Pakistan’s Gas Import
Pipeline Projects
Energy Charter Treaty
Meeting on Transit and Trade
Brussels – October 26 & 27, 2006
Syed Hassan Nawab
Managing Director
INTER STATE GAS SYSTEMS (PVT) LTD.
A Joint Venture of SSGC & SNGPL
World Natural Gas Proved Reserves
Russia
27%
4,804
Iran
15%
Rest of the
1,547
World
Top Ten
Countries
Qatar
14%
Iraq
Total: 6,351 TCF
Venezu
ela
Algeria
UAE Saudi
Arabia
USA
Nigeria
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 June 2006
2
Reserves-to-Production (R/P) Ratio
of Top Ten Countries by Reserves
593
307
240
99
80
149
130
52
Iraq*
Venezuela
Algeria
Nigeria
USA
UAE
Saudi Arabia
Qatar
Iran
Russian Fed.
10
1. * R/P ratio for Iraq is undefined because production was not reported
2. Pakistan’s 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 June 2006
3
PAKISTAN
Independence
August 14, 1947
Population
152 million
Macroeconomic
GDP / Capita (US$): 717
GDP growth 20042004-05: 8.4%
Export (US$bn) : 14.41
Imports (US$bn) : 20.62
Purchasing Power Parity: US$
2,200
Language
Urdu (national) and English
(official)
Area
794,880 sq. km.
Capital
Islamabad
Government
Parliamentary democracy in
federal setting
4
Real GDP Growth Rate
10
8.6
9
7.5
Percentage (%)
8
6.6
7
6.1
6
4.9
4.7
5
4
3.1
3
1.8
2
1
0
1980
1990
2002-1
2001-2
Source: Economic Survey of Pakistan 2005-06
2002-3
2003-4
2004-5
2005-6
P
5
Pakistan Energy Overview
Crude Oil:
Proven Reserves
MMBbl
309
‘000 Bbl/day
66
Import
“
175
Consumption
“
241
Production
Refining Capacity
Natural Gas:
Proved Reserves
Production
Coal:
TCF
BCF/Year
262
29
1,345
Import/(Export)
“
-
Consumption
“
1,345
MM Tonnes
3,303
Proved Res.
Production
Power:
“
MMTOE
2
Import/(Export)
“
2.2
Consumption
“
4.2
Giga Watts
19
TWh
86
MMBtu
15
Generation Capacity
Generation
Energy Supply Per Capita
Source: Pakistan Energy Yearbook 2005
6
Pakistan Primary Energy Mix Trend
60
50
43.4
40.5
Percentage (%)
50.7
49.7
43.4
41.4
43.8
42.7
40.8
38.3
40
29.9
30
29.4
20
10.7
10
4.7
10.0
9.2
4.5
0.2
4.9
1.1
11.3
11.0
7.6
6.5
5.4
1.2
12.7
0.9
1.2
0.8
0
2000
2001
Oil
Gas
2002
MTOE:
MTOE:43.18
43.18
Source: Pakistan Energy Yearbook 2005
Coal
2003
Hydro
2004
2005
Nuclear
MTOE:
MTOE:55.53
55.53
7
Pakistan Gas Consumption By Sector
FY 1999-00
FY 2004-05
712 BSCF
Power
31.9%
Cement
1.2%
Transport
0.4%
Domestic
19.6%
1,161 BSCF
Commerc
ial
3.0%
Transport
2.1%
Domestic Commerc
14.8%
ial
2.3%
Power
43.7%
Industry
19.5%
Industry
19.0%
Fertilizer
24.9%
Source: Pakistan Energy Yearbook 2005
Cement
1.2%
Fertilizer
16.4%
8
Growth in Demand for Energy
ƒ
Primary energy supplies grew at an ACGR of over 5% in the last 5 years
ƒ
Demand for oil and liquid petroleum products declined at an ACGR of around
3% during the same period
ƒ
Pakistan produces nearly 66,000 barrels per day of crude oil, which meets 27%
of national crude oil requirement
ƒ
Natural gas supplies grew at an ACGR of 10% over last 5 years
ƒ
The relative share of gas in primary energy supply increased from 40% to 50%
in the last 5 years
ƒ
Share of natural gas in primary energy mix is expected to be maintained at
around this level in the next 5 years
9
Pakistan Gas Transmission Infrastructure
Jammu
Afghanistan
&
ITEM
SNGPL
SSGC
TOTAL
Transmission, km
6,195
3,062
9,257
