Presentation on Pakistan Gas Industry

Demand Supply Constraint & Sustainable

Solutions

By

Shahzad Iqbal Executive Director (Gas)

Oil & Gas Regulatory Authority Pakistan

1

Outline

Gas industry in Pakistan - An overview Regulator setup and functions Pakistan Gas Market and Outlook: Large demand whigh growth potential

Primary energy supplies Natural Gas consumption Growth in terms of consumers adistribution network

Country wide gas transportation and utilization network Demand Supply Scenario Sustainable Solutions

Indigenous production LNG import Inter state Pipelines

Demand Supply - Consolidated

2

Gas Industry in Pakistan

• Pakistan a gas rich country, has a long history of and gas exploration, the first gas field at Sui wdiscovered in 1952.

• Pakistan’s total recoverable gas reserves aestimated at 27 TCF.

• 50% of the country’s total energy needs are mthrough natural gas.

• Natural gas supplies during 2011-12 remains at 38MMCFD.

• The largest use of natural gas is in power sectfollowed by domestic, fertilizer, industrial, transpocommercial and cement.

• SNGPL and SSGCL are the main gas utilcompanies operating the T&D system.

• T&D network is 140,000 km. • Total consumers are 6.7 Million. • Peak demand during last winters was 5200 MMCFD• Piped gas is available to only 25% of population. • Approximately 3 Million vehicles are on CNG.

3

Establishment of independent Regulator

Oil & Gas Regulatory Authority (OGRA) was established undeOGRA Ordinance, 2002 to regulate the mid and downstreampetroleum sector. The objectives of OGRA are to foster competition, increasprivate sector investment and ownership, protect the publiinterest while respecting individual rights and provide effectivand efficient regulations. Authority is independent in performance of its functions anhas exclusive powers to deal with the matters assigned in thOrdinance. Government may issue policy guidelines not inconsistent witthe Ordinance and the Authority is obligated to comply witsuch policy guidelines.

4

Main functions of OGRA

Grant of licenses for regulated activities in the fieldNatural Gas, Oil, CNG, LPG and LNG. Notification of gas producers’ prices (well head) on hyearly basis in accordance with Agreements signed wFederal Government. Notification of prices for various petroleum products. Determination of revenue requirement of natural gutilities: notification of prescribed prices and consumprices of natural gas. Enforcement of specifications and technical standardsall regulated activities. Monitoring and Enforcement of Performance and ServiStandards . Resolution of public complaints and disputes againlicensees and disputes between licensees. Formulation of Rules and Regulations.

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64.7 Million TOE

Natural Gas 50.0%

Oil 30.8%

Electricity 12.6%

Coal 6.6%

Oil & Gas: 80.8%

Pakistan Primary Energy Supplies 2011-1

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Year Total

(MMCFD)

1991-92 1333 1992-93 1401

1993-94 1509

1994-95 1498

1995-96 1597

1996-97 1638

1997-98 1665

1998-99 1742

1999-00 1951

2000-01 2099

2001-02 2259

2002-03 2390

2003-04 2881

2004-05 3181

2005-06 3319

2006-07 2929

2007-08 3171

2008-09 3288

2009-10 3504

2010-11 3418

2011-12 3519

•Three times increasenatural gas consumptionlast 20 years. (from 13333519 MMCFD)

•Addition of two new secto(transport being cheep fuand Captive Power dueelectricity shortage).

7

Natural Gas Consumption over the years

Natural Gas Consumption over the years

1333 14011509 1498 1597 1638 1665 1742

19512099

22592390

2881

31813319

2929

31713288

3504 3418

0500

1000150020002500300035004000

1991 -92

1992 -93

1993 -94

1994 -95

1995 -96

1996 -97

1997 -98

1998 -99

1999 -00

2000 -01

2001 -02

2002 -03

2003 -04

2004 -05

2005 -06

2006 -07

2007 -08

2008 -09

2009 -10

2010 -11

2011

Year

MM

cfd

8

Sectoral Growth over the years

0

500

1000

1500

2000

2500

3000

3500

4000

1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-

Year

MM

cfd

Residential Commercial Cement FertilizerPower General industry Transport Captive Powe

•All sectors have shown positive growth over last 20 yea

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Growth in terms of consumer addition during05 years

Consumers Addition during last 05 years

5,196,1435,606,051

5,996,471 6,332,689 6,711,488

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2007-08 2008-09 2009-10 2010-11 2011-12

Year

No. o

f con

sum

ers

• 1,500,000 consumer added during last five year

• An average addition of 300,000 consumers per year

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Growth in terms of network addition durlast 5 years

Distribution network Addition during last 05 years

91,881101,733

112,441121,282 128,701

-20,00040,00060,00080,000

100,000120,000140,000

2007-08 2008-09 2009-10 2010-11 2011-12

Year

Net

wor

kK

m

• 36,820 km distribution network laid during last five year

• An average addition of 7,300 km per year

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Country wide gas transportation anutilization network as on 30-06-2012

