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Contents
Regional Integration; a pressing
need01Energy cooperation; South and
Central Asia02Global Energy Trends; Pakistan’s
energy scenario03Cross Border Pipelines; Pakistan’s
Perspective04TAPI, IP and ancillary
infrastructure network 05
Why TAPI and IP – Enabling energy
security and regional integration06Implementation Challenges;
Pakistan’s perspective07LNG; Emergence of alternative08
Pipelines; Impact of non-execution09
Future of Cross Border Pipelines10
Regional integration; a pressing need
The world is maneuvering to a state where countries will have more cross-border pipelines
West-East Pipeline Project China -
8,704km
Trans-Saharan Pipeline - 4,127km
NationalUnification GasPipeline (GASUN),Brazil - 4,989km
Yamal-EuropePipeline - 4107 km
01
02
03
04
• The world has developed into a de
facto system of regions.
• Regional bonds have become the
cornerstone of economic cooperation
and integration.
• Economic performance is measured
how country mobilizes the resources
around the borders.
• Regional trade of electricity and
natural gas can lead to an
environmentally sound supply of
energy, at affordable costs.
Developing regional ties; Inevitable
World’s longest gas pipelines
Energy cooperation; South and Central Asia – contd’
There is an ingenerate need to integrate and confect an energy trade partnership between the “sisterly-regions” i.e energy-
hungry South Asia and energy-rich central Asian region has intensified.
Failing in sustainable development and
adequate provision of public goods due to
the energy shortages
Underperformingeconomically dueto shortcomings interms of access toexport markets
Central Asia
South Asia
Central Asia has great energy potential especially gas reserves, but it is landlocked, and it is dependent on the transit corridors
for transportation of gas. Kyrgyzstan and Tajikistan have large hydropower potential, while Kazakhstan, Turkmenistan and
Uzbekistan are blessed with abundant fossil fuels. Turkmenistan which accounts for almost a tenth of all global natural gas in
terms of known reserves has only about a 2% share in the global production of natural gas.
South Asia lacks energy due to its growing population, often increasing affluence and demand for economic expansion.
Energy Cooperation; South and Central Asia
There is an excessive reliance of Asian markets for oil and energy fuels on a single passageway of Strait of Hormuz
Strait of Hormuz; Chokepoint
• Strategically located with no treaty
governing this waterway.
• Nearly 30% of the total oil supply of
the world originates from this region
and East Asia consumes 85% of
the oil export supplies navigating
from Persian Gulf (EIA).
No 1:
The Strait of
Hormuz,
Strait of Malacca; Chokepoint
• Linking the Pacific and Indian
Oceans.
• Major artery for the transport of
oil and other commodities
No. 2:
The Strait
of
Malacca
Global Energy Trends; Pakistan’s energy scenario
In line with the global energy projections, there is an increasing demand of energy in Pakistan. Oil and gas are by far the
dominating sources of energy in Pakistan.
Pakistan; Net energy Importer
Import is creating a dent on Pakistan’s
economic stand and specifically the
foreign exchange reserves.
Perceptible recourse is to adopt an
appropriate energy mix offering
reliability, affordability and
sustainability.
Renewable energy and Gas imports
can provide short term solutions
“There is a strong consumption growth trajectory for renewable energy sources and gas.”
Pakistan
The geopolitical landscape of the
world is being remade by the
increasing demand for energy
resources.
Rising automation, industrialization
and prosperity is mainly driving this
increase in global energy demand.
Global energy demand mostly met
by fossil fuels (Oil: 30%, Coal: 27%
and Gas: 20%).
Global energy demand will increase
by at least a quarter between now
and 2040.
(Source: www.enerdata.com)
Global
A primary analysis of the energy
demand mix reveals that renewable
energy has the largest growth in long
term followed by gas establishing a
strong consumption growth trajectory
over the last few years and is
expected to continue in future.
Since 2010, average global gas
consumption has grown by 1.8% per
year, making it the fastest growing
energy source after renewable
power.
Gwadar
Multan
Galkynysh
Peshawar
Benazir Abad
Sukkur
RY Khan
Islamabad
Porbandar
KarachiOrmara
Chabahar
Assaluyeh
Chaman
Hyderabad
Iranshahr
Lahore
Quetta
Fazilka
PakistanDG Khan
India
Turkmenistan
Herat
KandaharDelaram
DurejiUthal
Pakpatan
Hub
819 Km
816 Km
214 Km
TAPI 56” x 1849 Km
NSGP 42” x 1090 Km
IP 42” x 781 Km
Offshore 48” x 1130 Km14” x 80 Km
SNGP 42” x 1100 Km
TAPI Gas Pipeline Offshore Gas PipelineIran - Pakistan (IP) Gas Pipeline
Project 1 Project 2 Project 3 Project 4
The project envisages transportation of natural gas
from Gazprom’s sources in the Middle East
onwards to Pakistan with a possibility to extend it
further to South Asian countries. The pipeline
would follow an integrated approach including other
ancillary projects such as Under Ground Gas
storage, desalination and other power projects.
