LNG based power pro­duc­tion to cost $9.5 cents per kWh

The Pak Banker - - NATIONAL -

The Liq­ue­fied Nat­u­ral Gas (LNG) based power pro­duc­tion will cost $ 9.5 cents per kilo­watt hour (kWh) as com­pared to en­ergy pro­duced through diesel, which costs ap­prox­i­mately $ 18 cents per kilo­watt hour. The en­ergy pro­duced through lo­cal gas costs ap­prox­i­mately $ 7.5 cents per kWh, ac­cord­ing to of­fi­cial sources here on Wed­nes­day.

Pak­istan has signed a 15-year agree­ment with Qatar to im­port up to 3.75 mil­lion tonnes of liq­ue­fied nat­u­ral gas a year, a ma­jor step in fill­ing the coun­try's en­ergy short­fall. The deal, Pak­istan's big­gest, will help the coun­try add about 2,000 Megawatts of gas-fired power-gen­er­at­ing ca­pac­ity and im­prove pro­duc­tion from fer­til­izer plants now hob­bled by the lack of gas.

Ac­cord­ing to ex­perts in oil and gas sec­tor, the deal sealed with Qatar for im­port of LNG at the price of 4.78 dol­lars per mmbtu was the cheap­est of its kind in South Asia. The land­mark deal would save the coun­try Rs.100 bil­lion per an­num and would con­trib­ute meet­ing the coun­try's en­ergy needs by 25 per­cent.

The set­tled price was 13.37 per­cent of the brent and was cheaper than the gas to be im­ported through Iran-Pak­istan and Turk­menistan-Afghanistan-Pak­istan-In­dia (TAPI) gas pipe­line projects.

The LNG pro­ject, a game changer for Pak­istan will save the coun­try more than one bil­lion dol­lars per year when ex­pen­sive en­ergy is re­placed with the cheaper and cleaner fuel. The LNG as a fuel for power gen­er­a­tion over fur­nace oil is more ef­fi­cient in power gen­er­a­tion - 60 per cent ef­fi­ciency on re-gasi­fied LNG ver­sus 45 per­cent on al­ter­nate fuel - has much lower op­er­a­tional and main­te­nance costs and thus is friend­lier on the econ­omy in the form of much lower elec­tric­ity tar­iff for the masses.

This is the rea­son, the world is turn­ing to­wards LNG, Global and emerg­ing economies such as China, Korea, Ja­pan, In­dia, Thai­land, In­done­sia, Euro­pean Union and Brazil en­sure LNG re­mains part of its en­ergy mix. Ja­pan im­ports 80 mil­lion tonnes of LNG ev­ery year, In­dia im­ports 15 mil­lion tons per an­num. In ad­di­tion to be­ing cleaner and safer fuel, LNG im­port would be rec­og­nized as the fastest so­lu­tion to ease the bur­den on Pak­istan's econ­omy.

In Pak­istan, nat­u­ral gas ac­counts for 35 per­cent of all power gen­er­a­tion, 23.8 per­cent of in­dus­trial use, 15.6 per­cent fer­til­izer, 5.4 per­cent CNG and 18.1 per­cent house­hold uses. Pak­istan cur­rently stands with a gas short­fall of two bil­lion cu­bic feet per day or 33 per­cent of its to­tal gas de­mand. Pak­istan's in­dige­nous gas sup­ply is ex­pected to de­plete to 1,500 mil­lion cu­bic feet per day in 2030 from cur­rent 4,000 mil­lion cu­bic feet per day and the de­mand/sup­ply gap is likely to in­crease to a mam­moth 7,000 mil­lion cu­bic feet per day in the next 15 years while lo­cal gas is fast de­plet­ing.

The eco­nomic cost of this gas short­age is in­cur­ring Pak­istan losses of up to one bil­lion dol­lar per year, as the coun­try is forced to im­port ex­pen­sive fur­nace oil, kerosene, LPG and diesel to make up for en­ergy re­quire­ments. Around 1200-1500 Megawatt of power gen­er­a­tion ca­pac­ity is un­der 35 per­cent uti­liza­tion be­cause of un­avail­abil­ity of gas. Ad­di­tion­ally, the govern­ment con­tin­ues to pay the ca­pac­ity pay­ments to such power pro­duc­ers un­der the In­de­pen­dent Power Pro­duc­ers (IPP) regime. The LNG im­port is the fastest short-term so­lu­tion to Pak­istan's crip­pling eco­nomic needs.

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