 25 years. The deal can be extended by five years and volume may rise to 30 million cubic meters a day.

U.S. President Barack Obama has publicly supported an alternative gas pipeline project, from Turkmenistan to Afghanistan, Pakistan and India, that would bypass Iran. The U.S. and its allies have tightened sanctions against Iran saying the Islamic Republic’s nuclear program is a cover to make weapons, while the Persian Gulf country has said it is only for peaceful civilian purposes.

Pakistan’s gas shortfall is forecast to reach 2.22 billion cubic feet a day in the fiscal year that began July 1, according to government data. The pipeline will carry gas from the South Pars field via Baluchistan province in southwest Pakistan to an off-take point in Nawabshah. South Pars, which extends from Qatar’s North Field, is the largest known gas deposit in the world.


http://www.bloomberg.com/news/2012-03-29/pakistan-sending-team-to-russia-to-seek-iran-gas-pipeline-help.html
Riaz Haq said…
Pakistan & Qatar deadlocked over LNG pricing, reports Express Tribune:

Talks between Pakistan and Qatar over the price for liquefied natural gas (LNG) have reached a deadlock as the latter is stuck to its stance and is not ready to supply gas at less than $18 per million British thermal units (mmbtu).

“Qatar has refused to export LNG below the price of $18 per mmbtu,” said a senior official of the Ministry of Petroleum and Natural Resources who is familiar with the developments.

Pointing to the reason, he said global LNG demand had surged and prices had increased following shutdown of nuclear power plants in Japan.

In comparison, gas import from Iran will cost $11 per mmbtu while gas supply through Turkmenistan-Afghanistan-Pakistan-India pipeline will cost $13 per mmbtu.

“Following Qatar’s reluctance to show flexibility, Petroleum Minister Dr Asim Hussain will visit Malaysia to discuss the possibility of LNG import,” the official said.

Last month, a government delegation went to Qatar to finalise a price for the import of LNG on government-to-government contract. Pakistan and Qatar have already signed a memorandum of understanding (MoU) in this regard.

According to the MoU, Pakistan will import 500 million cubic feet of LNG per day (mmcfd) which will be utilised to generate 2,500 megawatts of electricity.

Earlier, in a meeting of Pak-Qatar Joint Ministerial Commission held in the last week of February in Islamabad, Qatar sought a price of $18 per mmbtu, but Pakistani authorities believed that Doha would show flexibility in its stance later. Qatar also sent a term sheet seeking $18 per mmbtu for LNG.
------------
Private sector importers have already sought $18 per mmbtu for LNG supply, but this has invited a lot of criticism from different quarters. Even the Oil and Gas Regulatory Authority (Ogra) has opposed this high price and called for discussing the matter in the Economic Coordination Committee (ECC). Buyers of gas, including power companies, have also rejected such a high rate.

According to sources, the petroleum ministry has prepared a summary for the ECC which will discuss initiation of an integrated LNG import project. They say the government will furnish guarantees and receive gas from the parties qualified through a bidding process.

This is what private LNG importers had desired. Under this plan, imported LNG will be injected into pipelines of gas distributors – Sui Northern Gas Pipelines and Sui Southern Gas Company – and the government will take a weighted average price of gas.

As a result, the ministry official said, prices of domestic gas are expected to rise to $9 per mmbtu against existing $4.5 per mmbtu, which will affect all categories of consumers.

“The price of furnace oil is equal to $20 per mmbtu, therefore, LNG price of $18 per mmbtu is affordable for the industry,” an official said but added the industry, which was getting local gas at cheaper rates, was not ready to buy expensive LNG.


http://tribune.com.pk/story/359301/pakistan-qatar-in-deadlock-over-lng-price/
Riaz Haq said…
Pakistan has over 50 trillion cubic feet of shale gas, according to US Energy Information Admin. The US companies have the technology and the funds to extract it profitably.

Under the new policy, exploration companies will be offered 40-50% higher prices for the extracted gas compared with the $4.26/Btu price announced in Exploration and Production Policy 2009. Companies which succeed in recovering gas from tight fields within two years will get 50% hike over the 2009 price and if it takes more time they will get only a 40% hike on the 2009 price. As an added incentive, the leases for the fields will now be for 40 years instead of 30 in the 2009 policy, the official said.

Even with the higher prices for the tight gas offered to the exploration companies, it is estimated that Pakistan will have to pay a maximum of $6.50/Btu for the gas compared with $11-18/Btu for gas imports, according to a report by Platts.

Pakistan should ask US to help extract shale gas in exchange for abandoning the Iran-Pakistan gas pipeline.

http://www.riazhaq.com/2011/05/pakistans-vast-shale-gas-deposits.html
Riaz Haq said…
Here are some details of Pakistan segment of proposed Iran-Pak gas pipeline as published in Dawn:

Here the reported cost of the pipeline is $700m for 900km of the 56-inch-diameter pipeline. Perhaps this figure is wrong but we need to get the full details from our Iranian friends and work out what we can do including the possibility that we acquire the required pipe from the Iranian Ahwaz Rolling Mill, which presumably provided the pipe for the Iranian IGAT 7.

Of the other pipelines the one I have studied most closely is the Dolphin Project’s construction of the 48-inch-diameter pipeline connecting over 244km from the gas-receiving plant in Taweelah to the Fujairah power and desalination plant.

This successfully completed project was awarded to Stroytransgaz — a Russian company — in 2008 at $418m or roughly $ 1.73m per kilometre. At that time, steel prices were at an all-time high and Dolphin or Stroytransgaz contracted to buy 120,000 tons of pipe from Mannesman in Germany for more than $200m. Since then, steel prices have halved.

According to the Steelonthenet.com website billet prices that were above $1,000 a ton in 2008 now stand at just about $500.
One assumes therefore that the cost of material would be about half of what had to be paid in 2008. Were we building a 48-inch-diameter pipeline we would have needed to use by Dolphin standard some 400,000 tons of pipe but since ours is a 42-inch-diameter pipeline the requirement would be reduced to about 320,000 tons and would cost, even if we went to the expensive Mannesman source, about $300m. (I have seen a news item that our interstate pipeline company has invited expressions of interest for the supply of 335,000 tons of pipe which is roughly in line with my calculation).

Compressor stations will be needed and I have not been able to determine how many will be needed and what they will cost but a perusal of the literature would suggest that for the amount of gas involved we may need three or four compressor stations with a total 100,000 horsepower. These should not in my view cost more than $50-75m.

As regard other costs an American study suggests that in America in 2007 pipeline costs were roughly divided between labour (35 per cent), material (35 per cent) and the balance as miscellaneous of which right-of-way costs were about eight to nine per cent.

They projected that material costs would decline but labour and right-of-way and other miscellaneous costs would rise.
Material costs have, as stated, declined. This, however, is the only factor, which is common to Pakistan and the US. The other costs are much lower in Pakistan. The Balochistan government has granted right of way for free, and the cost of the skilled welder in Pakistan is about 10-15 per cent of the cost of welders in the US.

Our design and other miscellaneous expenses have to be much more modest since the current designed path of the pipeline, running parallel to the coastal highway will create few environmental concerns and require culverts or other major tasks other than the crossing of the Indus.

Perhaps this is wrong and experts should indicate what their evaluation is but to my mind in Pakistan the cost of material will be about 50 per cent of the total cost of our pipeline. That means our 780km pipeline should cost about $700m to $800m and no more. It is an amount that the government can easily cough up from its own resources if it diverts the gas surcharge towards this end, and the problems of finding foreign financing need not arise.

Turning now to the question of paying for the pipe that I presume we would import from Iran if Ahwaz Rolling mills has the capacity, I believe we have to see greater use of imagination and innovation. To start with, we must work out a mechanism whereby our payment is made in rupees used by the Iranians to pay for what they import from Pakistan. What can this be?...


http://dawn.com/2012/04/11/the-path-of-gas/
Riaz Haq said…
Here's a NY Times report on India's fuel shortages hurting electricity generation:

India — India has long struggled to provide enough electricity to light its homes and power its industry around the clock. In recent years, the government and private sector sought to change that by building scores of new power plants.

But that campaign is now running into difficulties because the country cannot get enough fuel — principally coal — to run the plants. Clumsy policies, poor management and environmental concerns have hampered the country’s efforts to dig up fuel fast enough to keep up with its growing need for power.

A complex system of subsidies and price controls has limited investment, particularly in resources like coal and natural gas. It has also created anomalies, like retail electricity prices that are lower than the cost of producing power, which lead to big losses at state-owned utilities. An unsettled debate about how much of its forests India should turn over to mining has also limited coal production.

The power sector’s problems have substantially contributed to a second year of slowing economic growth in India, to an estimated 7 percent this year, from nearly 10 percent in 2010. Businesses report that more frequent blackouts have forced them to lower production and spend significantly more on diesel fuel to run backup generators.

The slowdown is palpable at Sowmya Industries, a small company that makes metal shutters that hold wet concrete in place while it solidifies into columns and beams, a crucial tool for the construction industry.

The company, located outside this city on the southeast coast of India, is struggling with several issues, including a 20 percent increase in the price of raw materials and falling orders.

But Sowmya’s manager, R. Narasimha Murthy, said the lack of reliable power was an even bigger problem. His company loses three hours of power every evening. And all day on Wednesdays and Saturdays — euphemistically called “power holidays” — it receives only enough electricity to turn on the lights but not enough to use its large metal-cutting machines.
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A major problem is the anemic production of coal, which provides 55 percent of India’s electricity. Coal production increased just 1 percent last year while power plant capacity jumped 11 percent. Some electricity producers have been importing coal, but that option has become more untenable recently because India’s biggest supplier, Indonesia, has doubled coal prices.
------------
For many businesses, the power shortage has become debilitating.

In the southern state of Tamil Nadu, Srihari Balakrishnan, a textile factory owner, said he goes through 6,300 gallons of diesel fuel on an average day to keep his operation running, spending $3,000 more than he would if power were available around the clock.

“We are not able to use 20 to 30 percent of our capacity,” he said. “We can’t use grid power for two full days of the week. When we have power, we have a six-hour cut,” he added, using an Indian term for blackouts.
----------
Other companies are also stuck. Reliance Power, controlled by the investor Anil Ambani, says it has stopped construction on a large electricity plant nearby because it can no longer afford to buy coal from Indonesia as planned.


http://www.nytimes.com/2012/04/20/business/global/india-struggles-to-deliver-enough-electricity-for-growth.h
Riaz Haq said…
Here's a Gulf News story on Pakistan's plan to import power from neighbors:

Dubai: Talks with India and Iran on power exports are under way and likely to be settled soon, Pakistan's Minister for Water and Power Syed Naveed Qamar, told Gulf News.

Iran currently provides 72 megawatts to Pakistan which is likely to be increased to 1,100MW.

"It is our desire that the modalities, tariff and terms and conditions may be finalised at the earliest so that the project can be started soon."

He said the transmission line between Pakistan and India is around 100 kilometres compared with the Kyrgyz Republic and Tajikistan transmission lines which are around 1,000km.

"As we look into the future, the power demand is going to be robust coupled with the growth in the economy. The electricity trade with India is beneficial for both countries and it will open new avenues of economic ties," Qamar said.

Pakistan may import up to 500MW which may be supplied with the construction of small transmission lines from both sides.

Wind projects

He said that the major share of power production is through oil which is expensive, and therefore the government is considering running the power plants on coal. Special attention would be given to the power sector and in this regard more funds would be allocated for the power sector during the coming development budget.

The government has plans to produce 1,000MW of cheaper power from wind projects next year, Qamar said.

"Russia, Uzbekistan and Turkmenistan have also offered Pakistan to export their surplus power to Pakistan," A.U. Rahman, acting executive director of Central Asia, South Asia (CASA-1000) project, told Gulf News.

He said Russia is also keen to join the project.

Pakistan has an installed capacity of around 20,000MW, but the production capacity is around 16,000MW. Right now "the shortage of power is around 4,500MW," Rahman said.

He said the current load shedding will be "reduced gradually" with the new projects expected to come online soon.

In certain parts of the country current load shedding continues for more than 12 hours.


http://gulfnews.com/business/economy/pakistan-negotiates-for-indian-and-iranian-power-1.1025096
Riaz Haq said…
Here's a Nation story on China approving $450 billion loan for Neelum-Jhelum dam project:

Chinese EXIM Bank, after a long delay, has now approved $450 million loan to finance 969MW Neelum Jhelum hydropower project, which would add about 5.15 billion units of cheap electricity to the national grid every year by 2016.Well-placed official sources informed TheNation that Chinese EXIM Bank after a long delay has now approved $450 million loan to finance the Neelum Jhelum hydropower project located near Muzaffarabad adding that the Economic Affair Division (EAD) has also gotten an approval from the Chinese bank in this regard. They told that the Neelum-Jhelum hydropower project needed $700 million foreign funding to complete the project by 2016. The major financiers of the project include the Kuwait Fund, the Export Import Bank of China, the government of the UAE and the Saudi Fund for Development. Sources further told that project had originally been budgeted to cost Rs130 billion, but costs had witnessed skyrocketed rise by 154per cent to Rs330 billion. In the revised plan submitted by the water and power ministry, the main reason for the spike in costs was attributed to a change in design, but a detailed examination of the figures has shown that primary cause for the increase was delay in completion. Sources further told that more than 30per cent of the work on the project had been completed. The project would earn about Rs45 billion in revenues annually and would therefore be able to recover its cost of construction within seven years.It is also learnt that as the Chinese EXIM bank found hesitant to release the worthy amount since 2009 resultantly the delay for unknown reasons had caused the cost of the project to rise to Rs330 billion ($3.7 billion). It was also feared that the pace of construction might slowdown providing an edge to India, which had been building Kishanganga project on the same Neelum River on its side of Kashmir because if Pakistan failed to complete its project before India, then it might lose the water rights to the upper riparian country. Further, according to Indus Water Treaty (IWT), the country that first completes its project on Neelum tributary will have the priority rights on the water of Neelum River. Furthermore, the Neelum Jhelum Hydropower Project Company (NJHPC), a wholly owned subsidiary of the Water and Power Development Authority was set up to manage this very project.It is to be noted here that the top man of China had committed this loan during the visit of President Asif Ali Zardari to Beijing in 2009 but the Chinese Exim bank did not entrain Pakistan although three years have elapsed since the commitment of China to Pakistan resultantly the country was in contact with Islamic Development Bank, Saudi Development Bank, Abu Dhabi Fund, Kuwait Fund for the required finding. Even IDB had committed $200 million, Saudi Fund $337 million, Abu Dhabi Fund $100 million and Kuwait Fund $30 million and the government was pursing the said donors to expedite the disbursement of their credit line for the timely completion of the project.Waqar Masood Secretary Economic Affairs Division while confirming the information pertaining the receiving of approval worth of $450 million loan to help finance the 969-megawatt Neelum Jhelum hydropower project. He also informed that documentation process in this regard would take one month while disbursement of such a hefty amount is likely within one-month....

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/23-May-2012/china-bank-approves-450-million-loan
Riaz Haq said…
Here's World Bank economist's assessment of Pak competitiveness, according to The News:

Pakistan needs to improve its competitiveness for rapid industrialisation, which offers it a range of potential benefits, including more jobs creation, tax revenues and economic growth, said Dan Biller, World Bank’s lead economist on South Asia Region for Sustainable Development.



Addressing businessmen in Lahore, he said that the GDP growth of Pakistan in 2011 was only 24 percent, while China grew at 9.2 percent, India 7.8 percent, Sri Lanka at eight percent, Indonesia 6.4 percent and Malaysia 5.2 percent.



Among all these countries, Pakistan has the largest agricultural share of GDP and smallest industrial share, he said.



Biller said that lower industrialisation in Pakistan against other regional countries is due to its lower competitiveness, adding that Pakistan ranks poorly on the Global Competitive Index of the World Economic Forum. Pakistan’s institutions are weak, scoring 3.4 points out of 10, he said, adding that Malaysia score 5.2 points, China 4.3 points, India 3.8 points, Indonesia 3.8 points and Sri Lanka scored 4.2 points on quality of institutions.



Biller said that Pakistan’s score in infrastructure was dismal 2.8 points, while Malaysia scored 5.5, China 4.3, India 3.6, Indonesia 3.8 and Sri Lanka scored 4.1 points.



Similarly, he said, Pakistan’s score was the lowest among these countries in macroeconomic stability, health and primary education, higher education and training, goods market efficiency and labour market efficiency. Only in the market size, Pakistan had a better score than Sri Lanka, he added.



