Pakistans Gas Import

Pipeline Projects
Energy Charter Treaty Energy Charter Treaty
Meeting on Transit and Trade Meeting on Transit and Trade
Syed Hassan Nawab Syed Hassan Nawab
Managing Director
INTER STATE GAS SYSTEMS (PVT) LTD.
A J oint Venture of SSGC & SNGPL
Brussels October 26 & 27, 2006
2
World Natural Gas Proved Reserves
1,547
4,804
Iran
15%
Qatar
14%
Saudi
Arabia
Russia
27%
Nigeria
Algeria
Venezu
ela
Iraq
USA
UAE
Total: 6,351 TCF Total: 6,351 TCF
Top Ten
Countries
Rest of the
World
1. More than 75% of world gas reserves are held by the ten countries, which represent 40%
of the total natural gas exports through pipeline and/or LNG.
2. Pakistan is ranked at number 30 and represents 0.5% of world gas reserves.
Source: BP Statistical Review of World Energy J une 2006
3
Reserves-to-Production (R/P) Ratio
of Top Ten Countries by Reserves
80
307
593
99
130
10
240
52
149
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*
1. * R/P ratio for Iraq is undefined because production was not reported
2. Pakistans R/P ratio is 32
3. World R/P ratio of natural gas is 65 compared to 41 for oil
Source: BP Statistical Review of World Energy J une 2006
4
PAKISTAN
Government Government
Parliamentary democracy in Parliamentary democracy in
federal setting federal setting
Capital Capital
Islamabad Islamabad
Area Area
794,880 sq. km. 794,880 sq. km.
Language Language
Urdu (national) and English Urdu (national) and English
(official) (official)
Population Population
152 million 152 million
Independence Independence
August 14, 1947 August 14, 1947
Macroeconomic Macroeconomic
GDP / Capita (US$): 717 GDP / Capita (US$): 717
GDP growth 2004 GDP growth 2004- -05: 8.4% 05: 8.4%
Export (US$bn) : 14.41 Export (US$bn) : 14.41
Imports (US$bn) : 20.62 Imports (US$bn) : 20.62
Purchasing Power Parity: US$ Purchasing Power Parity: US$
2,200 2,200
5
Real GDP Growth Rate
6.6
4.7
3.1
1.8
4.9
6.1
8.6
7.5
0
1
2
3
4
5
6
7
8
9
10
1980 1990 2002-1 2001-2 2002-3 2003-4 2004-5 2005-6
P
Source: Economic Survey of Pakistan 2005-06
P
e
r
c
e
n
t
a
g
e

(
%
)
6
Pakistan Energy Overview
2.2 Import/(Export)
- Import/(Export)
175 Import
19 Generation Capacity Giga Watts Power: Power:
4.2 Consumption
86 Generation TWh
15 Energy Supply Per Capita MMBtu
3,303 Proved Res. MM Tonnes Coal: Coal:
2 Production MMTOE
1,345 Production BCF/Year
1,345 Consumption
262 Refining Capacity
29 Proved Reserves TCF Natural Gas: Natural Gas:
Crude Oil: Crude Oil:
241 Consumption
66 Production 000 Bbl/day
309 Proven Reserves MMBbl
Source: Pakistan Energy Yearbook 2005
7
Pakistan Primary Energy Mix Trend
P
e
r
c
e
n
t
a
g
e

(
%
)
MTOE: 43.18
MTOE: 43.18
MTOE: 55.53
MTOE: 55.53
Source: Pakistan Energy Yearbook 2005
43.4 43.4
40.8
38.3
29.9
29.4
40.5
41.4
42.7
43.8
49.7
50.7
4.5
4.9
5.4
6.5
7.6
10.7
9.2
10.0
11.3
12.7
11.0
4.7
0.2
1.1 1.2
0.9 0.8
1.2
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005
Oil Gas Coal Hydro Nuclear
8
Pakistan Gas Consumption By Sector
Industry
19.5%
Fertilizer
16.4%
Power
43.7%
Transport
2.1%
Domestic
14.8%
Commerc
ial
2.3%
Cement
1.2%
Source: Pakistan Energy Yearbook 2005
FY 2004-05
1,161 BSCF 1,161 BSCF
Industry
19.0%
Fertilizer
24.9%
Power
31.9%
Transport
0.4%
Domestic
19.6%
Commerc
ial
3.0%