Pakistan will import some 500 million to 1 billion
cubic foot of gas per day from Russia, which would
be transported via offshore link. ISGS and
Gazprom are conducting the feasibility study of the
project.
The Turkmenistan – Afghanistan – Pakistan –
India (TAPI) Gas Pipeline Project aims to bring
natural gas from Galkynysh and adjacent gas
fields in Turkmenistan to Afghanistan, Pakistan
and India.
The feasibility study, proposed to lay a 56-inch
diameter 1,680 KM pipeline with design capacity
of 3.2 billion cubic feet of natural gas per day
(Bcfd) from Turkmenistan through Afghanistan
and Pakistan up to Pak-India border.
Cross Border Pipelines; Pakistan’s perspective
ISGS’ projects i.e. TAPI, Offshore Gas Pipeline and IP are among the world’s major cross border and transnational gas
pipelines
Iran’s south Pars gas field is aimed to connect
at the Pak-Iran Border, near Gawadar. The
Pakistan section of the pipeline will be close to
the Makran Costal highway up to Nawabshah
covering a distance of over 781 KM.
A segmented approach is agreed among the
parties whereby both parties are responsible for
construction of their respective part. Gas Sale
and Purchase Agreement (GSPA) signed
between ISGS-Pakistan and NIOC-Iran allows
Pakistan to import 750 million cubic feet of gas
per day.
Infrastructure Gas Import
TAPI Gas Pipeline –
US$ 10 billion
TAPI Gas Import of
US$ 91 billion over
30 years period
IP Gas Pipeline –
US$ 1.5 billion
IP Gas Import value
US$ 53 billion over
25 years period
North South Gas
Pipeline - US$ 2 billion
Underground Gas
Storages – US$ 500
million
South North Gas
Pipeline US$ 2 billion
Offshore Gas Pipeline -
US$ 15 billion
TAPI, IP and ancillary infrastructure network
Planned gas infrastructure projects value to approx. US$ 30 billion while annual gas imports from TAPI and IP worth approx.
US$ 5 billion.
North South Gas Pipeline Project (NSGP)
The project will help fulfill the growing energy demand in
the Northern part of Pakistan (upper Sindh, Punjab,
Islamabad, KP, etc.), currently having more than half of
total country’s gas demand.
Two (2) other pipelines i.e RLNG –III (financing issues)
and South North Gas Pipeline (undergoing feasibility
study) are also planned on a similar route.
There is a need of one transmission line since the
existing RLNG I pipeline’s capacity will be fully utilized to
transmit RLNG from the existing two terminals located at
Port Qasim.
The upcoming Terminal III at Port Qasim and Terminal IV
at Somiani will therefore require a gas transmission
pipeline to connect to the SUI Companies transmission
network. The terminals at the port will serve as gas
source for the project.
Other possible source of gas in long term could be the
Offshore Gas Pipeline.
The hallmark of Pakistan-Russia business cooperation, NSGP is a 1100 KM long gas pipeline from Karachi to Lahore
capable of transporting 1.2 BCFD of gas.
Why TAPI and IP – Enabling energy security and regional integration
The energy mix of Pakistan is projected to change to a more rational mix with increased share of gas, hydro, coal, nuclear
and renewables.
Iran, Qatar and Turkmenistan among the top 5 countries, having
largest gas reserves in the world, other two being Russia and
Saudi Arabia.
Russia25%
Iran17% Qatar
13% US5%
Saudi Arabia4%Turkmenistan
4%
Others32%
Gas Reserves (trillion m3) 2016
Russia Iran Qatar US Saudi Arabia Turkmenistan Others
With TAPI and IP, Pakistan has locked in gas supply
line with Iran and Turkmenistan, among the top 5 gas
reserves, for next 25 to 30 years for import of 20 bcm
gas at competitive pricing mechanism to fill in demand
supply gap.
While the conflict is expanding around the sensitive
strategic narrow channel of Strait of Hormuz, over
past few years, especially the recent US-Iran
tension, these projects will secure gas sourcing and
supplies through diversification of energy route by
bypassing the Strait of Hormuz.
Provide a platform for partnership with world’s
leading energy sector companies from
Russia, China, Iran, India and Turkmenistan, thereby
magnifying the strategic relations and strengthening
ties with these important countries of the region.
A step towards establishing an energy corridor thus
stimulating potential for further foreign investments in
allied industries.
Long term
energy
security
Diversifying
energy
supplies
Strengthening
regional ties
Stimulating
investment
Major challenges in implementation – Pakistan’s perspective
Security challenge will be the biggest among all the challenges involved in the implementation of these projects. Stable
Turkmenistan, extreme risky Afghanistan and improving Pakistan lies on the route of TAPI while IP is subject to international
sanctions on Iran.