He also said that Pakistan has the most expensive and least-efficient port systems in the region, adding that the handling charges at the Karachi Port Trust are $110 per ton. India charges $80 per ton, Sri Lanka $150 per ton and Hong Kong charged $140 per ton. Ship charges of 2,800 tons are $30,000 at KPT, $5,500 in Sri Lanka, $6,000 in Hong Kong and $25,000 in the Indian port.



He said Pakistan handles 55 containers per hour, Sri Lanka 70 per hour, Hong Kong 100 per hour and India 65 per hour. The Customs authorities in Pakistan examine 10 percent containers physically; Sri Lanka and Hong Kong less than five percent, while physical examination of containers in India is also high, but less than 100 percent, he said, adding that Pakistani ports lack water depth, which is 10.5 feet at KPT, 13 feet in Sri Lanka, 14 feet in Hong Kong and 12 feet in Indian ports.



The World Bank economist said that Pakistan provides relatively low access to services that impeded foreign investment. Pakistan has two fixed telephone lines per 100 people against 22 in China, 2.9 in India, 17.2 in Sri Lanka, 15.8 in Indonesia and 16.1 in Malaysia.



Around 99.4 percent of the population in China has access to electricity; it is 66.3 percent in India, 76.6 percent in Sri Lanka, 62.4 percent in Pakistan, 64.5 percent in Indonesia and 99.4 percent in Malaysia, he added.



The roads and power generation are number one infrastructure concern for the businesses worldwide, Biller said, and advised Pakistan to reduce the transport cost that is critical to competitiveness.



In addition, the state should ensure safe mobility and enhance regional connectivity. Pakistan’s foreign market access potential is at least 4.5 times higher than the United States, he said, adding that its current market access is only 4-9 percent of the United States.



Pakistan’s market share in total global exports is less than half percent and remained stagnant since 2000. India, on the other hand, increased its global export share from 0.6 percent in 2000 to 1.5 percent in 2010, he added.


http://www.thenews.com.pk/Todays-News-3-114426-Pakistan-needs-to-improve-competitiveness-for-rapid-industrialisation
Riaz Haq said…
World Bank agrees to fund Dasu Dam in Pakistan, reports Express Tribune:

Following the signing of an agreement with the government of Pakistan for providing $840 million for the 1,410-megawatt Tarbela 4th Extension Project, the World Bank has also agreed to extend financial assistance to the 4,320MW Dasu Hydropower Project.

It has also been agreed that the project will be constructed in phases after work on the 4,500MW Diamer-Bhasha Dam is initiated and its financial plan is finalised.

Water and Power Development Authority (Wapda) Chairman Shakil Durrani stated this while presiding over a meeting here at the Wapda House to discuss the report submitted by an international panel of experts.

Addressing the meeting, the Wapda chairman said international financial institutions were taking keen interest in providing funds for Wapda projects due to excellent ‘economic internal rate of return’ (EIRR) of these schemes.

The Dasu project is part of the least-cost energy production plan of Wapda aimed at harnessing the country’s hydropower resources to improve the share of hydroelectricity in energy mix.

The project will be constructed on the Indus River, seven km upstream of Dasu village and 74 km downstream of Diamer-Bhasha Dam. The project is situated on the Karakoram Highway, about 350 km from Islamabad.

According to a statement issued by Wapda, the priority is to construct Diamer-Bhasha Dam for which land acquisition process has already started and 13 contracts for offices, colonies and roads have been awarded.

Dasu Hydropower Project will follow the initiation of work on Diamer-Bhasha Dam. Detailed engineering design, for which the World Bank is providing funds, and tender documents are likely to be completed in early 2013. Afterwards, construction work will commence.

The project will generate 21.3 billion units of electricity per annum and will also have positive impact on existing hydropower stations including Tarbela, Ghazi Barotha and Chashma.


http://tribune.com.pk/story/397368/world-bank-agrees-to-fund-dasu-hydropower-project/
Riaz Haq said…
Here's PakTribune on WAPDA's power & water projects:

The Water and Power Development Authority (WAPDA) here on Thursday informed the Senate Standing Committee on Water and Power that WAPDA is working on 20,000 megawatts (MW) hydel power generation projects and assured that 10,276 MW at lowest rates will be made available in the country by 2020.

The Senate body met in the Parliament House with Senator Zahid Khan in the chair, Minister for Water and Power Chaudhry Ahmed Mukhtar, secretary Zafar Mehmood and Petroleum Secretary Dr Waqar Masood Khan also attended the meeting. The members of the committee questioned that who would be judging the claim of WAPDA in 2020 when no one from the members of this committee will be in the parliament. However, WAPDA officials assured the committee that what they are committed to make sure through their efforts by 2020 that 10,276 MW power through hydel projects would be available in the country.

A WAPDA official explained that less than committed financial resources is the main hurdle in delay and cost overrun on water and power sector development projects and sought help of the committee in providing funds to WAPDA as per committed amount to make its planning predictable.

WAPDA Chairman Shakeel Durrani was optimistic about the average annual flows and water storage potential of the country and informed that some 17.8 million acres feet (MAF) water would be available for storage in future in the country (enough for three dams like Diamer Bhasha Dam).

The live storage of the Diamer Bhasha Dam would be 6.8 MAF and WAPDA has already released Rs 5 billion for land acquisition and Rs 13 billion for construction or establishment of required infrastructure for the construction of dam like roads, residential colony and offices power availability. Explaining the access water availability scenario, he informed that average annual flows to Kotri Downstream were 31.3 MAF during 1976-2010. However, during 2012 alone 54.5 MAF flows to Kotri Downstream were recorded.


http://paktribune.com/business/news/WAPDA-working-on-20000MW-hydel-power-projects-10053.html
Riaz Haq said…
Here's Peninsula Qatar story on new power generation capacity addition in Pakistan:

SLAMABAD: In order to meet the higher demand for power, the government of Pakistan has spent Rs138.213bn ($1.455bn) on different power generation projects and has managed to generate only 2,996 megawatts (MW) extra in the last five years, sources in the Ministry of Water and Power revealed.

The government spent Rs38.729bn in government-owned power generation companies (GENCOs) for investment in new power plants, Rs47.6bn in National Transmission and Despatch Company (NTDC) for improvement of transmission network and Rs51.884bn in distribution companies for revamping of their 132 KV, 11 KV and Low Voltage Network.

The sources said that these expenditures enabled the government to transmit output of 2,996 MW of the new power plants to load centres.

It will also be providing capacity for accommodating future increase in load demand and removing transmission network constraints to allow distribution of power to constrained areas of main load centres and Balochistan.

The government has also spent the amount in improvement and revamping of power distribution companies (DISCOs) networks for meeting load demand, accommodating new connections and reducing losses.

In addition, the government has spent generously under the head of subsidy to mitigate electricity crisis in the country and spent Rs701.2bn in the last five years.

The subsidy injection enabled DISCOs to pay the outstanding bills of independent power producers (IPPs) to overcome fuel shortage.

This crisis mitigation effort resulted in an overall increase in electricity generation and electricity consumption by 10 percent over the last three years and 3.0 per cent per annum on compound growth basis.

In addition the works of village electrification and new connections were facilitated. Consequently 57,777 villages were electrified and 3.926m connections were installed.


http://thepeninsulaqatar.com/pakistan-afghanistan/212884-pakistan-spends-145bn-to-generate-2996mw-power.html
Riaz Haq said…
Here's a Business Recorder report on Tarbela dam's 4th tunnel power generation project:

The government would award the contract of 'Tarbela Fourth Extension Hydropower Project', costing $928.9 million, including $840 million World Bank loan in March next year to initiate Civil and Engineering and Management (E&M) work. According to documents obtained by Business Recorder, mobilisation of contract was expected by the end April 2013. Pre-qualification of applicants for Civil and E&M works is under way.

The project would be completed by June 2018. The government would spend $88.9 million for this project. Tarbela has an installed power generation capacity of 3,478 megawatts on tunnels 1, 2 and 3 while tunnel 4 was originally intended for irrigation water releases only, but subsequent studies proposed its conversion to irrigation-cum-generation tunnel.

The latest proposed installed capacity of Tarbela is 1,410MW. Ultimately, Tarbela's capacity would be upgraded to 4,888MW after the development of tunnel 4. The projected energy form the project is 3840 GWh/year while annual capacity factor is 31 %.

According to the Project's cost estimate, powerhouse and tunnel work is to cost $307.45 million, turbines, generators and auxiliaries; $434.24 million and implementation of SAP and EMP dam monitoring $28.63 million. Similarly, project management, technical assistance and training cost is $20.45 million while base cost with physical/price construction is $817.9 million.

The Executive Committee of National Economic Council (ECNEC) has approved the Project on August 16 this year for Rs 83.6 billion, including foreign exchange component of Rs 65.8 billion. A million families would benefit from the additional power. Load shedding would be substantially reduced. Documents also showed that about Rs 39 billion per annum revenue was expected after the completion of the Project. During construction period, between 2,000 and 2,500 jobs would be created.


http://www.brecorder.com/top-stories/0/1252452/
Riaz Haq said…
Here's an ET story on decline in circular debt:

The good news is that circular debt in the energy sector is going down. The bad news is that it is doing so for all the wrong reasons.

Circular debt has now become shorthand for the crippling string of financial liabilities that energy companies owe each other because the federal government fails to live up to its promise to pay out energy subsidies that it announces as vote pleasers. This debt has resulted in a massive cash shortage virtually all along the energy chain and significantly reduced the ability of power companies to operate at full capacity, which in turn causes massive power outages throughout the country, particularly during the summer months of peak demand.

But now at last, it appears that the government is paying out what it owes in subsidy payments. Azfar Naseem and Sateesh Balani, research analysts at Elixir Securities, an investment bank, estimate that total circular debt throughout the energy chain has not only stopped growing, but has shrunk by about Rs137 billion during the first six months of the fiscal year ending June 30, 2013.

Part of this reduction has come from higher subsidy payouts to the energy sector from the finance ministry, which rose to Rs160 billion between July 1 and December 20 of this year, about 5% higher than the net payouts throughout the whole previous fiscal year that ended June 30, 2012.

Another significant chunk came when the government effectively forced the state-owned Oil & Gas Development Company (the largest company in Pakistan by market capitalisation) to buy about Rs82 billion in government bonds meant to clear out the outstanding liabilities. The bonds do not mean that the government has paid out its liability: they just mean that they forced OGDC to pay the rest of the energy chain and promised to pay OGDC back.
-----------
The government was given this fiscal breathing room by the inflow from the United States in the form of $1.1 billion in outstanding dues on account of the Coalition Support Fund. That entire amount, by some accounts coming out of the finance ministry, was spent on power subsidies. Yet the government may well be running out of accounting tricks to patch up the power sector before the elections.

The reason the government has tried to juggle around its scarce cash reserves is because it wants to make sure that the power companies have enough cash to buy the fuel they need to keep the lights on in the country, at least most of the time, in the run-up to the elections, expected around May 2013.

These techniques appear to be having at least some positive impact: the outstanding receivables at Pakistan State Oil, the largest oil retailer in the country, are down by almost 40% to around Rs120 billion. Receivables at Hub Power Company and Kot Addu Power Company (which supplies politically important regions of southern Punjab) are also down substantially....


http://tribune.com.pk/story/485765/energy-crisis-circular-debt-is-going-down-but-not-for-the-right-reasons/
Riaz Haq said…
Here's PakObserver on PM Ashraf's speech in Karachi:

Sunday, December 30, 2012 - Karachi—Prime Minister of Pakistan Raja Pervez Ashraf has said that the Parliament is the mother of all institution, strengthening the democracy means strengthening of the parliament.

Addressing the leadership, President/Office Bearers and members of Karachi Chamber of Commerce and Industry (KCCI) here today, the Prime Minister said that energy crisis was due to increasing demand and supply gap while the electricity was also provided to the villages.

The government inorder to enhance energy production is working on Jhelum-Neelum, Diamir Bhasha and Thar Coal was in progress. He stated that Judiciary was playing its role and media was free and strong democracy will prevail in the days to come. Provinces have been empowered with transfer of Rs 1000 Billion, he stated

The business and industrial community of Karachi contributes largest chunk of revenue in the national exchequer and holds a distinction in Pakistan as well as the region. He stated that the KCCI is the role model and trendsetter of the business community. He said that the businesspersons are chosen ones to provide employment to the people, he complimented.

To make Pakistan strong, the business community has to be strengthened, he maintained. He ordered the Chief Secretary Sindh to revisit the case of factory fire incident as an accident and rectify the charges under proper sections of Pakistan Penal Code referring accident instead of PPC-302. For prosperous Pakistan, he emphasized on the collective efforts by all the segments of the society.

Highlighting some achievements of the government, Raja Pervez Ashraf said that many challenges were converted to opportunities by the Government as the forex reserves and exports increased, inflation reduced to single digit.

PM was accompanied by Makhdoom Amin Faheem Commerce Minister, Abbas Khan Afridi Minister of State for Commerce, Syed NaveedAmanullah Khan

Karachi—Prime Minister of Pakistan Raja Pervez Ashraf has said that the Parliament is the mother of all institution, strengthening the democracy means strengthening of the parliament.
Addressing the leadership, President/Office Bearers and members of Karachi Chamber of Commerce and Industry (KCCI) here today, the Prime Minister said that energy crisis was due to increasing demand and supply gap while the electricity was also provided to the villages.
The government inorder to enhance energy production is working on Jhelum-Neelum, Diamir Bhasha and Thar Coal was in progress. He stated that Judiciary was playing its role and media was free and strong democracy will prevail in the days to come. Provinces have been empowered with transfer of Rs 1000 Billion, he stated
The business and industrial community of Karachi contributes largest chunk of revenue in the national exchequer and holds a distinction in Pakistan as well as the region. He stated that the KCCI is the role model and trendsetter of the business community. He said that the businesspersons are chosen ones to provide employment to the people, he complimented.
To make Pakistan strong, the business community has to be strengthened, he maintained. He ordered the Chief Secretary Sindh to revisit the case of factory fire incident as an accident and rectify the charges under proper sections of Pakistan Penal Code referring accident instead of PPC-302. For prosperous Pakistan, he emphasized on the collective efforts by all the segments of the society.
Highlighting some achievements of the government, Raja Pervez Ashraf said that many challenges were converted to opportunities by the Government as the forex reserves and exports increased, inflation reduced to single digit....


http://pakobserver.net/detailnews.asp?id=189317
Riaz Haq said…
Here's a Nation report on oil and gas production in Pakistan:

Country’s average oil production has increased by a decent 10 per cent to 71.6k barrels a day in 2012 from 64.9k in 2011 while gas production, which contributes approximately 50 per cent to energy mix, grew by 4 per cent to an average of 4.2bcfd from 2011 average gas production of 4.1bcfd, latest data revealed.

Industry experts said that five years back in 2007 average gas production was 3.9bcfd. “This increase is well below the organic growth in its consumption thereby creating huge deficit affecting the overall economic growth,” said Nauman Khan, an energy expert. He said that major news of the year was commissioning of KPD-TAY that added an average 104mmcfd to the system. However, other gas fields like Qadirpur, Zamazama, Mari led their due hands. However, natural decline in major fields namely Sui and Sawan coupled with reduce production from Tal block diluted its impact.

According to experts, oil production was 70.4k in 2007. Improvement in 2012 was largely attributed to Nashpa field. During 2012, Nashpa field of Naspha block located in KPK region of the Pakistan was the star performer for the sector. Thanks to favorable results of its appraisal wells, fields production increased by a mammoth 109 per cent to above 11k bpd as against 5.5k bpd last year. Other notable increase also came from Adhi fields as its production rose by a decent 16 per cent. The much talked abou, Tal block production increased by a mere 3 per cent, despite commissioning of Makori East towards the end of the year. Though, experts continue to have conviction in the block’s potential but commissioning of Makori CPF (Central Processing Facility) holds its key.

A Top line security report suggests that near-term trigger is expected to come from materialization production from Sinjhoro fields, Mamikhel-2 and Maramzai-2, while improved production from Naspha, Adhi and Mela fields are also events to keep a track.