Compression, BHP
185,300
62,600
247,900
Sales, mmcfd (Avg. Day)
1,566
970
2,536
Customers, Million
2.69
1.86
4.55
Quetta
Abbottabad
Peshawar
Kashmir
Islamabad
Pakistan
Gujranwala
Faisalabad
Lahore
Multan
Bahawalpur
India
Iran
SNGPL :
SSGC :
Karachi
10
Pakistan Natural Gas Market
Figures in MMcfd at 1000 btu/scf
12000
10000
6000
8.9 Bcfd
5.4 Bcfd
2.8 Bcfd
0.8 Bcfd
4000
Anticipated Supplies
2000
SNGPL & SSGC Supplies
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2010
2009
2008
2007
2006
2011
Independent Supplies
0
2012
MMcfd
8000
FY06
FY08
FY10
FY11
FY12
FY13
FY14
FY15
FY20
FY25
Demand
3,522
4,434
5,113
5,507
5,819
6,060
6,253
6,538
8,143
10,961
Indigenous Supplies
3,639
4,072
4,284
4,262
4,201
4,067
3,883
3,767
2,738
2,084
Shortfall
117
(362) (829) (1,245) (1,618) (1,993) (2,370) (2,771) (5,406) (8,877)
Demand & Supply Data Source: Hagler Bailly Pakistan
11
Pakistan Natural Gas Sourcing Strategy
Figures in MMcfd at 1000 Btu/scf
12000
10000
2nd Import Pipeline (2016): 3,200 MMcfd
6000
1st Import Pipeline (2012): 2,100 MMcfd
2nd LNG (2012): 500 MMcfd
st
1 LNG (2010): 500 MMcfd
4000
Anticipated Supplies
2000
SNGPL & SSGC Supplies
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2010
2009
2008
2007
2006
2011
Independent Supplies
0
2012
MMcfd
8000
FY06
FY08
FY10
FY11
FY12
FY13
FY14
FY15
FY20
FY25
Demand
3,522
4,434
5,113
5,507
5,819
6,060
6,253
6,538
8,143
10,961
Indigenous Supplies
3,639
4,072
4,284
4,262
4,201
4,067
3,883
3,767
2,738
2,084
Shortfall
117
(362) (829) (1,245) (1,618) (1,993) (2,370) (2,771) (5,406) (8,877)
Demand & Supply Data Source: PWC/Hagler Bailly Pakistan
12
Iran-Pakistan-India (IPI)
Gas Pipeline Project
IPI Route Options
IPI-Central Route
Jaisalmer
IPI-Coastal Route
Barmer
14
IPI Gas Pipeline Project
•
•
Length
Km
Capital
Cost*, $ billion
Central Route
Assaluyeh (Iran) to Jaiselmir (India)
Assaluyeh to Pak-Iran Border
Pak-Iran Border to Pak-India Border
Pak-India Border to Jaiselmir
2037
1136
757
144
7.4
4.4
2.7
0.3
Coastal Route
Assaluyeh (Iran) to Barmer (India)
Assaluyeh to Pak-Iran Border
Pak-Iran Border to Pak-India Border
Pak-India Border to Barmer
2191
1092
999
100
7.4
4.0
3.2
0.2
Total off-take volume: 55 Bcma (India: 33 Bcma, Pakistan: 22 Bcma)
2x56 inch, Class 600, X-70, Compression Ratio 1.40
15
IPI Gas Pipeline Project
ƒ
Bilateral Iran-Pakistan Joint Working Group (JWG), was constituted and the
first meeting was held in December 2003 in Islamabad
ƒ
An MOU was signed on July 7, 2005 to include India in the Project.
ƒ
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
ƒ
Iran would deliver gas to Pakistan at the Iran-Pakistan border, and to India
at Pakistan-India border, under supply contracts
ƒ
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
16
IPI Project Status
ƒ
The transaction envisages sale by Iran of Pakistan volumes at IranPakistan border and Indian volumes directly to India at Pakistan-India
border
ƒ
Discussions underway on :
•
•
•
Gas pricing and GSPA
Route selection
Project Structure and Inter-Governmental Agreement
17
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
18
IPI Separate Pipeline Ownership
Internat
Co*
Owners and
ownership
MSA
MSA
40%
Contracts and
counterparties
Others
Iran?