Cement
1.2%
FY 1999-00
712 BSCF 712 BSCF
9
Growth in Demand for Energy
Primary energy supplies grew at an ACGR of over 5% in the last 5 years
Demand for oil and liquid petroleum products declined at an ACGR of around
3% during the same period
Pakistan produces nearly 66,000 barrels per day of crude oil, which meets 27%
of national crude oil requirement
Natural gas supplies grew at an ACGR of 10% over last 5 years
The relative share of gas in primary energy supply increased from 40% to 50%
in the last 5 years
Share of natural gas in primary energy mix is expected to be maintained at
around this level in the next 5 years
10
Afghanistan
Pakistan
Iran
India
Karachi
Multan
Faisalabad
Lahore
Islamabad
Peshawar
Quetta
SNGPL :
SSGC :
Bahawalpur
Gujranwala
Abbottabad
Pakistan Gas Transmission Infrastructure
Jammu
&
Kashmir
247,900 62,600 185,300 Compression, BHP
4.55 1.86 2.69 Customers, Million
2,536 970 1,566 Sales, mmcfd (Avg. Day)
9,257 3,062 6,195 Transmission, km
TOTAL SSGC SNGPL ITEM
11
Pakistan Natural Gas Market
0
2000
4000
6000
8000
10000
12000
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
M
M
c
f
d
Figures in MMcfd at 1000 btu/scf
SNGPL & SSGC Supplies
Independent Supplies
Anticipated Supplies
10,961 8,143 6,538 6,253 6,060 5,819 5,507 5,113 4,434 3,522
Demand
2,084 2,738 3,767 3,883 4,067 4,201 4,262 4,284 4,072 3,639
Indigenous Supplies
117
FY06
(362)
FY08
(5,406)
FY20
(2,771)
FY15
(1,993)
FY13
(2,370)
FY14
(8,877) (1,618) (1,245) (829)
Shortfall
FY11 FY25 FY12 FY10
Demand & Supply Data Source: Hagler Bailly Pakistan
0.8 Bcfd
2.8 Bcfd
5.4 Bcfd
8.9 Bcfd
12
Pakistan Natural Gas Sourcing Strategy
0
2000
4000
6000
8000
10000
12000
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
M
M
c
f
d
1
st
LNG (2010): 500 MMcfd
1
st
Import Pipeline (2012): 2,100 MMcfd
2
nd
Import Pipeline (2016): 3,200 MMcfd
Figures in MMcfd at 1000 Btu/scf
SNGPL & SSGC Supplies
Independent Supplies
Anticipated Supplies
2
nd
LNG (2012): 500 MMcfd
10,961 8,143 6,538 6,253 6,060 5,819 5,507 5,113 4,434 3,522
Demand
2,084 2,738 3,767 3,883 4,067 4,201 4,262 4,284 4,072 3,639
Indigenous Supplies
117
FY06
(362)
FY08
(5,406)
FY20
(2,771)
FY15
(1,993)
FY13
(2,370)
FY14
(8,877) (1,618) (1,245) (829)
Shortfall
FY11 FY25 FY12 FY10
Demand & Supply Data Source: PWC/Hagler Bailly Pakistan
Iran-Pakistan-India (IPI)
Gas Pipeline Project
14
IPI Route Options
Barmer
Jaisalmer
IPI IPI- -Central Route Central Route
IPI IPI- -Coastal Route Coastal Route
15
IPI Gas Pipeline Project
7.4
4.0
3.2
0.2
2191
1092
999
100
Coastal Route
Assaluyeh (Iran) to Barmer (India)
Assaluyeh to Pak-Iran Border
Pak-Iran Border to Pak-India Border
Pak-India Border to Barmer
7.4
4.4
2.7
0.3
2037
1136
757
144
Central Route
Assaluyeh (Iran) to Jaiselmir (India)
Assaluyeh to Pak-Iran Border
Pak-Iran Border to Pak-India Border
Pak-India Border to J aiselmir
Capital
Cost*, $ billion
Length
Km
Total off-take volume: 55 Bcma (India: 33 Bcma, Pakistan: 22 Bcma)
2x56 inch, Class 600, X-70, Compression Ratio 1.40
16
IPI Gas Pipeline Project
Bilateral Iran-Pakistan J oint Working Group (J WG), was constituted and the
first meeting was held in December 2003 in Islamabad
An MOU was signed on J uly 7, 2005 to include India in the Project.