Amongst the listed companies, OGDC’s average gas production increased by a decent 14 per cent in 2012, largely attributed to KPD-TAY effect, while its oil production grew by 7 per cent. PPL performed well in the oil, depicting a growth of 12 per cent however, its gas production declined by 4 per cent due to subdued performance of Sui and Sawan. 2012 was a disappointing year for POL whose oil production declined by 18 per cent mainly on account capped production from Tal and decline in production from its own operating fields. Analysts are of the view that with security concerns and circular debt restricting Pakistan oil & gas exploration companies to tap in new reservoir, the sector continues to rely on maximizing the yield of existing reservoirs, industry experts said.

As a result, the increase in oil and gas production in 2012 failed to fill the mounting demand thereby affecting the overall industrial growth besides affecting the transport and other segments


http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/16-Jan-2013/oil-production-up-10pc-gas-4pc-in-2012
Riaz Haq said…
Here's the latest on IP pipeline from PakistanToday:

ISLAMABAD - The $ 1.2 billion Iran-Pakistan gas pipeline project, set to be completed next year, may prove a bonanza for the hard-pressed energy sector of Pakistan’s economy as the initiative will supply 750 million cubic feet of gas besides helping to contribute 4000 MW of electricity to the national power grid.
Iran is stated to have completed 900 km of work on its side while Pakistan launched its part of work last month, thus setting the stage for an ambitious undertaking which will greatly overcome Pakistan’s severe energy shortages.
In the prevailing energy crunch, the PPP-led coalition decided to go ahead with the project despite stiff opposition from some quarters.
However, the Pakistani government despite the pressure has signed the agreement with Iran to meet its energy shortages.
President Asif Ali Zardari and Iranian President Mahmoud Ahmadinejad signed the Inter-Governmental Framework Declaration (IGFD) of the IP project in Tehran on May 24, 2009. After signing ceremony of the Sovereign Guarantee Agreement (SGA), Pakistan’s then Minister for Petroleum and Natural Resources Naveed Qamar signed Gas Sales and Purchase Agreement (GSPA) with Iran on June 5, 2009 through which Pakistan would import one million cubic feet gas per day.
The government had also appointed the engineering and project management teams in April 2012, to conduct route surveys on IP, who later submitted a final detailed report on the project.
Pakistan is experiencing a prolonged power crisis, low gas pressure and suspension of Compressor Natural Gas (CNG), adding to the problems of the masses.
Advisor on Petroleum and Natural Resources to the Prime Minister Dr Asim Hussain said the government wanted to complete the project as soon as possible in order to overcome the looming power and gas crises.
He termed the project beneficial for both countries and said, “We are dependent on this project as there is no other substitute at present to meet the growing energy demand.”
He said the government of Pakistan had started work on the project in December 2012, while Iran had already constructed more than 900 km of the gas pipeline on their side.
Asim stated that after completion of the project, it would start supplying 750 million cubic feet gas per day.
He said the implementation of the project showed that Pakistan had a flexible foreign policy.
In a press conference on the sidelines of the summit of the Group of Eight Developing Countries (D8) in Islamabad on November 22, Iranian President Mahmoud Ahmadinejad vowed to complete the multi-billion dollar project within the stipulated time.
He said the portion of pipeline on Iranian side was about to be completed while Iran was also extending financial assistance to Pakistan to complete the project.
Another purpose of signing this pact was to strengthen the bilateral relations between the two countries.


http://www.pakistantoday.com.pk/2013/01/19/news/profit/ip-gas-project-to-help-overcome-gas-power-crises/
Riaz Haq said…
Here's a ET report on additional gas production expected in Pakistan this year:

KARACHI:

Pakistan’s gas crisis – which has forced the shutdown of factories, caused sporadic street protests, and created chaos at CNG pumps – will ease by next winter, says a senior industry executive.

“It cannot get any worse than this,” Asim Murtaza Khan, the managing director of Pakistan Petroleum Limited (PPL), said in an interview with The Express Tribune. “I am not saying that the gas shortfall will decrease, but there will be enough additions to stop the situation from getting uglier,” he stated.

Natural gas is the most-consumed fuel in the country, used to run everything from factories, stoves and cars. The fuel’s demand stands at 6.2 billion cubic feet per day (bcfd) whereas supply comes to just about 4.2 bcfd.

Khan’s optimism relies on untapped resources in mature fields, from where around 100 million cubic feet per day (mmcfd) is expected to be added in the coming months. This addition will come from the Tal, Nashpa, Kunar Paseki Deep and PPL-operated exploration blocks in Sindh, like Serani and Gambat.

However, Khan says that importing gas has become imperative. “There is no way we can meet all the demand from indigenous sources. We must import.”

Expansion problems

Most of the country’s gas is extracted in Sindh, but large tracts of prospective areas remain unexplored in Balochistan and Khyber-Pakhtunkhwa, where petroleum industry officials have been attacked in the past.

In Sui, the country’s oldest and second-largest gas producing field, PPL runs schools and hospitals in the area, and pays soldiers for protecting its installations from insurgent attacks.

“The money that we have put in for corporate social responsibility and security is immense. And yet there is resentment.”

Shale gas policy in offing

PPL, along with Austrian and Italian petroleum companies, is working on a pricing mechanism which will make the exploration of shale gas feasible, Khan said.

“There might be a lot of potential for shale gas, but we don’t have data. The last survey was done in the 1980s. We are trying to compile that data first,” he said.

Last year, PPL engineers drilled out a sample from the Hala Block. The 18-metre long core is being tested by experts in Houston, USA, to examine the potential for shale gas exploration.

Financial woes

PPL is one of the worst-hit victims of inter-corporate circular debt, which continues to bog down the energy supply chain of the country.

“We have around $300-350 million stuck in debt. Imagine what we could have done with that money. It would have spurred exploration activity,” Khan said.

With government being its largest shareholder, PPL is also obliged to pay out cash dividends on a regular basis – something that has to be stopped once the company starts hitting oil and gas discoveries.

“Shareholders should be prepared, because we would need cash to start production. Normally, $200 million are spent on the development of field alone,” he said.

“We have enough cash to finance exploration activities right now. The stage where cash dividends might possibly have to be cut could come in the next two years.”

Offshore expedition

A consortium of comprising PPL, the Oil and Gas Development Company and ENI will start drilling for petroleum reserves in the Arabian Sea next year. Exploration in Block G of the Indus delta comes on the heels of successive prospecting failures in the area, which remains one of the least-explored offshore regions.

“Offshore investment is an expensive proposition,” explains Khan, acknowledging the scepticism. “But at least we are getting the data. The geology and depth of the offshore basin makes it very difficult to prospect there. However, it doesn’t mean we should give up.”...


http://tribune.com.pk/story/495106/notes-from-the-industry-one-more-year-and-the-gas-crisis-will-ease
Riaz Haq said…
Here's PakistanToday on nuclear power expansion in Pakistan:

ISLAMABAD - Pakistan Atomic Energy Commission (PAEC) envisages production of 8,800 MW by the year 2030 through nuclear power reactors. Two nuclear power plants, 340MW each, are under construction at Chashma and expected to be commissioned by 2016 with Chinese assistance. Construction of these power plants became possible after a long-standing agreement, while three other nuclear power plants already commissioned in the country are performing well. According to official sources, the allocation for PAEC is almost 11% of the total federal development budget estimated at Rs 360 billion for the financial year 2012-13.
Officials said a major chunk of the PAEC budget has been allocated to two nuclear power plants.
“An amount of Rs 34.6 billion has been set aside for Chashma Nuclear Power Plants, C3 and C4. The total cost of these two projects is Rs 190 billion which will be partially funded by a Rs 136 billion Chinese loan.
The government has so far spent Rs 62.4 billion on the mega project having a 660 MW generation capacity. With Rs 34.6 billion additional spending, the government will be able to complete almost half of the work by June 2013, an official said. According to an official in Ministry of Science and Technology, government is harmonising the efforts made in the energy sector by different ministries, departments and research centres by creating an ‘Energy Council’ with heads of relevant organisations. The council will be entrusted to advise on priority areas for Research and Development (R&D) and management of resources and to fill the gaps.
Acquisition of technology for building nuclear power reactors through R&D, as well as transfer of technology agreements is also in consideration, he said.


http://www.pakistantoday.com.pk/2013/01/24/news/profit/paec-to-produce-8800-mw-by-2030/
Riaz Haq said…
Here's an FT report on Iran-Pakistan gas pipeline:

...Asif Ali Zardari, Pakistan’s president, unexpectedly cancelled a trip to Iran at the last minute in December, amid concerns in Islamabad over stiff US opposition to a project considered essential for tackling mounting energy shortages. Some Pakistani officials had expected Mr Zardari to consent to the project during the trip.

The plan would see Pakistan build a pipeline connecting its national gas supply grid in the southern Sindh province to the Iranian border in southwest Baluchistan. Iranian officials say they have already built the pipeline on their side of the border to within 100km of Pakistan.

The US has opposed the pipeline on the grounds it would inject foreign exchange into the Iranian economy at a time when western countries have imposed a number of ever tighter sanctions in an effort to prevent Tehran from advancing its nuclear weapons programme.

Independent economists said it was too early to predict whether the project would go ahead. “The companies involved from Pakistan may face the danger of being exposed to US-led western sanctions,” warned Sakib Sherani, an economist. “There are also technical issues in undertaking such a large project.”

However, Islamabad has become all too aware of the political and economic risks posed by chronic electricity shortages after people took to the streets in cities across the country last summer in protest at power cuts up to 20 hours long.

Pakistan appeared confident the US would not hit it with tough sanctions, according to a senior western diplomat in Islamabad. “In their [Pakistan’s] calculus, they believe that the US needs Pakistan to ensure a successful drawdown from Afghanistan by December next year,” the diplomat said.

“The Pakistanis probably believe there will be a lot of huff and puff but no painful sanctions. In all honesty, Pakistan has a terrible situation on energy and these [energy] shortages can undermine the country’s stability.”

Iran has offered its neighbour at least $500m to help finance the project. The money was “just the beginning”, the Pakistani official said. “The Iranians have said they will provide more funding for this project if there is a need.”

The Iranian pipeline offers Pakistan the shortest supply route from any gas surplus country, officials say. Asim Hussain, chief adviser on oil and natural resources to the government, told the FT last December: “It’s a feasible project for Pakistan. It’s the quickest route, the cheapest route where we can fulfil our energy needs.”


http://www.ft.com/intl/cms/s/0/3a2abb18-6bbe-11e2-a700-00144feab49a.html
Riaz Haq said…
Here's an APP report on Chinese nuclear plants in Pakistan:

Two nuclear power plants, 340 MW each, are under construction at Chashma and are expected to be commissioned by 2016, with Chinese assistance.
Construction of these power plants became possible after a long-standing agreement, whereas three other nuclear power plants already commissioned in the country are performing well.
According to official sources, a major chunk of the Pakistan Atomic Energy Commission (PAEC) budget has been allocated to the two plants. PAEC envisages production of 8,800 MW by the year 2030 through nuclear power reactors, sources added.
“An amount of Rs 34.6 billion has been set aside for Chashma Nuclear Power Plants, C3 and C4. The total cost of these two projects is Rs 190 billion which will be partially funded by a Rs 136 billion Chinese loan,” said a source.
The government has so far spent Rs 62.4 billion on the mega project having a 660 MW generation capacity. With Rs 34.6 billion additional spending, the government will be able to complete almost half of the work by June 2013, an official said.
According to an official in the Ministry of Science and Technology, the government is harmonising efforts made in the energy sector by different ministries, departments and research centres by creating an Energy Council including heads of relevant organisations.
The council will be entrusted to advice on priority areas for Research and Development (R&D), management of resources and filling existing gaps.
Acquisition of technology for building nuclear power reactors through R&D and transfer of technology agreements is also in consideration, the official said.


http://www.pakistantoday.com.pk/2013/02/22/news/national/two-nuclear-power-plants-to-be-commissioned-by-2016/
Riaz Haq said…
Here's a Dawn report on KESC's plans to invest $500 million in Karachi power infrastructure:

KESC would invest about $500 million for setting up of coal-based power plants, improvement in transmission and distribution systems in Karachi during the next five years, said Tabish Gohar, chairman, KESC board of directors here on Thursday.

A five-member KESC delegation briefed the Minister for Water and Power, Chaudhry Ahmad Mukhtar, on plans to improve power supply situation in Karachi.

Mr Gohar said that the Bin Qasim power plant would be converted on imported and local coal to generate 400MW cheaper electricity with an investment of $300 million.

The conversion plan would take almost 20 months to complete.

The KESC would spend $80 million on conversion of gas-based plants on combined cycle, while $80 million would be spent on smart grid station that would help improvement and transmission system.

The KESC chairman said that due to investment plan, the power system in Karachi would improve, and power thefts and line losses would be checked.

He also briefed the minister on outsourcing of some of its feeders and future plans to meet the electricity requirements.


http://dawn.com/2013/02/22/kesc-to-invest-500m-in-coal-plants/
Riaz Haq said…
Here's a Dawn story on oil and gas discoveries in Pakistan:

Following a lacklustre period of several years, when things remained quite on the oil and gas exploration sector, in the face of heightened security situation and circular debt issues, the oil and gas fields have started to buzz with activity.

In the current financial year-to-date (July 1, 2012 to March 11, 2013) the country’s oil and gas sector has spudded as many as 56 wells. It represents a big leap over the 31 wells drilled in the same period last year. The sector has drilled 20 new exploratory wells as against 12 wells same time last year, depicting a significant increase of 67 per cent.

On the discovery side, the picture was a lot brighter than the earlier years as a total of 10 discoveries have been made by the sector in FY13 so far.

The sector’s drilling of a total of 56 exploratory and development (E&D) wells during the period also represents achieving 61 per cent of the full year target set at 91 wells. Even in that sphere, the sector fared better than the comparable period last year when only 41 per cent of the target 76 wells could be drilled.

“O&G sector’s focus continues to remain on the development wells”, says Nauman Khan, analyst at Topline Securities. Of the total wells drilled, 36 were development wells (representing 64 per cent of total activity). It reflected improvement over 19 wells or 61pc of total wells drilled in the comparable period last year.

Apart from the development wells, the activity on the exploration side also represented encouraging growth. Although, contribution of the exploratory wells had slightly declined to 36pc as against 39pc in the same period last year, the overall trend was heartwarming.

The sector spudded 20 exploratory wells, which was significantly more than 12 wells drilled in the comparable period last year while it represented 45pc of full year target of 44 wells.

Analyst said that amongst the listed companies, Pakistan’s largest oil and gas explorer, the Oil and Gas Development Company (OGDC) had drilled 13 wells which were 63 per cent higher than eight wells drilled last year. Included in those 13 wells, were two exploratory wells and 11 development wells.

Pakistan Petroleum Limited drilled five wells (one exploratory and four development), up from two development wells in the comparable period last year. However, with full year target of 16 wells (six exploratory and 10 development), sector watchers expect the drilling activity of the company to significantly intensify in the remaining of the year.

The third major oil and gas E&P company, the Pakistan Oilfields Limited drilled only one exploratory. In the comparable period last year, POL had drilled two exploratory wells.

Though much of the success eluded the E&P companies on the listed sector, the revival and discovery would benefit the country. The darkest hour for the sector came possibly in late 2010 and early 2011, when exploration and development work had started to limp.

According to the data compiled by Pakistan Petroleum Information Services (PPIS), 28 E&P companies in the country, that hold operator licences, together had drilled only 19 wells in first half of the year 2011, compared to 80 wells targeted for all of the FY11.Besides the poor security situation, the two major reasons for the underperformance of E&P companies were the nagging circular debt, which had affected the drillers’ liquidity thereby restricting their drilling portfolio and secondly, the continuation of the carry over wells of the earlier year that stalled companies from launching into new wells, keeping them focused on already drilled ground.


http://dawn.com/2013/03/24/oil-gas-sector-makes-10-discoveries/
Riaz Haq said…
Here's a report on China supplying 1000 MW Chashma 3 nuclear power plant:

China confirmed this week it will sell a new 1,000-megawatt nuclear reactor to Pakistan that the United States says would violate Beijing’s obligations under a nuclear supplier control group.

Chinese Foreign Ministry spokesman Hong Lei was asked Monday about a report in the Free Beacon March 22 that first disclosed the secret agreement for the reactor reached last month in Beijing between the China National Nuclear Corp. and the Pakistan Atomic Energy Commission.

“China has noted the relevant report,” Hong told reporters in Beijing.

Normally, Chinese government spokesmen deny such reports and label them “groundless” as a way to avoid comment. The spokesman’s use of the phrase “noted the relevant report” is unusual and a tacit admission the report is accurate.

