Probing into the ongoing LPG scam, the media has been inquiring the petroleum ministry about the amount in question, which reportedly runs up to a billion dollars.
The media trial, however, seems to have undermined the core issue; the dire need to import Liquefied Natural Gas (LNG) in the country on an as-soon-as-possible basis.
Pakistan is expected to face a massive gas shortfall of 540 million cubic feet per day in 2010, according to a research study carried by the Energy Expert Group last year, which needs some serious attention.
With the bleak security situation in high potential gas drilling areas and a relatively lower success rate of natural gas exploration, the need to have a continuous supply of imported gas is incontestable.
"Pakistans primary energy supply/demand imbalance is expected to increase due to slow growth of indigenous resources. To bridge this gap in the short run, Pakistan will be heavily reliant on gas imports particularly LNG due to its relatively shorter lead time", so read the excerpts from the Integrated Energy Plan of Pakistan prepared by the Economic Advisory Council in 2009.
Imported gas is predicted to have a 7 percent share in Pakistans energy mix by 2022 - which seems an optimistic target given the disappointingly slow progress so far. The recent Vitol-Fauji LNG episode is a prime example of governments seriousness or the lack of it, when it comes to boosting gas supplies.
Pakistan needs to establish more LNG terminals, and at the same time, must enter into new gas supply contracts for both its short-term and long-term needs. So far, only one LNG terminal, that of Mashal project at Port Qasim, has been approved and is on its way to start operations by mid 2012.
The delay in the awarding of LNG supply contract may delay gas supply twelve months beyond its original timeline. The allegation being probed by both the Supreme Court and the National Assembly Sub-Committee would add to the confusion.
What deserves a mention here is that the upfront rejection of Vitol-Fauji proposal by the Petroleum ministry without letting anyone know in the ECC is an eye-opener and gives a hint about the governments energy vision.
First and foremost, the general misperception that Vitol-Fauji made the bid for Mashal LNG projects needs to be clarified. Fauji Foundation made the bid for setting up a separate LNG terminal with Vitol bidding for the gas supplies.
Therefore, rejecting the Vitol proposal on the basis of comparing it with GDF Suez or the proposal from Shell (backed by Qatari government) defies logic and raises questions not only on the transparency of the process but also the lack of vision. Pakistan will certainly need more such terminals in the future.
Another reason why Faujis bid for setting up an LNG terminal should have been entertained is that it would have reduced the reliance on a sole terminal and supplier. The need of the hour is to encourage more LNG terminals at all the ports including KPT and Gwadar, keeping in view the widening shortfall.
Bear in mind that setting up a terminal takes no less than 24 months, so the pre-feasibility stages should start now. All eyes are on the Supreme Court now to judge the fate of Fauji-Vitol LNG project.
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