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Transmission & Distribution Network -KM

SNGPL SSGCL Total Country

Transmission 7,654 3,401 11,055

Distribution 87,796 40,905 128,701

Consumer strength

SNGPL SSGCL Total Country

Domestic 4,155,260 2,463,584 6,618,844

Commercial 57,347 24,496 81,843

Industrial 6,672 4,129 10,801

Total 4,219,279 2,492,209 6,711,488

Available Capacity & utilization (FY 2011-12)

SNGPL Capacity utilization

Transmission Network Segment

Available Capacity Utilization

(mmcfd) %age Sui - Bhong 790 90

Sawan - Qadirpur 370 63

Qadirpur - Bhong 850 80

Bhong - AC4 1630 78

AC4 - AV22 1590 79

AV22 - Kot Addu 350 19

Dhodak - Kot Addu 70 41

AV22 - Multan 1430 81

Multan - AV29 1350 84

AV29 - Sahiwal - Lahore 650 86

AV29 - Faisalabad 990 85

Faisalabad - Lahore 450 75

Faisalabad - Galli Jagir 350 47

Wah - Peshawar 110 129

Wah - Abbottabad 94 70

Gurguri - Kohat 315 114

Daudkhel - FC1 - C6 110 125

Nowshera - Mardan 75 107

Mardan - Mangora 30 70

SSGCL’s Capacity Utilization Transmission Network Segment Available

Capacity (mmcfd)

Utilizatag

16" dia.Indus Left Bank Pipeline(ILBP) Nawabshah-Karachi Terminal 80

24"/20"dia. Kadanwari Pipeline Kadanwari -Malir-Karachi 180

24"dia.x116 Km loopline from Sind University to FJFC offtake 60

24"dia.15 Km Masu-HQ3 40

24"dia.x84 Km HQ2-Shahdadpur 85

18"dia. Badin Pipeline Badin-Hyderabad 200

Sub Total A 1(Indus Left Bank Pipeline) 645 76

20"/18"dia. Indus Right Bank Pipeline (IRBP) Dadu-Malir-Karachi 400

24"dia.x200 Km Bajara-Karachi Loopline 240

Sub Total A 2 (Indus Right Bank Pipeline) 640 83

12"/18"/20" dia. Queeta Pipeline Jacobabad Quetta 90

18"dia.18 Km Abbe-gum to Mach Loopline 7

18"x31 Km Dingra-Sibi,18"x15 Km Mach-Kolpur Loopline 10

24"x30 Km Loopline from Gokart to Abbegum 6

18" x 18 Km loopline (Dhadar to Gokart) 36

Sub Total A 3 (Quetta Pipeline) 149 10

Total Capacities for SSGC A (A1+A2+A3) 1434 81

Transmission Network Contracted for transporting 3rd party gas.

18" dia.Pirkoh Pipeline (OGDC) Pesh Bogi-Pirkoh. 35

16"dia.ILBP (SNGPL) Hassan –Sui 30

20"dia.IRBP (Reverse Flow to SNGPL) Dadu-Sui 170

16" ILBP reverse flow providing regulation between 20"dia.IRBP & 16" dia ILBP at RSI 10

Total Contracted Network (B) 245 91

SSGC Total Available Transmission Network Capacity (A+B) 1679 83

Demand Supply Scenario

The demand supply gap is widening.

Indigenous fields depleting

Demand over the years has increased.

Current supplies are around 3800 MMcfd.

Current demand is 5500 MMcfd.

There is shortfall of 1000-2000 MMcfd.

In 2020 the shortfall will jump to 3500-4000 MMcfd.

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0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

FY-13 FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21 FY-22 FY-23 FY-24 FY-25 FY-26 FY-27 FY-28 FY-29

Year

MM

cfd

Demand

Indigenous Supply

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Sustainable Solutions

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Indigenous production LNG import Inter state pipeline

Province wise Indigenous Gas Supplies &Consumption

Province wise Gas Consumption (SNGPL &SSGCL only) (%age)

47%

45%

7% 2%

Punjab SindhKPKBalochis

Province wise Gas Supplies (%age)

69%

17%

9%5%

SindhBalochisKPKPunjab

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Increase in indigenous production through incentive oriented sustainable policies. Improvement in law and order situation to facilitate exploration. Exploration of Shale & Tight gas to bencouraged, for which reserves of 51 TCF40 TCF has been estimated. Utilization of huge coal reserves in thcountry and production of coal gas. Production of methane through sewage waste (waste water treatment). Use of Biogas.

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Steps to improve indigenous production

LNG Imports

• OGRA has been facilitating the prospective investofor development of LNG infrastructure in the countand tangible efforts have been made in this regard.