U.S. intelligence and diplomatic officials privately said the agreement was reached in Beijing during a visit by a high-level Pakistani delegation of nuclear industry officials from Feb. 15 to 18.

The Chinese at the meeting urged Pakistan to keep the deal secret to avoid expected international opposition by states that say the sale violates China’s commitment to the Nuclear Suppliers Group, a 46-member association aimed at preventing the spread of nuclear weapons.

China agreed in 2004 not to sell additional reactors to Pakistan’s Chashma nuclear facility beyond the two reactors that began operating in 2000 and 2011.

However, Hong denied the sale violates the voluntary NSG guidelines.

“The cooperation between China and Pakistan does not violate relevant principles of the Nuclear Suppliers Group,” he said. “In recent years, China and Pakistan do indeed carry out some joint projects related to civilian use of nuclear energy. These projects are for peaceful purpose only, in compliance with the international obligations shared by both countries, and they are subject to guarantee and monitor by international atomic energy organization.”

However, U.S. intelligence officials said the China National Nuclear Corp. (CNNC) is Beijing’s main nuclear weapons producer and is working to modernize Pakistan’s nuclear arsenal in addition to the civilian reactor construction at Chashma.

China also is working to develop Pakistan’s nuclear fuel reprocessing capabilities, the officials said....


http://freebeacon.com/concerns-proliferating/
Riaz Haq said…
Here's ET piece on energy-hungry South Asia looking to energy-rich Central Asia:

.Kazakhstan, Turkmenistan, Uzbekistan, Kyrgyzstan and Tajikistan are all rich in oil and gas. According to available data, they have a combined 8.2 billion tons of proven oil reserves and 8.4 trillion cubic metres of natural gas reserves.

On the other side, South Asia faces a deficit in energy, rapidly picking up on economic growth. Connecting South Asian energy consumption centres to energy-rich Central Asian states is a win-win solution. It can bring economic growth to Central Asia through oil and gas revenues, and it can help South Asia continue on the path of stable economic growth and prepare the subcontinent as a future consumption market, which can support trade needed to sustain G-8 countries at the present level.---------

At the moment, three principal gas pipelines can bring gas to the subcontinent. These are the Turkmenistan-Afghanistan-Pakistan-India gas pipeline (TAPI), the Qatar-Pakistan-India (QPI) submarine gas pipeline, and the Iran-Pakistan-India (IPI) gas pipeline. The QPI, for a considerable portion, has to be laid down in the seabed of the Arabian Sea. The option, at present, is too expensive to be adopted. Even after completion, its estimated annual maintenance cost is a considerable portion of the profit margin, and the host consortium may not find it feasible to run.

A Memorandum of Understanding (MoU) was signed on March 15, 1995, between Turkmenistan and Pakistan to build a gas pipeline from the Daulatabad gas field in Turkmenistan to Multan in southern Punjab. US company Unocal, in consort with Saudi oil company Delta, prepared to start work on the project. The two companies later joined the CentGas consortium in which several international petroleum companies joined in, including Russian petroleum giant Gazprom.

Later on, in June 1998, Gazprom relinquished its share in the project, while Unocal withdrew in August 1998 after attacks on American Embassies in Nairobi and Darussalam. The project was then put on the backburner.

----

The $7.6 billion pipeline, with initial capacity of 27 billion cubic metres of natural gas per year, will deliver 2 billion cubic metres of gas to Afghanistan and 12.5 billion cubic metres each to Pakistan and India.

IPI

The proposed pipeline was designed to bring gas to Pakistan and India. The pipeline can initially supply 22 billion cubic metres of natural gas per year, which was expected to be raised later to 55 billion cubic metres per year. The project was supposed to be commissioned by 2013 (this year) at a cost of $7.5 billion. After reaching Multan, a spur line had been proposed, which would deliver gas to India. Under the gas purchase agreement, Pakistan was supposed to get gas at a price of $11 per million British thermal units (MMBTU). The price is $2 per MMBTU cheaper than the TAPI pipeline gas, which costs $13 per MMBTU. The Iranian gas is also $7 per MMBTU cheaper than imported LNG.

In 2008, after signing a civilian nuclear deal with the US, India withdrew from the project.

Pakistan’s federal government in January this year has approved a $1.5 billion government-to-government deal with Iran for laying the 785-kilometre segment of the pipeline in Pakistan. The federal cabinet has finally approved the project, and a special committee has been formed to expedite it. The US has been quick to register its concerns over the deal.

South Asian consumption

In Pakistan per capita natural gas consumption in 2010 was 229 cubic metres, whereas in India this is as low as 55 cubic metres..


http://tribune.com.pk/story/529170/the-energy-supply-conundrum-integrating-the-resources-of-central-and-south-asia/
Riaz Haq said…
Here's an Oilprice report on "water flooding" to extract oil from shale in US:

The cheapest and most profitable oil North America has ever seen is now “flooding” into the market, as producers once again use old technology to create a wave of new profits.

Producers are using “waterfloods”— pushing water into underground formations to flush a large amount of oil out to nearby producing wells — to increase production and profits. It’s the next big money-making phase of the Shale Revolution.

Waterflooding has been around for 70 years or more, but the Big Question over the last five years has been — can you do it effectively with tight oil?

The answer is a Big Yes, and waterflood potential has become so important that institutional investors now see them as major share price catalysts for junior producers—and track them closely.

Waterfloods start 1-2 years after drilling the well, in a time window producers call “secondary recovery.” (Drilling is primary recovery.) Waterfloods are cheap to try and cheap to run (with most operations costing just $5-10 per barrel!), and now the industry is seeing that they are sometimes doubling reserves from a well.

“Secondary recovery is where you really make all your money in this industry,” says Dan Toews, VP Finance and CFO of Pinecrest Energy (PRY-TSX.V).

Pinecrest is very vocal about their waterflood potential. They say they can double the amount of oil they recover (called the Recovery Factor, or RF) from a well — at less than $15/barrel — half the price of primary recovery costs, which are over $30/barrel.
“Everyone is trying to find a new resource play,” says Toews. “First you find a resource, and then you drill it like crazy. But the second stage is to go in for your secondary recovery, through waterflooding of some kind if possible.”

To date, Pinecrest isn’t yet flowing even one barrel of waterflooded oil—so their powerpoint slide is just projections. Toews and his team expect to be waterflooding all of their operations by the end of this quarter. But analysts are already seeing the waterfloods as a share price catalyst.

“Just about every investor and institution we talk to wants to know the status with our waterfloods,” says Toews. “The buy side (fund managers = buy side, brokerage firms = sell side—ed.) is very savvy on waterfloods. Once we apply the method, this is what has the potential to shoot up our share prices.”

Realistically, the effects can be seen within 2-3 months, but it’s best to give them a year—or more—of operations before judging their impact. Waterfloods can last up to 20 years or more.

Another Canadian oil junior, Raging River Exploration (RRX-TSX), also explains the waterflood potential in their powerpoint. They expect to be swimming in 1 million EXTRA recoverable barrels of oil per square mile, courtesy of waterfloods—at an even cheaper cost of $5-10 barrel, vs $30 barrel for the first 600,000 barrels.

Raging River is developing the Viking formation in SW Saskatchewan—a large, tight oil play that since the 1950s has had an improved outlook from 2 billion barrels of oil to an estimated 6 billion barrels of oil in place, all thanks to horizontal drilling.
Raging River expects waterflooding to increase its RF from 8% from primary recovery methods (drilling vertical and horizontal wells) using 16 wells/section, to 16-20%. The simple math says that will increase the number of barrels recovered from 480 million at 8% to 1.25 billion at 20% RF.

If Raging River—or any producer—can show a steady RF for over a year, I would suggest to investors those barrels will be worth $10-$15 each—creating huge value to shareholders on a buyout.

Some Viking waterfloods have even seen results as high as 30% RF....


http://oilprice.com/Energy/Crude-Oil/US-Shale-Industry-Set-for-a-Second-Boom-with-Waterflood-Technology.html

Riaz Haq said…
Here's Express Tribune on private sector jumping in to add power generation capacity:

After five years of unbearably long daily power outages, Pakistan’s private sector has had enough: over the next five years, they plan on investing over $14.3 billion in increasing the nation’s power production capacity by nearly 46%, and they are doing so by investing in the cheapest possible sources of electricity.

According to data released by the National Electric Power Regulatory Authority (Nepra) in its 2012 State of the Industry report, private sector firms have already begun work on dozens of projects that would substantially increase the country’s electricity generation capacity. For the purposes of this special report, we include only those projects that are scheduled to be completed by the end of the next administration’s term in 2018.

If the next administration were to do absolutely nothing to prevent or slow down the progress currently being made on projects that are already approved and progressing, Pakistan’s power generation capacity will increase to 34,200 megawatts (MW), compared to the approximately 23,500MW today. Of that increase, more than 80% is coming through private sector initiatives.

Yet it is not just the private sector’s initiative that deserves to be applauded: it is also their foresight. Nearly all of the private sector projects scheduled to come online use the cheapest fuels possible. These firms are scheduled to add about 4,900MW to the nation’s hydroelectric power generating capacity, for example. Another 800MW will be added in terms of gas-fired thermal power plants. And nearly 3,000MW will be added or converted to coal and bagasse (a waste product from sugar manufacturing).

Residents of Karachi should rejoice in particular: the Karachi Electric Supply Company is converting 840MW of oil-fired thermal power stations to coal, which will dramatically increase the country’s only private utility’s ability to generate cheaper electricity. Put simply, this will mean even fewer power outages in Karachi.

The private sector’s focus appears not only towards fuel sources that are cheap, but also easily available. Natural gas, for instance, is possibly the cheapest source electricity, cost an average of Rs4.24 per kilowatt-hour, according to Nepra. But the bulk of the investment is going towards hydroelectricity, which, according to Nepra’s tariff determination, is expected to cost Rs5.43 per unit for the first 12 years of a project’s life, while the debt used to finance the plants is still being paid off, following which the tariff will be reduced to Rs2.47 per unit.

The preference for hydroelectricity has to do with the fact that Pakistan’s natural gas reserves are rapidly being depleted and importing gas is far more difficult than importing coal. Power plants that run on imported coal can produce electricity for an average of Rs10 per unit, according to industry experts, much cheaper than the Rs16 per unit that oil-fired thermal plants cost.

Compared to the $14.3 billion being invested by the private sector, the government is planning to invest just over $2.5 billion over the next five years to upgrade its power infrastructure, which will add about 2,100MW of electricity generating capacity over the next five years, the overwhelming bulk of which will be in thermal power plants that can run on both oil and gas.

The picture, of course, is not completely rosy. Power projects are notorious for not meeting their deadlines so it is possible that the next administration will not see all of these projects come to fruition during its term. But given the private sector’s commitment to solving Pakistan’s energy problems, the least the government can do is not create hurdles in their way. It will only help their own re-election chances.


http://tribune.com.pk/story/532404/energy-power-generation-capacity-expected-to-jump-46-by-2018/
Riaz Haq said…
Here are excerpts of Pepe Escobar's RT.com Op Ed on Iran-Pakistan pipeline:

..When Iranian President Mahmoud Ahmadinejad and Pakistani President Asif Zardari met at the Iranian port of Chabahar in early March, that was a long way after IP was first considered in 1994 – then as Iran-Pakistan-India (IPI), also known as the 'peace pipeline.' Subsequent pressure by both Bush administrations was so overwhelming that India abandoned the idea in 2009.

IP is what the Chinese call a win-win deal. The Iranian stretch is already finished. Aware of Islamabad’s immense cash flow problems, Tehran is loaning it $500 million, and Islamabad will come up with $1 billion to finish the Pakistani section. It’s enlightening to note that Tehran only agreed to the loan after Islamabad certified it won’t back out (unlike India) under Washington pressure.

IP, as a key umbilical (steel) cord, makes a mockery of the artificial – US-encouraged – Sunni-Shia divide. Tehran needs the windfall, and the enhanced influence in South Asia. Ahmadinejad even cracked that “with natural gas, you cannot make atomic bombs.”

Zardari, for his part, boosted his profile ahead of Pakistan’s elections on May 11. With IP pumping 750 million cubic feet of natural gas into the Pakistani economy everyday, power cuts will fade, and factories won’t close. Pakistan has no oil. It may have huge potential for solar and wind energy, but no investment capital and knowhow to develop them.

Politically, snubbing Washington is a certified hit all across Pakistan, especially after the territorial invasion linked to the 2011 targeted assassination of Bin Laden, plus Obama and the CIA’s non-stop drone wars in the tribal areas.

Moreover, Islamabad will need close cooperation with Tehran to assert a measure of control of Afghanistan after 2014. Otherwise an India-Iran alliance will be in the driver’s seat.

Washington’s suggestion of a Plan B amounted to vague promises to help building hydroelectric dams; and yet another push for that ultimate 'Pipelineistan' desert mirage – the which has existed only on paper since the Bill Clinton era.

---

The big winner is… China

IP is already a star protagonist of the New Silk Road(s) – the real thing, not a figment of Hillary Clinton’s imagination. And then there’s the ultra-juicy, strategic Gwadar question.

Islamabad decided not only to hand over operational control of the Arabian Sea port of Gwadar, in ultra-sensitive southwest Balochistan, to China; crucially, Islamabad and Beijing also signed a deal to build a $4 billion, 400,000 barrels-a-day oil refinery, the largest in Pakistan.

Gwadar, a deepwater port, was built by China, but until recently, the port's administration was Singaporean.

The long-term Chinese master plan is a beauty. The next step after the oil refinery would be to lay out an oil pipeline from Gwadar to Xinjiang, parallel to the Karakoram highway, thus configuring Gwadar as a key Pipelineistan node distributing Persian Gulf oil and gas to Western China – and finally escaping Beijing’s Hormuz dilemma.

Gwadar, strategically located at the confluence of Southwest and South Asia, with Central Asia not that far, is bound to finally emerge as an oil and gas hub and petrochemical center – with Pakistan as a crucial energy corridor linking Iran with China. All that, of course, assuming that the CIA does not set Balochistan on fire.

The inevitable short-term result anyway is that Washington’s sanctions obsession is about to be put to rest at the bottom of the Arabian Sea, not far from Osama bin Laden’s corpse. And with IP probably becoming IPC – with the addition of China – India may even wake up, smell the gas, and try to revive the initial IPI idea....


http://rt.com/op-edge/iran-pakistan-syria-pipeline-843/
Riaz Haq said…
Here's a PakTribune report on lack of budget allocation for power generation in Pakistan:

Not a single penny has been allocated in federal budgets for power generation for the last 19 years despite unprecedented electricity loadshedding in the country.

This was stated by former managing director of Pepco, Engineer Tahir Basharat Cheema, while addressing a seminar on “Pakistan power sector: past, present and the future” held here at Pakistan Engineering Congress on Wednesday.

Stressing the need for higher budgetary allocation to meet rising power costs, he observed that no government has allocated any fund in national budget for electricity generation after 1994.

“The National Highway Authority was given Rs92 billion in current budget while Rs16 billion was allocated only for a single constituency and if this amount was given to power sector that would have gone a long way in eliminate power loadshedding.” Cheema, who is presently heading an Energy Management Committee of the Ministry of Water and Power, stated that government's seriousness to control power crisis can be gauged by the fact that it allocated a minor amount of Rs15 billion for power sector but that was not released either and diverted to some other project.

“In order to tackle the energy shortages, maximum funds should be allocated for construction of dams or water reservoirs, besides tapping of Thar Coal, completion of Iran-Pakistan gas pipeline, energy conservation & energy efficiency, fuel mix and energy rationing.”At least Rs50 billion of the total budget should be allocated for hydel power projects, he stressed.

Reliance on costly thermal power has been jacking up the cost of production and the import bill as well. “The country is in dire need of an urgent shift in its energy-mix in favour of hydel power and local fuels. Use of biogas should be promoted throughout the rural sector both for electricity generation and gas for cooking besides producing bio fertiliser, said the power sector expert.He expressed that 175 billion tons of Thar coal reserves with a price tag of $13 trillion in the international market are enough to provide 100,000MW of electricity for 100 years. Uninterrupted and affordable power supplies can turn Pakistan into an economic powerhouse. While expressing the optimism for construction of Kalabagh Dam, he said that Sindh needs fresh water the most and it is the KBD, which would fulfill its dire need of fresh water..


http://paktribune.com/business/news/Not-a-penny-in-budgets-for-making-power-for-19-years-11125.html
Riaz Haq said…
Here's a Dawn story on Saudi help for incoming Prime Minister Nawaz Sharif to overcome energy crisis in Pakistan:

ISLAMABAD, May 22: With an ‘amiable’ government in place, Saudi Arabia is expected to extend a bailout package of about $15 billion to Pakistan’s highly indebted energy sector by supplying crude and furnace oil on deferred payment to enable it to resolve the chronic circular debt issue.

