The consumption of petroleum products in the power sector declined 43 per cent, whereas the demand and supply gap between gas production and consumption is likely to increase three times in the next 10 years.
According to a report “State of the Regulated Petroleum Industry 2019/20”, released by the Oil and Gas Regulatory Authority (Ogra), the oil sector of the country has faced major challenges due to unprecedented crisis emanating from the Covid-19.
The import of crude oil and petroleum products declined 26.42 per cent and 7.60 per cent, respectively, to 6.77 million tonnes and 8.10 million tonnes, respectively, during FY 2019/20, compared with the previous year’s imports of 9.21 million tonnes and 8.77 million tonnes, respectively.
Accordingly, the refineries’ production declined 20.43 per cent to 9.86 million tonnes, compared with 12.38 million tonnes and the consumption by 11.98 per cent to 17.63 million tonnes, compared with 20.03 million tonnes in FY 2018/19.
PARCO holds its position at the top among all the local refineries in the production of petroleum products during FY 2019/20 with 29 per cent share (2.85 million tons) of the total production; followed by Byco Petroleum Pakistan Limited (BPPL) with 22 per cent (2.13 million tonnes), Attock Refinery Limited (ARL) and National Refinery Limited at 16 per cent (1.56 million tonnes) each and Pakistan Refinery Limited (PRL) with 12 per cent (1.21 million tonnes).
The product-wise production shows that the high-speed diesel has the highest share of 40 per cent (3.79 million tonnes) in the total refineries production; followed by furnace oil with over 23 per cent (2.22 million tonnes) and motor spirit around 21 per cent (1.98 million tonnes) during FY 2019/20. These three POL products accounted for around 85 per cent (7.99 million tonnes) in the total refineries’ production.
The consumption of petroleum products in the power sector suffered a huge decline of 43.5 per cent to 1.52 million tonnes during FY 2019/20, compared with 2.76 million tonnes during FY 2018/19 due to the shifting of power generation from the furnace oil to the re-gasified liquefied natural gas (RLNG); followed by the government, where consumption declined 10 per cent, transport 5.6 per cent and industry 5.5 per cent.
However, despite shifting power generation from the furnace oil and high-speed diesel to cheaper RLNG, the circular debt of the country reached Rs2.37 trillion in FY21, mainly because of the capacity charges the government has to pay to the Independent Power Producers.
According to the Ministry of Energy, the transmission and distribution system of the country has the load capacity of 24,000MW, whereas the installed generation capacity is over 37,000MW.
The government is paying Rs450 billion to the IPPs as capacity charges annually whether it purchases electricity from them or not. Line losses of the distribution companies is another contributing factor in piling-up the circular debt.
Despite increasing basic tariff of electricity twice, the PTI government remained unable to control the rising circular debt, according to the report.
In the marketing arena, the energy products have witnessed a change in the market share, compared with the previous year.
Pakistan State Oil (PSO) being the major shareholder with the highest market share, gained around 3 per cent (from 41 per cent to 44 per cent) during FY 2019/20, Hascol lost around 4 per cent market share from 10 per cent to 6 per cent.
The port handing facilities for the petroleum products and crude oil in the country comprises three seaports, two in Karachi, i.e., Keamari (KPT) and Port Qasim (PQA) with the combined operational capacity of 33 million tonnes/annum and the third is the Single Point Mooring (SPM) with the installed capacity of 12 million tonnes/annum and owned and operated by Byco.
Keamari is the largest among all the operating ports with three oil piers having combined installed capacity of 24 million tonnes/annum.
The report said the demand for the natural gas, particularly by the residential, fertiliser and power sectors has also increased over the years, causing more pressure on limited indigenous gas supplies.
The indigenous gas production declined 10 per cent during the year. The deficit between the production and consumption was partially met through RLNG imports, whose share in the natural gas supplies has increased from 27 per cent to 29 per cent during the current financial year.
It also said the country has a huge transmission network of 13,452km and the distribution network of 177,029km gas pipelines providing natural gas to domestic, industrial, commercial and transport sectors.
The gas utility companies expanded their transmission and distribution network to cater to the demand of its new consumers. Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) have extended their transmission network by 190km and 72km, respectively, during FY 2019/20.