Pakistan is situated in the South Asian which region brings along an underperforming economic
geography due to energy deficiency together with a convoluted political dynamism. In such
situation, developing a transnational energy transportation project and that too through a security
sensitive, uncertain and most concerned areas involve great geopolitical factors depending upon the
relationships between regional countries. International sanctions on Iran is one fine example.
Given the magnitude and risk profile of these transnational energy project, raising adequate debt capital
may be challenging in the current state of global financial markets and maintaining investor confidence
throughout the development process may be difficult to achieve. Achieving and maintain an
acceptable, economic and affordable pricing front for participating countries is also a major challenge.
The development of such mega project involves uncertainties related to project structure, counterparty
coordination, capabilities of the participating countries, gas supply and reserve
availability, permits, right of way, security, design, public support, construction and others.
Geopolitical
challenges
Economic
challenges
Technical
challenges
Social and
environmentalThere is a strong need to ensure that the design and technology used in the
development, construction, and operations will not have an unfavorable impact on the environment and
local communities.
a
b
c
d
Emergence of
competitive
fuels
Trade of LNG has accelerated to provide fuel to a greater number of markets. The clear advantage of
LNG shipments lies in access to distant markets which become uneconomical for pipeline
transport, flexibility of purchase in terms of quantity and rates and avoids lengthy negotiations and
pipeline routing and security enforcements.
e
Emergence of alternative fuel product - LNG
Don’t keep all eggs in one basket. LNG can be a part of energy mix, but shouldn't be a sole energy source
What could possibly make pipeline gas viable than LNG in Pakistan?
It is essential for pipeline gas to answer the
“trilemma” of economic viability, sustainability
and security of supply in order for it to
compete LNG.
LNG shipments take advantage in terms of
pricing, flexibility and easy access to distant
markets without being involved in lengthy
negotiations on international pipeline routing
and security enforcement.Public Vs Private Sector
Bypassing the sensitive Strait of Hormuz.
An effective, evolving and adjusting long term pricing mechanism with pricing review procedures should be in place to ensure sustainability and economic viability. The triggers for periodic pricing reviews needs to be all encompassing and aligned with the market realities and facts.
Recent developments in U.S. shale gas and
Australian reserves will unleash another
surge in LNG exports. This may impact the
economic viability of LNG export market
itself in the future due to increase LNG
supply form US and other countries
benefitting from reducing costs of shale gas
technologies.
How emerging LNG market is impacting pipeline gas projects?
Implication of non-execution of TAPI and IP
One can’t find any argument or justification for Pakistan not to import energy supplies especially natural gas because its
own indigenous reserves are depleting, and the demand is on rise.
IPTAPI
Non-execution of TAPI gas project shall put
crippling effects on Turkmenistan.
Afghanistan links it to the future development
and also a source of earning foreign exchange in
the form of gas transit fee.
Both India and Pakistan rely heavily on energy
imports to fulfil their rising energy demands, they
equally need TAPI pipeline. They would each get
42% of the gas supply. However, the high-octane
bilateral relationships between two countries and
the perpetual fear of escalating tension are big
hurdles to the TAPI project.
Iran is facing an extreme economic pressure owing
to international and US sanctions. Any measure to
support the economy and foreign exchange of the
country is a life support for nation’s economy.
Pakistan is among the largest consumer of energy
and is short on indigenous
resources, therefore, requires more projects other
than TAPI Pipeline to fulfill its fast growing needs of
energy.
Gazprom is making efforts to institute an offshore
pipeline natural gas from Gazprom’s sources in the
Middle East onwards to Pakistan with a possibility
to extend it further to South Asian countries.
Future of gas pipeline projects in Pakistan
There are no two views about of the vitality of Gas Pipeline projects for long term energy security of Pakistan, however, the
viability of such projects is an apprehension to address.
The gas pipeline projects i.e TAPI and IP will bring
much needed energy to energy deficient Pakistan.
Industrial and power units planned along the route
can use this natural gas for their production.
Presence and support of major energy players i.e
Russia and China in the region will be the key.
Russia is leading the world gas markets by
investing billions in infrastructure projects.
Implementation of these project will improve
regional development, strengthening regional
economic linkages and consolidating
cooperation, inter-regional harmony and political
bonds.
The Pipeline & Gas Journal survey based on
Energy Web Atlas data, indicates 145,353 miles of
pipelines were planned or under construction
worldwide at the start of year 2019.
The midstream sector is on a wave of pipeline
construction activity alongwith construction of LNG
facilities driven by the continuing global shift toward
natural gas, the rapid growth of shale
production, and the infrastructure demands created
by changing patterns of interregional trade.
A massive pipeline “Power of Siberia” linking one
of the most remote parts of Russia with a far-flung
region of China has begun delivering gas.
How gas pipeline are shaping the future of global energy markets?
What is the future of the gas pipeline in Pakistan?