A senior government official said the Saudis had been taking reasonable interest in helping out the incoming PML-N government led by Nawaz Sharif.

They had extended a similar special package to Pakistan soon after it went nuclear in 1998 and faced international economic sanctions.

Between 1998 and 2002, Pakistan received $3.5 billion (Rs190 billion at the exchange rate at that time) worth of oil from Saudi Arabia on deferred payment, a major part of which was converted into grant.

According to the official, as soon as the PML-N emerged as the majority party after the May 11 elections, the Saudi ambassador in Islamabad sought a briefing on the country’s oil requirements from the foreign ministry before calling on prime minister-designate Nawaz Sharif in Raiwind, Lahore.

He was immediately provided a position paper, the official said.

Pakistan expects about 100,000 barrels of crude oil and about 15,000 tons of furnace oil per day from Saudi Arabia on deferred payment for three years. The amount involved works out at about $12-15bn.

The facility can be utilised to reduce loadshedding in the short term and provide an opportunity in the medium term to restructure the power sector by minimising subsidies, eliminating circular debt, ensuring recovery from the public sector and reducing system losses to bring it to a self-sustainable level.

“During the package period, the PML-N government can resolve the electricity crisis and develop hydropower projects through a combination of public and private investments and bagasse-based power production by the sugar industry,” he said.

He said the arrangement for oil supplies on deferred payments could be further discussed during Mr Sharif’s first visit to Saudi Arabia soon after assuming the office of prime minister early next month.

Pakistan’s total crude oil import is about 400,000 barrels per day and 30,000 tons of furnace oil. Its total oil import bill stands at about $15bn per annum.

The official said a request for 100,000 barrels of oil and 15,000 tons per day of furnace oil had already been passed on through the Pakistan-Saudi Arabia Joint Ministerial Commission.

A meeting of the commission could be convened soon after the new government assumed charge, an official said.

The Saudi rulers had not taken any interest in the issue earlier ostensibly because of the chill in their relationship with the PPP government.

Large political delegations taken to Saudi Arabia by the PPP government were cold-shouldered, an official said, adding that warming up of diplomatic relations with Iran and the UAE and cancellation of hunting facilities for Saudi royals had also annoyed the kingdom.

The official said the breathing space provided by the likely Saudi package could also be used for renegotiating gas price with Iran for the Iran-Pakistan gas pipeline to bring it down to a sustainable level.

Under the gas sales and purchase price agreement, any party may seek revision of the rates in view of the cost of alternative import options one year ahead of the first gas flows scheduled to take place in December 2014.

The official ruled out any possibility that the Saudi oil package could be used to persuade Pakistan to stay away from the Iranian gas import. He said the project had reached an advanced stage and involved international agreements and, therefore, backtracking was no option, but the development could give leverage to Pakistan to secure lower gas prices.


http://beta.dawn.com/news/1013070/15-billion-saudi-bailout-likely/
Riaz Haq said…
Here's a WSJ piece on Iran-Pakistan pipeline:

Pakistani Prime Minister Nawaz Sharif said he would proceed with a plan to build a gas pipeline from Iran, despite objections from the U.S., and said that he plans to use his speech at the United Nations on Friday to hit out against American drone strikes in his country.

In an interview in New York with The Wall Street Journal, Mr. Sharif also spelled out, for the first time, the conditions that Pakistani Taliban would have to accept if his government proceeds with a peace deal with the militant group, demanding that they lay down arms and recognize Pakistan's constitution. At the same time, he voiced fears that continued U.S. drone attacks would wreck his policy to negotiate with the Pakistani Taliban, a group closely linked to al Qaeda.

----

In the interview Wednesday, Mr. Sharif acknowledged frictions with the U.S. but said he believed that the issues could be overcome. "President Obama was very kind to call me up immediately after my election and express his desire to work with Pakistan. I also want to work with the United States of America," he said.

The White House said Thursday that President Barack Obama and Mr. Sharif will meet Oct. 23 at the White House, part of what officials said was a broader effort to deepen ties.

A White House statement said terrorism and the economy will be among the topics discussed, but didn't mention the controversial pipeline. "The visit will highlight the importance and resilience of the U.S.-Pakistan relationship and provide an opportunity for us to strengthen cooperation on issues of mutual concern, such as energy, trade and economic development, regional stability, and countering violent extremism," the White House said in a statement.

---

An inadequate supply of gas, used to produce electricity, is one of the main reasons for the crippling shortage of power in Pakistan. Mr. Sharif said Pakistan had a contractual obligation to go ahead with the agreement, or face penalties from Iran of $3 million a day if it is not completed by the end of next year. He said that in Islamabad's legal opinion, the pipeline wouldn't trigger the sanctions.

He said that Pakistan would proceed "unless you give us the gas, or the $3 million a day."

However, Pakistan still needs to find $1.5 billion to build the pipeline, which is already completed on the Iranian side, according to Tehran. Islamabad is also hoping that a change in Washington's stance on Iran after the election of Mr. Rouhani could help Pakistan avoid the sanctions.

----
"The more the drones, the more the terrorists get multiplied. You kill one man, his sons, his father, his brothers, they become terrorists. So this is something that is not helping at all," said Mr. Sharif.

Washington believes the drones have been highly effective in killing senior al Qaeda commanders, Pakistani Taliban leaders and Afghan insurgents who use Pakistan's tribal areas, which border Afghanistan, as a sanctuary.

---

In words not used in the offer of talks, Mr. Sharif, in the Journal interview, laid out the terms that would be available to the militants.

"They will have to renounce terrorism," said Mr. Sharif. "They [Pakistani Taliban] will have to abide by the constitution of Pakistan."

"It's been often said by them that they don't recognize the constitution of the country," he said. "But the constitution has to be recognized. If we agree on addressing this terrorism, they will have to be disarmed, lay down their arms."


http://online.wsj.com/article/SB10001424052702303342104579099142009080988.html
Riaz Haq said…
Here's NY Times on 2,200 MW nuclear power plant in Karachi:

“The beginning of the 2,200-megawatt power project is indeed a proud moment in the energy history of Pakistan,” Mr. Sharif said at the groundbreaking ceremony in the coastal city of Karachi, which the Chinese ambassador to Pakistan, Sun Weidong, and officials from Pakistan’s Atomic Energy Commission attended.

“For achieving the goal of energy, nuclear power will form an increasingly significant component,” Mr. Sharif said, adding that he was told by the Chinese officials that the project, Karachi Coastal Power Project (K-2/K-3), will be completed in six years.
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The cost of the new reactor project is estimated to be $9.59 billion, with China providing extensive construction help and expertise. Further, China will provide maintenance and enriched uranium for fuel.

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China has signaled its intent to expand nuclear energy cooperation with Pakistan in joint statements from their leaders, Mr. Zhang said in a telephone interview.

“Both countries have expressed their willingness to expand cooperation in civilian nuclear energy,” he said. “In that sense, you didn’t need a crystal to see this project coming.”

China is almost certain to deem the new projects as a “grandfathered” extension of nuclear cooperation agreements signed with Pakistan before China joined the Nuclear Suppliers Group, meaning that China will not consider seeking approval for the reactors from the group, Mr. Zhang said. He said the major member states in the group, including the United States, also appeared unlikely to go beyond relatively restrained, formulaic expressions of concern about the new reactors.

“My analysis is that this issue won’t trigger too much controversy,” he said. “The Indian government will certainly respond, but I don’t think that this will fundamentally harm Sino-Indian relations, because it’s not something that has come out of the blue. China and India have exchanged views on this many times.”

On the supplier group’s likely response, Mr. Zhang said: “I don’t think the N.S.G. will formally raise this issue, because the experience in the past was that the members would reach an implicit understanding, and so this issue never caused a big fuss in previous N.S.G. meetings.”
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“China’s supplies to Pakistan are under full I.A.E.A. safeguards,” said Mansoor Ahmed, a Pakistani analyst who is a visiting research scholar at the Cooperative Monitoring Center, Sandia National Laboratories, in Albuquerque, N.M. “However, the Chinese have chosen to ignore criticism with regard to the N.S.G. restrictions, which are subject to various interpretations, in view of the India-U.S. nuclear deal.”

Mr. Ahmed also stressed that the two reactors were being sold under a civilian nuclear cooperation framework concluded in 1986 before China becoming a party to the Nuclear Nonproliferation Treaty in 1992 and the N.S.G. in 2004. “Therefore, the Chinese don’t need N.S.G. approval for the sale of new reactors in spite of Indian protests,” he said.

Mr. Sharif on Tuesday also announced plans to build six more civilian nuclear plants in other parts of the country. But Mr. Zhang said that China was unlikely to build any more nuclear reactors in Pakistan beyond the two units in Karachi.

The choice of Karachi is significant as it is considered Pakistan’s economic and trade center. “Today people look with envy toward cities like Dubai, Hong Kong, Kuala Lumpur and Singapore,” Mr. Sharif said in his speech, which was broadcast live on state-run television.

“I wish to see Karachi in this list of harbors and industrial hubs.”


http://www.nytimes.com/2013/11/27/world/asia/pakistan-breaks-ground-on-nuclear-power-plant-project-with-china.html?hpw&rref=science&_r=0
Riaz Haq said…
APP reports that Asian Development Bank has agreed to finance coal-fired power generation plant in Pakistan in spite of strong opposition from the environmental lobby:

The Asian Development Bank (ADB) is providing a $900 million loan for a new supercritical coal power generation unit in Pakistan that will deliver reliable and cost effective electricity to hundreds of thousands of energy-starved households and businesses.
The coal-fired generation unit, the first in the country to use supercritical boiler technology, will be built at an existing power plant in the town of Jamshoro in Sindh province, about 150 kilometres east of the provincial capital, Karachi.
It will employ state-of-the-art emission control equipment resulting in cleaner emissions than the existing heavy fuel oil-fired generators and subcritical boiler technology, which is more commonly used, according to ADB statement issued on Monday.
Pakistan only has 19 percent of the global average for carbon dioxide emissions per person and has only one coal-fired power plant in operation generating 0.7 percent of the generation mix.
Recycling ash from the plant will also save about 115,000 tons of carbon dioxide equivalents per year, the statement said adding the electricity generated from the plant will alleviate some of the power shortages and replace generation from small individual oil and diesel generators which is expected to save a further 503,000 tons of carbon dioxide per year.
The new plant will generate electricity at a lower cost saving about $535 million per year on its fuel import bill compared with oil fired generation.
The new unit is a part of broader government efforts to decrease electricity tariff.
Coal-fired power plants, using cleaner technology, provide an environmentally sound and cost-effective medium-term energy solution at a time when the country's natural gas reserves are dwindling.
Resolving the energy crisis is a priority for the country and the government is pursuing all options including large hydropower plants, renewable energy, energy efficiency, increasing domestic gas production, and importing electricity and natural gas.
Pakistan has substantial potential for large hydropower which will be developed to meet long-term energy needs because of the longer construction period involved.
Small and medium sized hydropower will be developed to meet medium-term needs, it said adding the stable base-load power provided by this project will enable the fluctuating power from solar and wind power to be used without disruption to the grid.
ADB's assistance, which includes $870 million from ordinary capital resources and $30 million from its concessional Asian Development Fund, will be complemented by cofinancing of $150 million from the Islamic Development Bank and counterpart funds of $450 million from the government.
The project is expected to be completed by December 2018. ADB's assistance will also provide 5 years of operation and maintenance support after its completion.


http://www.brecorder.com/top-news/1-front-top-news/147932-adb-providing-$900mn-to-support-pakistan-end-energy-crisis.html

http://www.businessweek.com/news/2013-12-09/adb-to-lend-900-million-for-coal-plant-unit-in-pakistan

http://www.huffingtonpost.com/jake-schmidt/important-test-of-the-ove_b_4395835.html
Riaz Haq said…
Here's a News story on US support and funding for Central Asia-South Asia (CASA) transnational grid:

WASHINGTON: The United States has committed $15 million in financing towards the Central Asia-South Asia electricity transmission project (CASA-1000) that on completion would help bring electricity to Afghanistan and Pakistan.

While announcing the funding the State Department expressed the hope that the US financial support for CASA-1000 would help leverage other donors to support the project and encourage the World Bank to present the project to its Board of Directors for final approval next year.

“We believe CASA-1000 can be a potentially transformative project, helping create a regional energy grid that connects Central and South Asia for the first time,” a statement released by the Office of the Spokesperson said.

When completed, CASA-1000 will allow Tajikistan and Kyrgyzstan to profit from existing, unused summer generation capacity by selling electricity to Afghanistan and Pakistan. Afghanistan would doubly benefit from the project as a consumer (300 MW) and as transit country generating revenue.

“Pakistan would add 1,000MW to its national grid during the summer months when it experiences its peak demand period and have access to a reliable, clean, and cheaper energy supply.”

According to the State Department, CASA-1000 is entirely dependent on existing hydropower generation so it will not affect water-sharing agreements for other Central Asian countries. It also complements ongoing efforts by the Asian Development Bank and others to support a regional energy grid.

“These types of projects can enhance economic interdependence and support peace and stability in the region for years to come. That is why the United States has been supporting the CASA-1000 Secretariat for several years, and is now committing an equity stake in the project.”

“US support for CASA-1000 is representative of our long-term commitment to peace, stability and prosperity for Afghanistan and its neighbours. CASA-1000 is a practical example of a project that supports regional economic connectivity and our New Silk Road vision. The United States looks forward to working with the World Bank, the Islamic Development Bank, and other development partners to support CASA-1000 and other projects which connect Central and South Asia.”


http://www.thenews.com.pk/Todays-News-13-27249-US-pledges-$15-million-to-bring-electricity-to-Pakistan-Afghanistan
Riaz Haq said…
Here's Reuters on China financing nuclear power plants in Karachi:

China has committed $6.5 billion to finance the construction of a major nuclear power project in Pakistan's port city of Karachi as it seeks to strengthen ties with its strategic partner, Pakistani officials said.

Pakistani Prime Minister Nawaz Sharif broke ground on the $9.59 billion project last month but officials have provided few details of how they plan to finance it.

Financing documents seen by Reuters showed China National Nuclear Cooperation (CNNC) has promised to grant a loan of at least $6.5 billion to finance the project which will have two reactors with a capacity of 1,100 megawatts each.

Two members of the government's energy team and three sources close to the deal confirmed this. CNNC was not available for comment.

"China has complete confidence in Pakistan's capacity to run a nuclear power plant with all checks in place," said Ansar Parvez, chairman of the Pakistan Atomic Energy Commission which runs the civilian nuclear program.

"As things stand, the performance and capacity of nuclear power plants in Pakistan is far better compared to non-nuclear plants."

Parvez declined to give more details of the funding but said it would be completed by 2019 and each of the two reactors would be larger than the combined power of all nuclear reactors now operating in Pakistan.

As part of the deal, China has also waived a $250,000 insurance premium on the loan, said two sources in the Energy Ministry with knowledge of the project. They declined to be identified as they are not authorized to speak to the media about the financing.

Pakistan and China, both nuclear-armed nations, consider each other close friends and their ties have been underpinned by common wariness of India and a desire to hedge against U.S. influence in South Asia.

Pakistan sees nuclear energy as key to its efforts to solve power shortages that have crippled its economy. Pakistan generates about 11,000 MW of power while total demand is about 15,000 MW.

Blackouts lasting more than half a day in some areas have infuriated many Pakistanis and sparked violent protests, undermining an economy already beset by high unemployment, widespread poverty, crime and sectarian and insurgent violence.

Under its long-term energy plan, Pakistan hopes to produce more than 40,000 MW of electricity through nuclear plants by 2050.

The United States sealed a nuclear supply deal with India in 2008, irking both China and Pakistan....


http://www.reuters.com/article/2013/12/24/us-pakistan-china-nuclear-idUSBRE9BN06220131224
Riaz Haq said…
Here's a Shell Pakistan press release of Asia Energy Survey 2013:

Following is the text of press release issued by Shell Pakistan Limited

Quote

Thailand, the Philippines and India top a list of nine Asian countries that say they are very concerned about future energy needs, amid increasing pressure for more energy, water and food to keep up with increased population growth.

