12b lost as crucial LNG shipment cancelled

[niaz]

SIr is it good?

In theory yes; gas is cleaner, more efficient and imported LNG is most of the time cheaper than imported fuel oil.

In addition to the gas shortage, there is also a severe shortfall of gasoline and diesel. To the best of my info, Pakistan imported more than 4-million tons diesel and close to 5-million tons of motor gasoline in 2017 (2018 data not yet available). Therefore local refineries need to run to capacity to produce maximize diesel, kerosene, motor gasoline & jet fuel. With the total refining capacity at 12.2-million tons; Pakistani refineries would generate close to 3-million tons of fuel oil per annum. This fuel oil needs to be consumed in the local industry before any end-user switches over to burning gas imported as LNG.

Obviously, many power plants must have switched over to burning gas for reducing their fuel bill to create tank top problems for the refineries which in turn were forced to cut crude runs resulting in lesser production of diesel, motor gasoline & kerosene. (As referred by me in post No. 3 above)

2017 fuel oil imports of Pakistan (high sulphur & low sulphur fuel oils) were nearly 6-million tons. Shahid Khaqan Abbasi's plan was to replace the imported fuel oil with imported LNG with a view to improving the environment as well as saving foreign exchange.

Correct policy would be to ensure that Gas from the imported LNG should first go the households & CNG gas stations and supplied to power plants only after all the locally produce fuel oil has been consumed.

Thus replacement of imported fuel oil by imported LNG was in principle a good policy but needed to be implemented judiciously. However while some Pakistani households are having difficulty cooking food due to lack of gas supply, GOP had to resort to postponing the scheduled LNG imports to relieve the local refineries.

Truthfully speaking; most third world countries are “Third world” only because of lack of “ Human Resources”. Even the competent manpower that is available is seldom appointed in the decision making positions because of nepotism and rewarding the party loyalists. Regrettably, PTI suffers from the same malaise; for example, can one honestly justify the choice of Usman Buzdaar as the Chief Minister of the largest & most important province of Pakistan?

 

[niaz]

The same subject explained in more appropriate words.

Gas supply decisions
EditorialUpdated December 28, 2018
https://www.facebook.com/sharer/sha...awn.com/news/1454010&display=popup&ref=plugin

IN taking on the issues of gas supply and pricing, the prime minister has touched upon a sensitive and important economic issue. Much hangs in the balance as the PTI government takes its first steps towards managing what are recurrent problems in the gas sector: continued supply through the winter, pricing and demand forecasts, as well as managing LNG imports. As per the handout issued after a meeting on Wednesday, it would appear that the discussion careened all over the place, from furnace oil off-takes to gas pricing in an era of growing gas imports. All these issues are tied, and given the nature of the oil and gas sector, small decisions made today can send large shockwaves through the economy months later. In taking up these issues, the prime minister and his government have a difficult task to accomplish, and it will take much thought and subtle and careful policy balance to make this happen. It will not happen through angry directives, aggressive inquiries and continued talk of ‘mafias’ and ‘lobbies’.

The quandary surrounding fuel and the power sector is simple. Power production has to shift towards import LNG since it is cheaper, cleaner and more efficient, and ample capacity has been installed around the country. But as this shift happens, the refineries find themselves in a quandary because demand for furnace oil plummets, and none of Pakistan’s refineries have deep cracking capacity; their production process necessarily has almost 30pc furnace oil as its output. There is no other use for this furnace oil other than power generation. As power shifts to LNG, inventories of furnace oil pile up until the refineries have to shut down operations impacting production of all other fuels like petrol, diesel, jet fuel and associated gas as well. The problem crops up in the winter because there is lower demand for power, and some power plants have to be shut down. The other problem in the oil and gas sector is now well known: import RLNG is almost twice the cost of domestic gas, and the government is having a hard time persuading industry to shift to LNG for fuel needs. Yet there is no alternative to LNG either. The problem is simple to understand, but the solution will need careful policy acumen. It is time for the PTI government to start shoring up its credentials in this area too, now.

Published in Dawn, December 28th, 20
https://www.dawn.com/news/1454010/gas-supply-decisions

 

[ziaulislam]

The same subject explained in more appropriate words.

Gas supply decisions
EditorialUpdated December 28, 2018

IN taking on the issues of gas supply and pricing, the prime minister has touched upon a sensitive and important economic issue. Much hangs in the balance as the PTI government takes its first steps towards managing what are recurrent problems in the gas sector: continued supply through the winter, pricing and demand forecasts, as well as managing LNG imports. As per the handout issued after a meeting on Wednesday, it would appear that the discussion careened all over the place, from furnace oil off-takes to gas pricing in an era of growing gas imports. All these issues are tied, and given the nature of the oil and gas sector, small decisions made today can send large shockwaves through the economy months later. In taking up these issues, the prime minister and his government have a difficult task to accomplish, and it will take much thought and subtle and careful policy balance to make this happen. It will not happen through angry directives, aggressive inquiries and continued talk of ‘mafias’ and ‘lobbies’.

The quandary surrounding fuel and the power sector is simple. Power production has to shift towards import LNG since it is cheaper, cleaner and more efficient, and ample capacity has been installed around the country. But as this shift happens, the refineries find themselves in a quandary because demand for furnace oil plummets, and none of Pakistan’s refineries have deep cracking capacity; their production process necessarily has almost 30pc furnace oil as its output. There is no other use for this furnace oil other than power generation. As power shifts to LNG, inventories of furnace oil pile up until the refineries have to shut down operations impacting production of all other fuels like petrol, diesel, jet fuel and associated gas as well. The problem crops up in the winter because there is lower demand for power, and some power plants have to be shut down. The other problem in the oil and gas sector is now well known: import RLNG is almost twice the cost of domestic gas, and the government is having a hard time persuading industry to shift to LNG for fuel needs. Yet there is no alternative to LNG either. The problem is simple to understand, but the solution will need careful policy acumen. It is time for the PTI government to start shoring up its credentials in this area too, now.

Published in Dawn, December 28th, 20
https://www.dawn.com/news/1454010/gas-supply-decisions

What is short term solution to furnace oil problem...?
Apparently neither the private sector or govt forseen the problem when LNG plants were started 3 years ago..i guess they thought they can bribe their way to furnace oil salw sale

 

[aziqbal]

two things are killing Pakistan

instability and corruption

 

[maithil]

Furnace oil plants are here to stay. Total shift to LNG will cripple Refineries and make Pakistan totally dependent on imported petroleum products. This “cure” will be much worse than the problem.