A Term Sheet was signed between Iran and Pakistan on November 16,
2005. The Term Sheet provides for gas supply of 2.1 Bcfd for a period of 30
years
Iran would deliver gas to Pakistan at the Iran-Pakistan border, and to India
at Pakistan-India border, under supply contracts
The project envisages two parallel 56 inch pipelines carrying up to 150
MMcfd (5.3 bcfd) of which 60 MMcfd (2.1bcfd) is for Pakistan and 90 MMcfd
(3.2 bcfd) is for India
17
IPI Project Status
The transaction envisages sale by Iran of Pakistan volumes at Iran-
Pakistan border and Indian volumes directly to India at Pakistan-India
border
Discussions underway on :
Gas pricing and GSPA
Route selection
Project Structure and Inter-Governmental Agreement
18
IPI Project Structure
M/s. Allen & Overy, the Legal Advisors hired by ISGSL have proposed a
trilateral project structure based upon the following principles:
Iran would deliver gas to Pakistan at the Iran-Pakistan border, and to
India at Pakistan-India border, under a supply contract
Supply contract to be backed by Iranian Government Guarantee
(NIGEC is currently proposing to offer an NIOC guarantee)
Iran does not allow foreign ownership of upstream field development,
processing or pipeline assets. It does have buy back arrangements for
upstream field development and production
The Indians prefer a single ownership structure, under which a
consortium should own and operate the whole pipeline in the three
countries.
Based upon above, the project structure proposed by Allen & Overy is
attached
19
IPI Separate Pipeline Ownership
*Same International Oil Company to be appointed in the three countries
90%
MSA =Management Services Agreement
SA =Shareholders Agreement
BBA =Buy Back Arrangement
IRAN
Iran
(NIOC?)
Iran
Pipeco
10%
Internat
Co*
Pakistan
Iran? Others
Pipe
Holdco
India
SA
90% 10%
50% 10%
40%
Pakistan
Pipeco
India
Pipeco
MSA
Owners and
ownership
Contracts and
counterparties
Owners and
ownership
Contracts and
counterparties
PAKISTAN INDIA
Field / Processing Pipeline
SA
MSA
Internat
Co*
BBA
20
IPI Way Forward
Project planned to be undertaken by private investors on BOOT basis
Prefeasibilty study undertaken by PriceWaterhouse Coopers lead Financial
Advisory consortium
Land/ROW to be acquired by ISGSL/GoP to expedite process
ISGSL/GoP to take 10% equity share in pipeline company
Lead sponsor/Consortium to be appointed to setup pipeline company, to
undertake
Detailed Feasibility
Engineering, Procurement
Financing
Construction and
Operation
21
Project Road Map
Turkmenistan-Afghanistan-Pakistan (TAP)
Gas Pipeline Project
23
TAP Pipeline Route Options
Barmer
Jaisalmer
TAP TAP
24
TAP Project Technical Highlights
Design Features
Capacity, Bcfd: 3.2
Diameter, Inches: 56
Pressure, Psig : 1,450
Specifications : Class 600, X-70
Length, km
145
735
555
1,435
Southern Route*:
Turkmenistan Segment
Afghanistan Segment
Pakistan Segment (up to Multan)
Total
Northern route through Mazar-e-Sharif, Kabul, Peshawar and then to Lahore and
onward to India is also being considered. This southern route however is shorter, and
follows relatively easy terrain
Capital Cost US$ 3.3 Billion (Penspen Estimate 2003). Recent estimate close to $4
billion
25
Project Overview
Aimed to supply gas from the Dauletabad gas fields in Turkmenistan close
to the Turkmenistan-Afghanistan border to Pakistan and possibly India
Gas Pipeline Framework Agreement between Governments of
Turkmenistan, Afghanistan and Pakistan signed by the Heads of States in
December 2002
Project envisages a 56 diameter, 1,435 km pipeline up to Multan for a flow
of 3.2 Bcfd; shortest cross-border pipeline to Pakistan gas load centers.