The results emerged from a series of Shell-commissioned Future Energy surveys in which 80 percent of the respondents ranked longer-term future energy needs alongside everyday concerns like public education and cost of living as important. The surveys covered 8,446 people in 31 cities and 9 regional areas.

These concerns have arisen amid growing energy pressures globally. By 2030, the world will need 40% to 50% more energy, water and food in tandem with rising demand and increased populations. Tremendous stress will be placed on these vital resources as energy is used to move and treat water; water is required to produce energy and both energy and water are required in the production of food.

"It is encouraging to know that Asians view future energy needs as high priority, as this region will see one of the fastest growths in population and energy demand," said Jeremy Bentham, Shell's Vice President for Global Business Environment. "More than ever before, the industry, government and public all have a joint responsibility to create a better energy future, and must come together to collaborate and coordinate our efforts to meet these challenges for generations to come."

Most survey respondents expect energy shortages and higher energy prices to have a significant impact on their countries. Issues seen as most pertinent are energy shortages in Thailand (91%) and Pakistan (90%), higher energy prices in India (91%) and Singapore (79%), water shortages in Vietnam (89%) and food shortages in Indonesia (86%).

The surveys indicate that Asia is in favour of a mix of future energy sources, with solar energy and natural gas leading the way in many countries. Solar energy is the most desired future energy source across most countries, which include Singapore (86%), Thailand (83%) and India (77%). Natural gas is cited as the most preferred future energy source in Brunei (87%) and is second most preferred in Singapore (52%), Indonesia (43%) and India (43%).

Survey respondents agree that collaboration between industry, government, and the public, as well as innovation and incentives for cleaner energy, are the most important factors in shaping future energy needs. In Pakistan, over 50% of 2000 respondents, identified effective government policy as the most important factor in building future energy solutions.


http://www.4-traders.com/SHELL-PAKISTAN-LIMITED-6496379/news/Shell-Pakistan-Limited--Shell-surveys-show-Asia-concerned-about-future-energy-needs-amid-constraint-17890560/
Riaz Haq said…
Here's a Financial Times report on Qatar-Pakistan LNG deal:

Electricity-starved Pakistan is close to signing a deal with Qatar worth as much as $2.5bn a year for the supply of liquefied natural gas (LNG) from the Gulf emirate to fuel Pakistan’s power grid, according to senior officials in Islamabad.
“This will be the last winter of discontent,” said Shahid Khaqan Abbassi, Pakistan’s petroleum minister, in a reference to the long power cuts that have for years angered Pakistani industrialists and householders. He promised a “major improvement” in gas supplies next year after particular severe shortages this winter.

Mr Abbassi is close to signing an agreement for the import of LNG from early 2015. Although the government has yet to name a supplier formally, Mr Abbassi and other officials from his ministry said that Qatar was the expected seller.
“If we can provide gas to those of our power generation plants that run on gas, [electricity cuts] will go down by half,” said Mr Abbassi. Demand for natural gas in Pakistan, a country of 180m people, is estimated at 8bn cubic feet per day, double the amount produced locally from gas fields in the south of the country.
Pakistan has also negotiated an agreement to buy gas to be piped from neighbouring Iran, but implementation of the project has been has been hampered by lack of financing and by US opposition.
Mr Abbassi expects Pakistan to buy some 3.5m tonnes of LNG a year from Qatar, meeting only part of the country’s shortfall.
Before the winter, Mr Abbassi alarmed his cabinet colleagues when he told them that for the first time in Pakistan’s history gas supply this year would not be sufficient to meet the needs of domestic consumers – even if supplies to commercial and industrial buyers were suspended.
Nawaz Sharif, prime minister, ordered Mr Abbassi to “take emergency steps” to tackle the situation, according to a senior official working with Mr Sharif. “Failure to provide gas will only enlarge the political risk [to the government],” the official said.
Growing energy shortages in recent years have prompted street demonstrations that only add to political instability in Pakistan.
Some critics have questioned Pakistan’s ability to keep up with the payments for future LNG supplies given the country’s weak finances, although the gas would partly replace oil used for power generation. “That may spare foreign exchange and allow the authorities to pay for at least part of the gas imports,” said Sakib Sherani, a former finance ministry adviser
The discussions with Qatar have deepened uncertainty over an earlier plan by Pakistan to build a pipeline to the Iranian border to import gas from Iran’s South Pars gas field. Mr Abbassi refused to comment on that project, and said only that “Pakistan will need more gas even after the LNG project. We are looking at all possible avenues.”


http://www.ft.com/intl/cms/s/0/82b74180-8c79-11e3-9b1d-00144feab7de.html
Riaz Haq said…
Here's an Express Tribune report on Pakistan's commitment to civil use of nuclear energy:

Prime Minister Nawaz Sharif on Tuesday said that Pakistan intended to use nuclear technology in order to address the country’s severe energy crisis.
Talking to Director General International Atomic Energy Agency (IAEA) Yukiyo Amino here at the Prime Minister House, the premier said Pakistan Atomic Energy Commission (PAEC) was helping the country to meet its power requirements with expansion of the Chashma nuclear projects and new nuclear power plants in Karachi.
Terming the help of IAEA as key, Nawaz said Pakistan was making use of nuclear technology in several areas including power production, medicine, agriculture, food preservation and water management for the benefit of the people.
The premier also assuaged fears of proliferation, reaffirming Pakistan’s commitment to nuclear non-proliferation (despite remaining one of the three countries to have never signed the non-proliferation treaty), adding that “all our current nuclear power plants as well as research reactors are under IAEA safeguards and all obligations are being fulfilled adequately.”
Nawaz appreciated the positive role played by the Agency in the development of peaceful use of nuclear technology in Pakistan, for human resource development in various scientific disciplines and establishment of research and development facilities at different centers in the country.
He said the government of Pakistan valued its relationship with IAEA and said this cooperation shall be strengthened in the time ahead.
IAEA director general appreciated Pakistan’s commitment to use of nuclear energy for the benefit of its people and extended his support for the cause.


http://tribune.com.pk/story/681534/pakistans-nuclear-programme-for-civil-energy-purposes-says-nawaz/
Riaz Haq said…
Here's a VOA report on the growing use of microhydro turbines for generating electricity at village level:

Many areas of Pakistan suffer energy shortages because the country's grid does not reach all of its remote corners. In one section of Pakistan's Kashmir region, people have taken the initiative to create their own energy from abundant streams and rivers, using small-scale turbines.

The Neelum Valley, in the Himalayan region of southeastern Pakistan, is sometimes called “Heaven on Earth” for its unspoiled beauty. Local residents want to preserve their forests and their clean environment despite a growing need for electricity said Shafiq Usmani, an official at a local hydroelectric board.

"All the beauty of the Neelum Valley is dependent upon those forests, streams, and neat and clean water, and this can only be sustained if we are giving them the clean energy," said Usmani.

Less than half of the Neelum Valley's 200,000 inhabitants have access to electricity from the national grid. However, the Neelum River itself and its tributaries flow with enough force to produce energy. Some local communities use small turbines, called hydel machines, to generate electricity to light their homes.

"This hydel machine [turbine] was installed with a share from 50 families, which costs us nearly $3,000. We started this small hydro scheme as we needed it. We only get light from it and no other electric appliances. We start this turbine at 3 in the afternoon and switch it off the next day at 8 am," said Rahimullah, one of the turbine operators.

Villagers say the homemade turbines have transformed their daily lives.

“When we had no electricity there was always smoke, as we use wood for heating and cooking, which causes diseases. Since we installed this project, thank God, we have gotten rid of these diseases and gained some other benefits," said Mushtaq Ahmad, a villager.

Even so, there is not enough energy for everyone's needs, and that means that trees still have to be cut down to provide wood for fire. Engineer Sardar Basharat Ahmad said the valley needs more turbines.

"Cutting down trees is a big loss, using wood for heating and cooking causes health problems. If the hydel is promoted and new projects are set up, it will fulfill all the requirements of the people like cooking and heating, and it will save the cutting down of green trees," said Ahmad.

Pakistan is plagued by power cuts, especially in the summer. The blackouts affect ordinary people's lives and hamper the economy. The country is using only about 10 percent of its identified hydropower potential.


http://www.voanews.com/content/pakistan-villagers-find-creative-energy-solutions/1870177.html
Riaz Haq said…
Here's another microhydro success story in rural Pakistan:

BAHRAIN, Pakistan, March 14 (UPI Next) -- Installation of a micro-hydropower station on a stream in Serai has brought electricity to the people of the remote village in the highlands of the Upper Swat Valley in northwestern Pakistan for the first time.

Residents of Serai, in Khyber Pakhtunkhwa province's Malakand Division, about 60 miles north of the Swat district capital of Mingora, say the introduction of electricity has provided them with benefits most people take for granted, such as allowing them to walk at night without fear of tumbling off steep paths to their death.

Similar power plants are in the works for the area, a move that could pave the way to solving Pakistan's increasing energy shortage.

Micro-hydropower stations require less water than do conventional hydropower stations, so a single family can install one producing 5 to 10 kilowatts for personal use.

The power station was built by the European Union and the Sarhad Rural Support Program, a development organization working in Khyber Pakhtunkhwa province and the Federally Administered Tribal Areas.

"A total of 240 micro-hydropower plants are to be installed with a production capacity of 21.7 megawatts in the parts of Malakand Division that have no access to electricity from the country's national grid," Zahid Khan, a Sarhad program project manager overseeing the installation of the plants, told UPI Next.

Most micro-hydropower plants in Pakistan can produce 5 to 100 kilowatts. The next size up, mini-hydropower plants, produce between 100 kilowatts and 1 megawatt. Small hydropower plants produce between 1 megawatt and 10 megawatts, while large plants can produce much more.

Energy experts in Malakand Division are urging government and non-government organizations to use micro-hydropower projects to tackle the country's increasing energy crisis.

Serai's 80-kilowatt power plant is among the first to be successfully installed, providing electricity to more than 700 households.

"It is something of a miracle. This is the first development project installed here. We are the most neglected and ignored people in Swat," Serai elder Abdul Qadoos told UPI Next.

"People say electricity is the source of every social development."

Another elder, Zareen Gujar, also praised the introduction of electricity.

"Our women, who used to perform household chores by torchlight, will now be able to work longer under brighter light from electric bulbs," he told UPI Next.

"Our women are now learning to use electric irons to iron our clothes too.

"We in Serai have never seen any development activity since this country came into being, as we had no roads, no middle school or high school, not even a dispensary. We have been living a life of deprivation."

Serai is in rough terrain and climbing up to houses can be difficult.

"At last, we are not blind during the darkest nights. Many of our people have died after falling at night," Gul Zada, a local community leader, told UPI Next.

"We have streetlights installed now to walk freely in at night."

Zada said no official or non-government organization had shown villagers the power potential from the water around the village.

The power plant was completed in nine months at a cost of $105,000, of which about $9,000 was raised locally....




Read more: http://www.upi.com/Top_News/Special/2014/03/14/Micro-hydropower-station-lights-up-remote-Pakistani-village/81393210835701/
Riaz Haq said…
AEDB is actively working with Aga Khan Rural Support Program (AKRSP) to install 103 Mini/Micro hydro power plants at Chitral and other places in Gilgit Baltistan. UNDP-GEF have committed US$ 1.00 Million for Productive Use of Renewable Energy (PURE) for which AEDB is the Implementing Agency.

http://www.aedb.org/Microhydel.htm
Riaz Haq said…
Pakistan’s first LNG terminal is finally on track to come onstream by early 2015, but whether the country can afford LNG imports is still in doubt, according to analysts.
Houston-based Excelerate Energy has agreed to install an FSRU off the coast near Port Qasim by the end of Q1 next year, which it will lease to Pakistan for 15 years, Daniel Bustos, Excelerate’s chief development officer, told Interfax.
Meanwhile, Pakistani conglomerate Engro Corp. is laying the pipelines and other infrastructure needed to deliver the LNG into the market, under an LNG service deal it reached with state distributor Sui Southern Gas Co. earlier this year.
In addition, consultancy FGE was appointed in September to advise the government in negotiations for “viable and competitive” LNG supplies.
These agreements have given the project considerable momentum following years of corruption scandals and other setbacks.
“Previously, the government always tried to get the supply before putting the terminal in place, and that brought delays over and over again,” said Bustos.
“What they’re doing now is running the process in parallel, but they started with the terminal. The big advantage of that is that when the suppliers see the terminal is a reality, they get more aggressive in dealing with the customers and are more willing to close a deal,” he added.
The FSRU will have the capacity to store 151,000 cubic metres and import 3.5 mtpa, or 11.3 million cubic metres per day (MMcm/d). According to Engro, the volume would reduce Pakistan’s gas shortfall of 45.3 MMcm/d by 25%.
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Domestic output – the country’s only source of gas at present – declined from a 10-year peak of 41.2 billion cubic metres in 2012 to 38.6 bcm in 2013, according to statistics from BP.
The need for more gas could underpin the development of a second terminal close behind the Excelerate FSRU, Bustos said. Local news reports in September said Sui Southern Gas planned to issue a tender within weeks for a 5.7 MMcm/d regasification facility.
“It’s a market that has tremendous possibilities to grow,” said Bustos. “Pakistan is following in the path of Argentina and Brazil in terms of continuing to add units – once they start seeing the benefits of FSRUs, they keep going back to the same concept.”
Credit problems
While the terminal’s development appears to be moving ahead, it is harder to discern any progress in the government’s LNG supply negotiations – although the finance minister said it is looking to secure the full 3.5 mtpa.
Islamabad has been in discussions with Qatar over the past few years, but the seller’s demand for a high oil-linked price was reportedly an issue when the two sides met in July.
There have also been suggestions Pakistan is beginning talks with Malaysia’s Petronas, which is expanding its large Bintulu LNG complex.
However, Pakistan’s ability to sign deals for long- or short-term LNG is questionable, particularly because the country’s credit risk would require it to pay more than already high Asian LNG prices.
“As a marketer of spot LNG, your main concern is your buyer’s creditworthiness, and we’ve seen other credit-insecure LNG buyers such as Argentina having to pay for cargoes with cash in advance – that precedent is already set,” said Benjamin Gage, an associate director of global LNG at IHS.
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“The project will be subject to scrutiny and it will be closely watched, particularly in the context of intensified pressure on the government over its record of attracting investment and bolstering energy security, and as opposition parties seek to seize on opportunities to weaken government credibility,” said Fry.

http://interfaxenergy.com/gasdaily/article/13770/momentum-builds-behind-troubled-pakistan-lng
Riaz Haq said…
From India Today:

A Chinese official has confirmed that China is involved in as many as six nuclear power projects in Pakistan and is likely to export more reactors to the country, indicating that the much debated civilian nuclear cooperation between the two countries will go ahead despite concerns voiced that it is in contravention of Nuclear Suppliers' Group (NSG) guidelines.

While China has in the past declined to confirm or share details regarding the extent of its on-going civilian nuclear cooperation with Pakistan, a top official of the National Development and Reform Commission (NDRC), the planning body, was quoted as saying on Saturday that Beijing has been involved in the construction of six reactors in Pakistan.

Wang Xiaotao, vice-minister of the NDRC, was quoted as saying by State media that the NDRC was keen to support further exports to Pakistan and other countries. To this end, the NDRC is drawing up new guidelines to announce supportive financial policies for exports in the nuclear sector. Railways exports would also be supported under the new guidelines, Wang said.

Announcing the guidelines at a Beijing press conference, Wang said that China "has assisted in building six nuclear reactors in Pakistan with a total installed capacity of 3.4 million kilowatts". China was also exporting nuclear technology to Argentina, with the two countries on Wednesday signing a deal for exporting heavy-water reactors.

China's recent projects with Pakistan have come under scrutiny as the NSG does not allow members to supply nuclear technology to countries that have not signed the Nuclear Non-Proliferation Treaty (NPT). India had to seek a waiver from the NSG for its civilian nuclear cooperation with the US, and obtained one only after undertaking a range of commitments.

China only declared the first two reactors it had constructed for Pakistan, Chashma-1 and Chashma-2, at the time of joining the NSG, according to Indian and American officials.

In 2009, the China National Nuclear Corporation signed agreements for two new reactors, Chashma-3 and Chashma-4. The deals became a matter of controversy and were debated at the NSG, with China arguing that the reactors were "grandfathered" as part of its earlier Chashma agreement and were not new projects per se. China also argued that the deals were under International Atomic Energy Agency (IAEA) safeguards and were legitimate.