• Notification of LNG rules & Natural Gas RegulateThird Party Access Rules 2012.

• Grant of construction / provisional licenses.

• Initiation of Terminal Tariff Study.

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LICENSES ISSUED BY OGRA

• To facilitate LNG imports, OGRA has issufollowing three licenses for construction of LNterminals.

M/s Pakistan GasPort Limited (PGPL). Elengy Terminal Pakistan Limited (ETPL)

(formerly Engro Corporation). Global Energy Infrastructure Limited (GEIL).

• A conditional construction license granted to MDaewoo Shipbuilding & Marine Engg. (DSME) ftwo years.

• A provisional license for one year was grantedM/s Fauji Oil Terminals Co. Limited (FOTCO)

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Public Sector LNG Terminals- Concepts

• SSGC is in discussion with the Port QasAuthority to retrofit its LPG import terminal fimport and re-gasification of LNG for short terLNG import project.

• SSGC has also sought EoIs from parties for integrated LNG import project for supply of 4mmcfd LNG initially.

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Strategically placed as a regional energy corrand well placed for both pipeline and LNG imp

• Pakistan’s location being at the crossroads of Central Asia and the Arabian Shas drawn attention to its significance as an attractive market and a regiotransit route for energy.

• GoP is working on following pipeline options to mitigate demand supply gap.

Iran Pakistan Pipeline (IP)

• The gas is to be supplied from Iran’s South Pars gas field and delive

at Pak-Iran border, near Gawadar.

• Onshore gas processing facility at Assaluyeh in Iran, to traversdistance of 1,150 km through a 42 inch dia pipeline upto the IrPakistan border.

• The Pakistan section - Makran costal highway from Iran-Pakistan borup to Pakistan off-take point at Nawabshah, covering a distance arou

781 KM. Gas volume to Pakistan is 750 mmcfd. • Intergovernmental Framework Declaration (IGFD) signed in May 2009

support of the project for early implementation by respecgovernments.

• Gas Sale and Purchase Agreement (GSPA) signed in June 2009, abecome effective in June 2010 after completion of required Conditioprecedent.

• Under G to G arrangement with Iran , the construction of PakisSegment has initiated on 11th Mar , 2013.

Turkmenistan Afghanistan Pakistan India Pipelin(TAPI)

• Natural gas from the Yolotan/Osman and adjacgas fields in Turkmenistan to Afghanistan, Pakisand India.

• 56-inch diameter 1,680 KM pipeline fTurkmenistan through Herat and KandaharAfghanistan, cross the Pakistan border nChaman to pass near Zhob, DG Khan, Multan,onwards to Fazilka near Pak-India border.

• Pipeline capacity is 3.2 bcfd with Pakistan off-tof 1.3 bfcd.

• Intergovernmental Agreement (IGA) was signedthe Head of States of all the member countduring TAPI Summit held at Ashgabat on 1December 2010.

• Pakistan and Turkmenistan signed the Gas SalePurchase Agreement (GSPA) at AvTurkmenistan on 23rd May, 2012.

Strategically placed as a regional energy corridand well placed for imports

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Map of import pipelines

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Demand Supply Scenario -Consolidated

Three type of projects are being considered to mitigademand supply gap:-

Iran Pipeline (IP) Turkmenistan Afghanistan Pakistan India Pipelin(TAPI) Liquefied Natural Gas (LNG)

The initial supply from IP is 263 MMCFD which will bincreased to 750 MMCFD. The initial supply from TAPI is 500 MMCFD which will bincreased to 1350 MMCFD. The initial supply from LNG is 400 MMCFD which will bincreased to 1000 MMCFD. By commencing all these projects demand supply will bmet for few years. The ever increasing demand will agawiden the gap thereafter.

2

Demand Supply Scenario (indigenous & imposupplies in mmcfd)

FY-13 FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21

mitted & Anticipated ly (Indigenous) 4451 4368 4263 4230 4036 3746 3400 3171 3041

Supply 200 200 1000 1000 1000 1000 1000 1000

ipeline 263 487 750 750 750 750 750 750

500 1350 1350 1350 1350 1350

Supply (Indigenous & rted) 4451 4831 4950 6480 7136 6846 6500 6271 6141

Demand 5938 6070 6132 6243 6490 6622 6785 6922 7079

without IP, TAPI, LNG 1487 1702 1869 2013 2454 2876 3385 3751 4038

with IP, TAPI, LNG 1487 1239 1182 -237 -646 -224 285 651 938

FY-22

2692

1000

750

1350

5792

7239

4547

1447

2

Demand Supply Scenario (indeginous & imported supplies)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

FY-13 FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 FY-20 FY-21 FY-22 FY-23 FY-24 FY-25 FY-26 FY-27 FY-28 FY-29

Year

MM

cfd

Demand

Total Supply

Indigenous Supply

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THANK YOU

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