Feasibility study completed in 2004 needs to be updated; ADB is providing
grant funds to update the study
26
TAP Project Issues
Gas Reserves Availability and Dedication to the Project
Russia reportedly claims priority over Turkmenistan gas reserves
Security of Pipeline in Afghanistan is a serious concern but could be
mitigated through remedial measures
Updating of Feasibility Study
Indian Participation
27
TAP Issues-Gas Reserves
Turkmenistan provided an Executive Summary of the 2003 Audit Report of
Daulatabad Field Reserve Certification by DeGolyer & MacNaughton (D&M) of USA.
Based on the D&M report, the proven plus probable plus possible gas reserves of the
field are nearly 1.43 TCM against the TAP requirements of 0.92 TCM over 30 years.
Daulatabad gas field has been in production since 1982. Cumulative production up to
December 2003 is 488 BCM and annual production is 27 BCMA which is reportedly
going to Russia
The proven and probable reserves can support a production level of 40 BCMA from
2007 to 2014, which then declines to less than 20 BCMA by 2022
TAP requirement of 33 BCMA can not be met after 2017 even at proven plus
probable production level
At the 9
th
SC meeting held in February 2006, Turkmenistan stated that additional
drilling at Dauletabad field increased the estimated gas reserves from 1.4 TCM (49
CF) to nearly 4.5 TCM (159 TCF). The production level can also be consequently
increased to meet the TAP requirements over its 30 years life
Turkmenistan therefore assured Pakistan that it will be able to comfortably meet its
commitment to the TAP Project, and invited Pakistan to sign a GSPA
28
TAP Issues-Pipeline Security
TAP pipeline has to traverse war ravaged Afghanistan. The area faces serious
security challenges.
A Security Study of the project was undertaken by Pacific Strategies & Consulting of
UK in 2005.
The report concluded that while the TAP Project faces serious security concerns,
they can be mitigated by:
commitment of considerable resources by deploying additional men and material
to patrol the pipeline route
innovative physical security measures by employing advanced SCADA systems,
satellite surveillance, etc.
a dynamic social outreach program by providing employment, vocational training
and health services etc, to the inhabitants along the pipeline route
Efficient and professional management of Security Administration
29
Indian Participation
India attended the 9
th
Steering Committee Meeting at Ashgabat as an
observer
India has requested to join the TAP project, and confirmed that it could take
around 2.5 Bcfd of gas, totaling nearly 26 Tcf over 30 years
Pakistan welcomes Indian participation in principle subject to availability of
adequate reserves in the Dauletabad gas fields to meet the combined
demand of the two countries
30
TAP Feasibility Study Revision
Feasibility study was done by M/s Penspen in 2004
Study was sponsored by Asian Development Bank (ADB), which indicated
that it has $40,000 left in its budget for the TAP Project.
Technical consultant to be hired after dedication of gas reserves and
agreement on gas pricing is reached.
ADB is arranging funds for the study
31
TAP-Way Forward
Meeting of Technical Working Group to be held at Ashgabat on 14-15
November to discuss:
the availability and dedication of adequate gas reserves
security of pipeline through Afghanistan
Updating of Feasibility study
Gas pricing offer to be made by Turkmenistan
GSPA-Draft tabled by Pakistan
Thank You