The two countries last year announced they would undertake a new project in Karachi, with Pakistani media reports saying China would provide $ 6.5 billion to finance two reactors there. At the time, Beijing declined to confirm those reports.

While the Chinese Foreign Ministry has, in the past, argued that China's cooperation with Pakistan "did not violate norms of the NSG", Beijing's main argument was that the Chashma reactors were part of an earlier deal. With China going ahead with building two new reactors in Karachi, it remains to be seen how Beijing will explain the deals' validity under NSG guidelines.



Read more at: http://indiatoday.intoday.in/story/china-pakistan-nuclear-projects-beijing-chashma-atomic-energy/1/417661.html
Riaz Haq said…
Finance Minister Ishaq Dar has appreciated the World Bank (WB) executive board’s approval for five energy sector projects in Pakistan.
In a statement issued on Saturday, Dar called the approval “a manifestation of the confidence of international organisations in the continued improvement of Pakistan’s economy owing to the prudent fiscal policies of the PML-N government.”
The five schemes approved by the board of WB’s executive directors are the Gul Ahmad Limited and Tenaga Generasi Limited wind power projects, the Gulpur hydro project, the Sindh Public Sector Reform.
Dar said the approval is in line with the government’s ‘four E’s’ policy, which endeavours to promote education, develop economy, eliminate extremism and end the energy shortage. He assured that projects would be completed before the tenure of PM Nawaz Sharif is over.”
According to the statement, this is the largest ever portfolio approved by WB executive board in one month. The energy projects are expected to add over 10,000 MW to national energy basket.

http://tribune.com.pk/story/834851/sign-of-confidence-dar-hails-wb-approval-for-five-energy-projects/
Riaz Haq said…
Pakistan’s Engro Vopak LNG terminal will receive its first cargo in March from Qatar, the terminal’s Chief Executive Imranul Haque, told a Singapore conference this week.
The terminal, near Karachi, plans to increase its capacity from 11 MMcm/d to 17 MMcm/d.
http://interfaxenergy.com/gasdaily/article/15243/pakistan-first-lng-cargo
Riaz Haq said…
From Wall Street Journal: "Pakistan Close to Agreement With Qatar Over LNG Supplies for Power Plants"

ISLAMABAD—Pakistan is close to striking a long-term deal worth potentially $22.5 billion or more to import liquefied natural gas to help fuel the country’s power stations and ease its crippling electricity crisis, Pakistan’s top energy official said.

“We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.”

An agreement with Qatar is expected by early March, Pakistani officials say.

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The deal with Qatar would provide supplies over 15 years, Pakistani officials say. Pakistan is looking to import 3 million tons of LNG a year, beginning this year, with much or all of that coming from Qatar.


The country’s overall LNG imports are expected to rise to around 7 million tons annually within three years. It isn’t clear as yet how much of that higher total would be provided by Qatar.

Importing 3 million tons of LNG would cost around $1.5 billion annually, or some $22.5 billion over 15 years, given current global oil and gas prices, analysts say. That cost will fluctuate with the price of oil, which is also used to price LNG.

The Pakistani conglomerate Engro has built a terminal to import LNG at Port Qasim, on the edge of the southern city of Karachi, set to become operational at the end of March, officials say. Bidding is now under way to construct a second LNG terminal at Port Qasim.

Pakistani officials have been negotiating for months with state-owned Qatar Gas. The government of Qatar and Qatar Gas didn’t respond to requests for comment.

Pakistan’s electricity crisis has been caused partly by its reliance on importing furnace oil and diesel to fire its power stations, both relatively expensive fuels that will be replaced by the LNG. “LNG is more efficient and cleaner for the environment than the alternatives,” Mr. Abbasi said. “This is a major shift in our energy mix.”

According to Mr. Abbasi, LNG imports of 3 million tons would yield cost savings worth an annual $300 million. By using LNG, Pakistan will be able to between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, Mr. Abbasi said.

Pakistan’s electricity shortage results from a failure to build power stations to keep pace with demand, a dependence on burning relatively expensive fuels and the swelling of debt in the sector that has led to some plants being shut down.

The deal would mark the first time that Pakistan will import natural gas. It would be the biggest financial commitment made by Pakistan to date, analysts say.

----
“This would be a positive development for Pakistan’s energy security. Qatar is a reliable and credible supplier,” said Anthony Livanios, head of oil and gas consultancy Energy Stream CMG. “For Qatar, this will help it diversify its customer base. So it’s a win-win situation for both countries.”

Qatar is the world’s biggest producer and exporter of LNG.

Pakistan is also considering shorter-term deals and open-market transactions to source some of its LNG needs from other countries, including Brunei, Malaysia and China, which isn’t a producer but may have excess imports that it can resell.

Nicholas Browne, a senior manager at Wood Mackenzie, an oil and gas consultancy, said typical pricing for Qatari LNG would be 14% to 15% of the price of oil. At 14%, Pakistan would be acquiring the fuel at $7 per million BTU, an attractive price, said Mr. Browne.

“From a buyer’s perspective, it is a great time to be in the market for LNG, in terms of both price and availability,” said Mr. Browne, because the price of oil has fallen and there is a substantial increase in supply expected in the next couple of years, as Australia and the U.S. bring new output onto the market.

http://www.wsj.com/articles/pakistan-close-to-deal-for-lng-supplies-from-qatar-for-power-plants-1424197572
Riaz Haq said…
MANILA, Feb. 27 (UPI) -- The Asian Development Bank said Friday it was supporting efforts to help Pakistan build its first liquefied natural gas terminal with a $30 million loan.
Pakistani company Engro Corp. will get funding from the ADB to build the regasification terminal at a port near Karachi. The plant will be able to convert as much as 3 million tons of LNG per year to gas for use in state power plants.

ADB investment specialist Mohammed Azim Hashimi said the loan would help Pakistan build a cleaner, more efficient and more diverse power sector.

"Pakistan urgently needs to utilize its existing power generation capacity fully, while reducing its reliance on costly imported diesel fuel for electricity generation," he said in a statement.

The Engro facility was approved for fast-track development earlier this week.

Pakistan's aging infrastructure means the country lacks a reliable power sector. The ADB in the past has lent its support to a multilateral natural gas pipeline that would strength from Turkmenistan.

The pipeline would draw from the Galkynysh natural gas field in Turkmenistan, one of the largest in the world.

The ADB describes the status of the power sector in Pakistan as "crippling." With the LNG facility, the bank said the Pakistan government would save about $1 billion per year on its fuel import bills. Cleaner burning natural gas, meanwhile, would help avoid 2 million tons of greenhouse gas emissions per year.



Read more: http://www.upi.com/Business_News/Energy-Resources/2015/02/27/Pakistan-gets-ADB-loan-for-LNG-port-facility/6621425036534/#ixzz3SxhtO138
Riaz Haq said…
LNG imports to help resolve electricity crisis:

Addressing the meeting, Shahbaz Sharif said that all out efforts are being made to decrease the energy crisis. He said that besides traditional sources, energy projects are being executed through renewable methods. He said that a planning has been made for setting up energy projects through LNG in the province.

The chief minister said that the Punjab government has decided to set up an LNG power plant near Sheikhupura and more than 1,000-megawatt electricity would be generated from this plant. The Federal Cabinet has given approval to set up energy projects through LNG at three different places in Punjab and a total of 3,600 megawatts of electricity will be generated from these projects, he added.

Shahbaz Sharif thanked Prime Minister Nawaz Sharif and Federal Minister for Petroleum Shahid Khaqan Abbasi for granting approval to the provision of 200 MMCFD LNG to Punjab. He expressed the hope that a number of energy projects will be generating electricity during the next three years and the people will be provided relief from the current energy crisis. He said that every moment of the nation is precious and the energy projects will be executed transparently and speedily.

The Chief Minister directed that concerned departments should immediately take necessary steps for LNG power plants and work should be started for laying pipelines and up-gradation of transmission lines at the earliest. He said that energy projects of LNG would be completed on fast track. Shahbaz Sharif said that 100-megawatt solar project has been completed in a record period of six months at Quaid-e-Azam Solar Park, Bahawalpur. He said that it is the first and biggest solar project in the history of the country which, Punjab government, has set up from its own resources.

The chief minister disclosed that Prime Minister Nawaz Sharif would soon inaugurate the project. He said that work is continuing on the project and energy is being generated through indigenous coal with the cooperation of China in Salt Range. He said that all our resources would be provided to ensure speedy completion of energy projects. Muhammad Asif and Shahid Khaqan Abbasi assured every possible cooperation to the Chief Minister Punjab for the early completion of energy projects.

http://www.pakistantoday.com.pk/2015/03/01/city/lahore/shahbaz-determined-to-plug-energy-shortage/
Riaz Haq said…
The first shipment of LNG is scheduled to arrive in Pakistan on 26 March 2015, according to local reports.

Sources suggest that Qatargas has sold the LNG to Pakistan at approximately US$8 – 9/million Btu.

The government of Pakistan is keen to secure supplies of LNG from Qatar to help ease the energy crisis that is currently plaguing the country. Last year, Engro Corp.’s subsidiary, Elengy Terminal Pakistan Limited (ETPL), won the contract to develop Pakistan’s first LNG import infrastructure within a 335-day deadline.

Engro Corp. prepared an exclusive article discussing the regasification project for the March 2015 issue of LNG Industry. In the article, Engro explained the extent of the energy crisis in Pakistan:

Pakistan’s demand for gas [is] expected to double in the next 10 years and current gas production at 4 billion ft3/d was less than the required 6 billion ft3/d. At the current rate of growth, the demand could touch 13 billion ft3/d by 2020.

If this happens, the energy conundrum in the country could well become an energy catastrophe. Towns and rural areas will be in perpetual darkness, and a majority of the industrial units will be forced to shut down or remain uncompetitive. Consequently, unemployment will increase, a greater majority of Pakistanis will fall below the poverty line, food inflation will become rampant, and social indicators will be well below that of sub-Saharan countries.

By this time, Pakistan will only be able to meet 41% of its energy requirements and will have an energy import bill of US$52 billion. With no end in sight, the repercussions of Pakistan’s ongoing energy crisis are severe and go well beyond threats to the country’s economic well-being and stability.

Hence, it is imperative to look for an alternative source of gas in Pakistan. Importing LNG will enable the government to save significant foreign exchange through import substitution of oil, and will alleviate the energy crisis plaguing the country.

http://www.lngindustry.com/regasification/23032015/Pakistan-set-for-first-LNG-shipment-464/
Riaz Haq said…
Excelerate Energy’s Exquisite FSRU arrived in Karachi on Thursday carrying Pakistan’s first LNG imports, according to local media.
The FSRU has been chartered by EngroVopak to be used as a permanent regasification vessel at Port Qasim for 15 years. Its installation marks the completion of the terminal, which has taken less than a year to build.
The terminal was initially slated to come online in the first week of March, but negotiations for a supply deal between Pakistan and Qatar overran. An agreement was reached on 13 March, although details on prices and volumes remain confidential.
The Pakistani government was under considerable pressure to finalise a deal as it would have been liable to pay penalties of $272,000 per day to Engro if an agreement had not been in place by the beginning of April.

http://interfaxenergy.com/gasdaily/article/15652/excelerate-fsru-arrives-in-pakistan
Riaz Haq said…
#Energy deal: #Moscow to lend $2b for #Karachi-#Lahore LNG pipeline. #Russia #Pakistan http://tribune.com.pk/story/871822/energy-deal-moscow-to-lend-2b-for-lng-pipeline/ …

Currently, Pakistan is working on two pipelines to transport re-gassified LNG from Karachi to the northern parts of the country. The first is a pipeline that will connect the Gwadar Port to the main natural gas pipeline hub in Nawabshah. The second will lay a direct pipeline from Karachi to Lahore.

The government has signed an initial deal with China to award a $3 billion LNG terminal and pipeline project to a Chinese contractor in a similar financing-for-guaranteed-contract arrangement.

Islamabad had initially offered Moscow and Beijing a similar arrangement for the Iran-Pakistan pipeline, but American and European sanctions against Tehran scuttled that project – at least for now.

An LNG import terminal, owned and operated by the Engro Corporation, an industrial conglomerate, is already up and running, though there is, as yet, no agreement to import natural gas from Qatar, the third-largest natural gas producer in the world and closest to Pakistan. There is also no infrastructure yet that would allow that natural gas to be transported upcountry.

“We are negotiating an LNG supply deal with Qatar which will be finalised soon,” Abbasi said.

Pakistan’s existing pipeline network has the capacity to transport 320 million cubic feet of gas per day (mmcfd) in re-gassified LNG. Consumption in Punjab and Khyber-Pakhtunkhwa, as well as upper Sindh, however, exceeds 3,000 mmcfd, which is why the new pipelines are badly needed.

In order to finance the payback of the loans needed to construct the pipelines, the Oil and Gas Regulatory Authority (Ogra) has allowed the state-owned gas utilities, Sui Northern Gas Pipelines (SNGP) and Sui Southern Gas Company (SSGC), to start charging consumers more for their gas bills every month. SNGP and SSGC are expected to invest $750 million and $300 million respectively to finance the LNG pipeline.
Riaz Haq said…
Energy is a critical element in our lives and positive developments are taking place in energy sector of Pakistan. Four to five years from now, our country will have a significant energy growth as many big projects are in the pipeline, said Syed Asad Ali Shah, former advisor finance, Sindh, on Tuesday.

“One of the greatest achievements of this government is to import LNG through LNG terminals, which have been completed laying down in March this year. LNG import is becoming streamlined. It will very much help redress energy crisis,” he said while speaking as a guest of honor in Conference on Entrepreneurial Engineering Opportunities in Renewable Energy for Self Sufficiency organized by College of Engineering Sciences, Institute of Business Management (IoBM).

He said apart from achievement in LNG sector, oil prices had also crashed which would boost overall production of the country. Shah said integration in energy sector was a much needed. All the companies working in silo should be controlled and monitored by one single body. “It is unfortunate thing that our country has been relying on imported fuel to generate electricity, while, our country is blessed with many resources and one of them is huge reserves of coal. I see positive development in Thar coal as Engro Corporation and Habib Bank Limited will be working on it,” he said.

He said hopefully, sanctions on Iran would be soon lifted and Iran-Pakistan (IP) Gas project would become reality. Prime minister of Pakistan has also discussed energy issue with Turkmenistan in his recent visit. We are generating 100mw electricity from wind corridors, which have the capacity of thousands mega watt. We also have great potential of solar energy if used properly,” he said.

Chief Executive Officer (CEO) Engro Vopak Terminal Limited Shaikh Imran Ul Haq delivered presentation on how Pakistan got LNG pipeline laid. How challenging it was in 335 days, “still Engro achieved this task”.“We are energy deficit country and importing LNG will provide us cheap alternative energy,” he said.

Senior Executive Director Osmani & Co Dr Akhtar said Europe and America had excelled in wind and PV solar energy as renewable energy, while coal, gas and oil are vanishing in those countries. Germany’s single largest energy production is solar and we were not getting benefit of this natural resource despite abundance of it in our country.

He said wind and PV solar energy should be used by choice rather than compulsion. Karachi was going to be dark in the smoke of pollution and electric vehicles were the solution for this.
Managing Director Systek (Pvt) Ltd Navid Ansari said energy gap is third world countries like Pakistan could not be overcome in near future. Solar energy could be immediate, affordable and abundant alternative source.

Member (Energy) of the Planning Commission, Ministry of
Planning, Development & Reforms, Syed Akhtar Ali said pricing on PV solar products should be lowered to promote the product. The government needed to lower duties on local production to make it viable.

Rector IoBM Talib Karim, Chairperson IEEE Dr Parkash Lohana, Ex-managing director Siemens Sohail Wajahat, Engineer, IEEEP, Irfan Ahmed,Dean Faculty of EECE MUET Dr Bhawani Shankar and HoD Public Affairs and Senior faculty IoBM Parvez Jamil were also present on the occasion.

http://www.pakistanherald.com/news/6938/04-august-2015/pakistan-to-have-significant-energy-growth-soon
Riaz Haq said…
LNG spot price now is $8 per mmBTU. It could fall to $6 soon.