Similarly, SNGPL extended its distribution network by 5,731km and SSGC by 527km during the same period.
The SNGPL has connected 271,228 new consumers during FY 2019/20, reaching 7 million consumers on its network, whereas SSGC has added 95,011 new connections, making a total of 3.1 million consumers on its network.
Overall, there were10.12 million natural gas consumers in the country by the end of the financial year 2019/20.
The power sector was the main consumer of natural gas, consuming 33 per cent (1,198MMCFD); followed by the domestic sector with 24 per cent (888MMCFD), fertiliser, 21 per cent (779MMCFD), general industry, 9 per cent (327MMCFD) and captive power, 8 per cent (290MMCFD) of the total gas consumed during FY 2019/20.
The province-wise gas consumption shows that Punjab’s share was 56 per cent (1,471MMCFD); Sindh, 33 per cent (874MMCFD); Khyber-Pakhtunkhwa, 9 per cent (249MMCFD); and Balochistan, 2 per cent (48MMCFD); of the total gas consumption during the year under review.
The natural gas supply during the year was 4,052MMCFD, mainly contributed by the major gas fields, i.e., Mari, Sui, Uch, Qadirpur, Kandhkot and Maramzai.
Of the total supplies, 1,057MMCFD of gas was supplied by the gas fields/producers directly to their consumers and the remaining through the gas utility companies, the report said.
Sindh’s share in gas supply was 45 per cent (1,344MMCFD), whereas Khyber-Pakhtunkhwa, Balochistan and Punjab supplied 12 per cent (368MMCFD), 11 per cent (335MMCFD) and 3 per cent (91MMCFD), respectively. The remaining 29 per cent (857MMCFD) of gas supplied was imported liquefied natural gas.
The demand-supply gap during FY 2019/20 was 1,349MMCFD, which is expected to rise to 4,229MMCFD by FY 2030/31.
The report also mentioned that the current size of liquefied petroleum gas (LPG) market is around 1,149,352 tonnes/annum. It is primarily meant to supply for the domestic fuel requirement, especially in the natural gas-starved areas and in peak shaving times in the urban territories.
The use of LPG as domestic fuel would deter deforestation in hilly areas and would provide a comparatively healthier and hygienically safe alternative to the common citizens.
The government has taken a policy decision to allow use of LPG in the automotive sector to share the burden with the conventional auto fuels. Subsequently, the Oil and Gas Regulatory Authority has laid down an elaborated regulatory framework for the supply of LPG to the vehicles.
The Ogra has simplified LPG licensing procedures; thereby, strengthening the supply infrastructure and promoting an environment conducive to investment and competition, the report added.
Of the total supplies, 1,057MMCFD of gas was supplied by the gas fields/producers directly to their consumers and the remaining through the gas utility companies, the report said.
Sindh’s share in gas supply was 45 per cent (1,344MMCFD), whereas Khyber-Pakhtunkhwa, Balochistan and Punjab supplied 12 per cent (368MMCFD), 11 per cent (335MMCFD) and 3 per cent (91MMCFD), respectively. The remaining 29 per cent (857MMCFD) of gas supplied was imported liquefied natural gas.
The demand-supply gap during FY 2019/20 was 1,349MMCFD, which is expected to rise to 4,229MMCFD by FY 2030/31.
The report also mentioned that the current size of liquefied petroleum gas (LPG) market is around 1,149,352 tonnes/annum. It is primarily meant to supply for the domestic fuel requirement, especially in the natural gas-starved areas and in peak shaving times in the urban territories.
The use of LPG as domestic fuel would deter deforestation in hilly areas and would provide a comparatively healthier and hygienically safe alternative to the common citizens.
The government has taken a policy decision to allow use of LPG in the automotive sector to share the burden with the conventional auto fuels. Subsequently, the Oil and Gas Regulatory Authority has laid down an elaborated regulatory framework for the supply of LPG to the vehicles.
The Ogra has simplified LPG licensing procedures; thereby, strengthening the supply infrastructure and promoting an environment conducive to investment and competition, the report added.