50%
10%
SA
SA
Pipe
Holdco
Pakistan
10%
90%
India
10%
90%
Internat
Co*
BBA
Iran
(NIOC?)
Iran
Pipeco
Pakistan
Pipeco
Field / Processing
IRAN
India
Pipeco
Pipeline
PAKISTAN
INDIA
MSA = Management Services Agreement
SA = Shareholders Agreement
BBA = Buy Back Arrangement
*Same International Oil Company to be appointed in the three countries
19
IPI Way Forward
ƒ
Project planned to be undertaken by private investors on BOOT basis
ƒ
Prefeasibilty study undertaken by PriceWaterhouse Coopers lead Financial
Advisory consortium
ƒ
Land/ROW to be acquired by ISGSL/GoP to expedite process
ƒ
ISGSL/GoP to take 10% equity share in pipeline company
ƒ
Lead sponsor/Consortium to be appointed to setup pipeline company, to
undertake
•
•
•
•
•
Detailed Feasibility
Engineering, Procurement
Financing
Construction and
Operation
20
Project Road Map
21
Turkmenistan-Afghanistan-Pakistan (TAP)
Gas Pipeline Project
TAP Pipeline Route Options
TAP
Jaisalmer
Barmer
23
TAP Project Technical Highlights
Southern Route*:
Length, km
Design Features
Turkmenistan Segment
145
Capacity, Bcfd:
3.2
Afghanistan Segment
735
Diameter, Inches:
56
Pakistan Segment (up to Multan)
555
Pressure, Psig :
Total
1,435
Specifications :
1,450
Class 600, X-70
ƒ
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
ƒ
Capital Cost US$ 3.3 Billion (Penspen Estimate 2003). Recent estimate close to $4
billion
24
Project Overview
ƒ
Aimed to supply gas from the Dauletabad gas fields in Turkmenistan close
to the Turkmenistan-Afghanistan border to Pakistan and possibly India
ƒ
Gas Pipeline Framework Agreement between Governments of
Turkmenistan, Afghanistan and Pakistan signed by the Heads of States in
December 2002
ƒ
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.
ƒ
Feasibility study completed in 2004 needs to be updated; ADB is providing
grant funds to update the study
25
TAP Project Issues
ƒ
Gas Reserves Availability and Dedication to the Project
ƒ
Russia reportedly claims priority over Turkmenistan gas reserves
ƒ
Security of Pipeline in Afghanistan is a serious concern but could be
mitigated through remedial measures
ƒ
Updating of Feasibility Study
ƒ
Indian Participation
26
TAP Issues-Gas Reserves
ƒ
Turkmenistan provided an Executive Summary of the 2003 Audit Report of
Daulatabad Field Reserve Certification by DeGolyer & MacNaughton (D&M) of USA.
ƒ
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.
ƒ
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
ƒ
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
ƒ
TAP requirement of 33 BCMA can not be met after 2017 even at proven plus
probable production level
ƒ
At the 9th 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
ƒ
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
27
TAP Issues-Pipeline Security
ƒ
TAP pipeline has to traverse war ravaged Afghanistan. The area faces serious
security challenges.
ƒ
A Security Study of the project was undertaken by Pacific Strategies & Consulting of
UK in 2005.
ƒ
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
28
Indian Participation
ƒ
India attended the 9th Steering Committee Meeting at Ashgabat as an
observer
ƒ
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
ƒ
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
29
TAP Feasibility Study Revision
ƒ
Feasibility study was done by M/s Penspen in 2004
ƒ
Study was sponsored by Asian Development Bank (ADB), which indicated
that it has $40,000 left in its budget for the TAP Project.
ƒ
Technical consultant to be hired after dedication of gas reserves and
agreement on gas pricing is reached.
ƒ
ADB is arranging funds for the study
30
TAP-Way Forward
ƒ
Meeting of Technical Working Group to be held at Ashgabat on 14-15
November to discuss:
•
•
the availability and dedication of adequate gas reserves
•
Updating of Feasibility study
•
Gas pricing offer to be made by Turkmenistan
•
GSPA-Draft tabled by Pakistan
security of pipeline through Afghanistan
31
Thank You