Private importers in Pakistan can import on spot price if contract price is higher.

http://www.cnbc.com/2015/08/31/asian-lng-price-to-plunge-as-local-demand-wanes-supply-jumps.html

Meanwhile, a Chinese company has the contract to build an LNG pipeline from Gwadar which will connect to Iran as well.

http://www.dawn.com/news/1209970

#India's Petronet #LNG breaks #Qatar contract to gain from low spot prices ..36% lower at $8 per mmBTU

http://www.livemint.com/Companies/Lk2NOm5DvuqeqxTCcKD19J/Petronet-LNG-breaks-Qatar-contract-to-gain-from-low-spot-pri.html …
Riaz Haq said…
Minister for Finance Senator Ishaq Dar on Sunday said that the government would be able to overcome the energy crisis by early 2018 by adding 10,000 megawatts more electricity to the national grid.

“Currently we are facing a shortfall of about 5,000 MW of electricity whereas energy projects of 24,000 MW are under process and some of them will start generating 10,000MW by the end of year 2017 or early 2018,” he said while addressing a ceremony organized by Old Hailians Association here.

The remaining projects of 14,000MW, he said, would start adding electricity to the system by 2020 which would help boost economic activity and industrialisation in the country.

The minister said two mega hydro power projects, Dasu and Diamir Bhasha dams, were also in progress, which would not only help overcome the energy crisis but also store water for irrigation purpose.

“Diamir Bhasha Dam will have the capacity of 1.3 trillion cubic feet water,” he added. Ishaq Dar said the government was also working on civil nuclear energy projects, which would add 1,000MW electricity to the system in next seven years. He said that before the year 2013, the country was on the verge of becoming a defaulter as the foreign exchange reserves had gone down to below $8billion and no international monetary institution was ready to lend money to it.

However, the Pakistan Muslim League-Nawaz (PML-N) after coming to power, worked hard to bring the country out of the financial crisis, he added.

“Within a short span of two years, the country has made immense progress as the energy crisis has considerably eased, forex reserves have touched $20 billion mark, a record in the country’s history, fiscal deficit has come down from 8.8 percent to 5 percent, and inflation rate has reduced from above 10 percent to record 1.3 percent.”

Moreover, the minister said, the tax to GDP ratio had also increased from 9 percent to 11 percent and revenue growth rate also surged from 3 percent to 15 percent. Now the world renowned fiscal institutions were praising Pakistan for its amazing economic development and had rated its economy as stable, he added.

Dar said if Pakistan continued its journey on the road to progress which it had witnessed during previous two years, it would become the world’s 18th major economy in 17 years.

He said that the PML-N was strictly implementing its manifesto announced during the 2013 general election, in which it had vowed to steer the country out of four crises.

“The country was facing 4 E challenges ( Economy, Energy, Education and Extremism) at the time the PML-N government came into power, which have now been overcome due to its prudent policies,” he added.

http://www.thenews.com.pk/Todays-News-2-345147-10000MW-to-be-added-to-national-grid-by-early-2018-Dar
Riaz Haq said…
Global #LNG surplus pushing producers, importers to spot market. Demand from #Jordan, #Egypt, #Pakistan http://reut.rs/1MYP9vr via @Reuters

* 130 mln T a year of capacity due online by 2020

* LNG supply began to exceed demand in 2014 -EY

* Prompt spot market still just 5 pct of trades in 2014 -BG

SINGAPORE, Oct 30 (Reuters) - Producers and importers of liquefied natural gas (LNG) are preparing to trade the fuel more actively on a spot basis as a looming supply surplus threatens to overwhelm decades-old bilateral contracts and pressure prices lower.

With the advent of 130 million tonnes of LNG capacity in Australia and North America by 2020, producers such as Woodside Petroleum and Chevron, and traditional buyers such as Japanese utilities, have expanded trading teams to handle excess cargo flows and navigate a more open market.

Australia, with investments of almost $200 billion in new production, is on track to overtake Qatar as the world's biggest LNG exporter before the end of the decade.

In North America, U.S. company Cheniere Energy plans to export its first LNG cargo in January, and Canada is also planning to start exports in the next few years.

"Buyers will be able to have their choice ... (of) very large supply sources that can deliver pretty much at a moment's notice," Cheniere Chief Executive Charif Souki said this week at a conference in Singapore.

Excess supply, along with rising demand, is key to establishing a liquid commodity market as in tight conditions producers and consumers tend to enter long-term fixed supply agreements rather than trade openly.

And while new demand is popping up in countries such as Jordan, Dubai, Egypt and Pakistan, it is unlikely to be enough to offset the slower-than-expected consumption growth in China and the falling demand in top importers Japan and South Korea.

Some major players in the industry disagree, though, on how quickly a robust spot market will develop.

Last year, less than 5 percent of total volumes were sold on a prompt delivery spot basis, said Ann Collins, vice president for LNG at BG Group, at Gastech on Thursday.

"A rapid tilt towards a commoditization of LNG seems unlikely in the near term," she said.

Still, Ernst and Young (EY) says liquefaction capacity has more than doubled since 2000 and exceeded demand last year.

This surplus, along with slow-growth demand, will keep prices under pressure until the end of the decade, consultancy Wood Mackenzie said in statement this week.

BUYERS TO SELLERS

Japanese power utilities - traditionally strictly buyers of LNG for gas-fired generators - are selling to each other or reselling to emerging smaller local buyers, even as nuclear reactors restart and the country's overall electricity demand falls with a shrinking population.

Japan's JERA Co, a joint venture set up by Tokyo Electric Power and Chubu Electric Power, will renew only a minimum of the long-term contracts that supply 80 percent of its gas, and instead meet its needs via mid-term and short-term contracts or spot purchases.

Australia's Woodside, one of the biggest producers of LNG, has traditionally sold its volumes on contracts that last 20 years or more, yet now says it needs more LNG tankers to deal with rising spot and short-term sales.

"We're becoming more sophisticated in our marketing and trading activities," Chief Executive Peter Coleman told reporters at the industry meeting this week in Singapore.

Chevron, which up to now has also dealt mostly in long-term supply agreements, has established an LNG trading desk in Singapore to handle output - mainly from its Australian projects - that is not committed to buyers.

Commodity trading houses are also getting ready for the increase in supply, with Glencore planning to double its trading team as it mounts a challenge to rivals Trafigura and Vitol to become the top merchant LNG trader.
Riaz Haq said…
New #LNG supply glut will test global gas floor price: #Europe Spot Price Hits New Low of $4 per mmBTU. #Pakistan http://www.hellenicshippingnews.com/new-lng-supply-will-test-global-gas-floor-price-global-coal-prices-will-be-key-to-potential-us-lng-shut-

In a report prepared for Gastech 2015, Wood Mackenzie outlines the key levers which will determine the global gas floor price as the market absorbs a wave of LNG. With 130 million tonnes per year (mmpta) of additional LNG supply set to reach market over the next five years, coincident with faltering China demand, Wood Mackenzie asserts that new local floors for spot prices will be tested, unlocking new demand and curtailing supply, with global pricing implications.
Mr Noel Tomnay, Head of Global Gas & LNG research for Wood Mackenzie sets the scene: “The last LNG oversupply between 2008-10 came about when Qatar ramped up its LNG output and the market had to absorb 50 mmtpa of new LNG, at a time when demand growth had slowed. As a result, gas spot prices in Europe traded under US$4 per million British Thermal Unit ($/mmbtu) through the summer of 2009 and with no market in Asia, those prices were still enough to attract LNG cargoes to Europe, including from Australia.”
“The LNG market is facing another oversupply which is likely to be deeper and will persist for some years. Prices in Asia will be lower than in Europe, and at their worst, between 2017-19, while prices in Europe will not reach a low point until 2020. The key question the industry is wrestling with is: how low will prices go?” Mr Tomnay asks.
Wood Mackenzie’s report , titled ‘Global gas prices – what will set the floor?’ asserts that China’s market policies will be key. While more new LNG markets will emerge with lower gas prices, particularly if oil prices climb, more liberalised market conditions in China could enable it to absorb a lot more LNG, mitigating the impact of the LNG oversupply on price. This includes improved regasification infrastructure access, reductions in regulated gas prices and allowing the curtailment of high cost indigenous gas. Mr Tomnay elaborates: “It is likely that output from some high cost gas will be curtailed but protectionist measures will restrict China’s willingness to fully replace indigenous gas with lower priced LNG, dampening the potential supply response.”
New demand for gas and LNG could be created through the displacement of coal in power generation, a theme which will be central to Mr Tomnay’s presentation at Gastech 2015’s Market Outlook session on Wednesday. The gas price at which coal will be displaced, a soft floor for gas prices, will be determined, in part, by the price of coal. “Assuming higher ARA coal prices in Europe of US$70/tonne and Japanese coal prices of US$80/t (CFR), a floor price for gas in Europe and Asia should be maintained at prices above US$5.00/mmbtu. This should be sufficiently high to avoid US LNG being shut-in,” Mr Tomnay explains.
However, lower coal prices, possibly a consequence of reduced demand through displacement by gas, risks pulling both gas and coal prices down further Wood Mackenzie says. “At prevailing ARA coal prices of US$50/t and Japanese coal prices of US$60/t CFR, a floor price for gas in Europe and Asia could go down to prices at which many US LNG exports fail to cover cash costs, around US$4/mmbtu. This would force US LNG exporters to consider shutting-in for periods, a move which would depress US gas prices,” Tomnay adds.
Lastly Mr Tomnay explains why the behaviour of major suppliers, most notably Russia, will be key: “We could see major suppliers withdraw gas from the market, thereby supporting LNG spot prices. It was Gazprom’s withdrawal of 20 bcm per annum of pipe gas from Europe between 2008-10, equivalent to 15 mmtpa of LNG, that prevented spot prices from remaining low. At periods of severe oversupply, Russian gas supply behaviour will again be key to gas price formation in Europe – and this time in Asia and even the US too.”
Source: Wood Mackenzie
Riaz Haq said…
Increase in Pakistan’s energy consumption depicts higher economic activities

Pakistan's primary energy consumption increased by 5.9 percent to 78.2 million ton oil equivalent (MTOE) in 2015, compared with 73.2MTOE in 2014 depicting higher economic activities.

According to the statistical data of British Petroleum on energy use around the world, the primary energy consumption in China grew by 1.12 percent from 2014 to 2015 that has resulted in slowdown in China’s economy. India’s primary energy consumption increased by 5.1 percent during the same period which is lower than that of Pakistan. Indian GDP growth, though highest in the world remains much below the peaks it attained at the start of this decade.

The fuels consumed for producing primary energy show that in 2014, Pakistan consumed 22.8MTOE of oil that increased to 25.2MTOE in 2015. Its natural gas use also increased from 37.7MTOE in 2014 to 39.0MTOE in 2015. The consumption of coal remained the same at 4.7MTOE in both years.

According to the report, electricity consumption in Pakistan increased from 96.2 terawatt-h in 2008 110.0 terawatt-h in 2015. The increase was restricted to 99.3 terawatt-h till 2012; showing cumulative increase of 4 percent only, but in the next three years the consumption cumulatively increased by 10.7 percent of which 2.7 percent increase was in 2015 over 2014. Indian electricity consumption in comparison increased more robustly being 833.4 terawatt-h in 2008 that increased to 1,304.8 terawatt-h in 2015.

---
India produces 45.5MTOE from natural gas, 407.2MTOE from coal that is 100 times more than the primary energy that Pakistan derives from coal. Its hydro electric generation is 8.6MTOE. It derives 15.5MTOE from renewable that is 30 times more than what Pakistan obtains from renewable. The primary energy obtained by China from natural gas is 177.6MTOE, from coal it is a whopping 19,203MTOE. Its hydro electric energy amounts to 254.9MTOE, nuclear 38.6MTOE and renewable 62.7MTOE. The renewable energy extracted by China is equivalent to 60 percent of the total energy produced in Pakistan.

Bangladesh in 2008 consumed only 34.2 terawatt-h electricity that was almost 1/3rd of the power consumption in Pakistan. In 2015 the gap was reduced to 60 percent of the power consumed in Pakistan. Bangladesh is exporting much more than Pakistan despite low power use because it adds high value to its apparel. The power requirement of the garment industry is nominal when compared with spinning, weaving and processing that produce low value-added textiles exported by Pakistan. The electricity consumption in China increased to 5,810 terawatt-h in 2015 compared with 3495 terawatt-h in 2008.

Coal, wind and solar energy are the cheapest source of energy around the world. Wind and solar along with hydro electricity are the cleanest energy fuels. China fulfilled 1,920MTOE of its energy needs from coal, India 388.7MTOE, and Pakistan only 4.7MTOE. Coal use for energy production is confined only to the private sector in Pakistan. Around 3,000MW coal based power plants are expected to be commissioned by 2019 after which share of coal in the energy mix would substantially increase. Wind power consumption in China was 41MTOE in 2015, it was 9.4MTOE in India and only 0.1MTOE in Pakistan. Solar power production in 2015 was 8.9MTOE in China, 1.5MTOE in India and only 0.3MTOE in Pakistan. Pakistan is also on the course to double its hydro electric production to over 16,000MW by the end of 2021.

https://www.thenews.com.pk/print/131885-Increase-in-Pakistans-energy-consumption-depicts-higher-economic-activities

http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf
Riaz Haq said…
Pakistan to lock another 3 mil mt of LNG in term contracts by year-end


Singapore (Platts)--28 Sep 2017 232 am EDT/632 GMT

https://www.platts.com/latest-news/natural-gas/singapore/interview-pakistan-to-lock-another-3-mil-mt-of-27875446

Pakistan is currently in negotiations to secure an additional three million mt of LNG in long-term contracts by the end of the year to supply its new LNG floating terminal due to arrive by December, according to M. Adnan Gilani, chief operating officer with Pakistan LNG Ltd.

The negotiations are taking place with over half a dozen potential suppliers on a bilateral government-to-government basis, Gilani said at an interview with S&P Global Platts Thursday on the sidelines of the 9th CWC LNG Asia Pacific Summit, held in Singapore September 19-22.

"We hope to have two to three government-to-government agreements signed by the end of this year," Gilani said. "In the interim, we will secure around four spot cargoes a month [the equivalent of 3 million mt/year] until our contracts start."

The new supply agreements will increase Pakistan's total LNG contractual commitment to more than 11 million mt/year, as the country aims to resolve a decade-long energy crisis, driven by mounting gas consumption and faltering domestic production.

The new contractual volumes will be delivered to Pakistan's second floating, storage and regasification unit -- with a capacity of 4.5 million mt/year -- due to arrive at Port Qasim by the end of the year.

Currently, imports are being delivered to the Exquisite, an FSRU with a similar capacity, with another two due start up in the second half of 2018, all in Port Qasim.

Pakistan term LNG contracts fromo 2018

OIL INDEXATION

As with PLL's previous supply agreements, the new deals will also be priced against international crude oil benchmarks, Gilani said.

PLL aims to change the electricity feedstock landscape by replacing fuel oil with regasified LNG, so LNG priced at a low slope to crude would guarantee the competitiveness of LNG over crude.

"Because of the fuel-oil substitution effect, the risk of oil prices moving in one direction or another is less of a concern; as long as it is oil linked, it is always better for us compared to fuel oil," Gilani said.

The excess use of fuel oil in power generation as a result of Pakistan's decade-long gas shortage has cost the government an extra $1 billion-$2 billion/year.

The country's consumption of diesel and fuel oil, a more expensive alternative to gas in power generation, peaked at 387,140 b/d in fiscal year 2014-15 (July-June), according to data from Pakistan's Oil Companies Advisory Council, before falling 1% in fiscal 2015-20, following the startup of the country's first LNG import terminal in March 2015.

SPOT, SHORT TERM

In the longer term, Pakistan aims to allocate a quarter of its LNG purchases to the spot and short-term markets, Gilani said.

"Initially, our goal is to solve our energy crisis. We have long-term downstream commitments, so we do not mind going to mid-to-long term initially," he said.

"Over the course of time, we will be able to cater to our variable non-cyclical demand... and allocate about a quarter of our portfolio to spot and short term.

PLL is currently purchasing four cargoes per month on a short-term basis as it awaits the start of new term volumes.

In the company's most recent tender, issued Tuesday, PLL sought four cargoes for delivery in January, with an award due to be announced November 3. PLL's previous tender, for four December cargoes, received 15 bids from a total of six sellers: Vitol, Engie, Gas Natural Fenosa, Gunvor, Trafigura and BB Energy. The lowest offer, at 13.98% of ICE Brent, was submitted by BB Energy. An award is yet to be announced.

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