ISLAMABAD:
The increasing import of liquefied natural gas (LNG) has begun to negatively affect Pakistan’s local oil and gas industry, with exploration companies facing a loss of $192 million over the past four months. This is due to LNG being added to the transmission system, leading to curtailed gas supplies from domestic fields operated by exploration companies.
The total reduction in gas supply is approximately 329 million cubic feet per day (mmcfd), causing a monthly loss of $48 million. Officials estimate that in the last four months, the total financial impact amounts to $192 million. Additionally, the halt in crude oil production caused by gas curtailment has resulted in an economic setback of Rs5 billion.
The value of the 329 mmcfd of imported LNG is estimated to be $500 million for the four-month period. Furthermore, the lack of tax recovery due to non-recovery of taxes has led to a Rs20 billion loss for the national exchequer.
Energy giants such as MOL Group, Oil and Gas Development Company (OGDC), and Pakistan Petroleum Limited (PPL) have reported substantial losses. MOL has warned of potential permanent reservoir damage and severe productivity deterioration due to liquid loading. OGDC has faced an $8 million revenue loss over the past eight weeks, with production falling to 1,461 mmcfd of gas, 26,394 barrels of oil, and 1,391 metric tons of liquefied petroleum gas (LPG). PPL has expressed concerns about how curtailed production is impacting field development plans and operational longevity.
The ongoing gas supply reductions, coupled with the lack of a clear resolution, have created a challenging investment climate. Stakeholders are losing confidence in the energy sector’s management, which is exacerbating the crisis. In the case of high line pack in the Sui Northern Gas Pipelines Limited (SNGPL) network, gas is redirected to Sui Southern Gas Company (SSGC) to prevent field curtailments. However, officials warn that Pakistan’s energy sector is spiraling into deeper trouble as both local and international investors grow increasingly frustrated with the continuous mismanagement and gas supply reductions.
Pakistan’s energy sector is facing a rapid decline in domestic gas production. Data reveals significant reductions from key fields, including 50 mmcfd from Sui, 25 mmcfd from Qadirpur, 70 mmcfd from Ghazij and HRL, 30 mmcfd from Mari-GTH, 45 mmcfd from Nashpa, 15 mmcfd from Togh, 10 mmcfd from Dhok Hussain, 4 mmcfd from Tolanj, and 80 mmcfd from MOL.
Industry insiders contend that these reductions are being made to accommodate the import of expensive LNG. This strategy is widely criticized as harmful to both local and international investment in Pakistan’s upstream energy sector. The shift away from domestic gas supply in favor of costly LNG imports is viewed as not only an economic blunder but also a geopolitical risk, as Pakistan becomes more dependent on foreign suppliers.
