In attempt to jump-start economy, Pakistan looks to Houston
Ambassador sees diaspora, region’s reliable LNG as key
Battered by security threats, government corruption and unreliable energy for decades, Pakistan has struggled to unleash its economic potential. But with new leadership attempting to launch the country onto the world stage, Pakistani leaders say they’re looking for a little help from Houston.
Pakistan’s U.S Ambassador, Asad Majeed Khan, said in an interview that the energy capital of the world contains two key ingredients his country is looking for to jump-start its economy: reliable energy and Pakistani Americans.
“Of course, it impresses me that we have a substantial community of Pakistani Americans (in Houston),” said Kahn, who visited the city last week for a conference hosted by the American Pakistan Foundation. “But what is important is that they are all contributing to the economy of Houston and are influential and successful.”
Houston has the third largest population of Pakistanis in the
U.S., according to Pew Research Center, following New York and Washington, D.C. Pakistanis living abroad are important to the country’s ability to attract foreign investment, Khan said, but Pakistan may have something to offer Houston, too. Pakistan is emerging as a potentially huge market for U.S. energy exports, particularly liquefied natural gas, as it attempts to stabilize and secure its economic future.
“The convenience of its use, its environmentally friendly use, and also the rates, I think make LNG an attractive option for Pakistan,” Khan said. “There is huge demand.”
Market for natural gas
LNG prices are particularly low these days due to abundant supplies and slipping demand, in part a result of mild winters in much of the world and the impact of the coronavirus on the Chinese economy. Large supplies of gas in Texas shale deposits and increasing demand for cheap, cleaner burning fuels spurred Houstonarea companies to look abroad for customers.
A few years ago, Cheniere Energy of Houston became the first company in the continental United States to export LNG.
Pakistan needs cheap, reliable energy that can easily integrate with existing pipelines, storage terminals and other infrastructure. Because the country has depleted much of its compressed natural gas reserves, and sanctions on Iran have reduced natural gas imports, the country is beginning to import LNG from the United States.
“As they are trying to become a more politically stable country looking for economic progress, they are going to need a lot more energy,” said Ramanan Krishnamoorti, chief energy officer at the University of Houston. “LNG might be that real game changer for them.”
Pakistani Prime Minister Imran Khan faces a steep climb, though. Around 52 million Pakistanis did not have access to electricity in 2017, and more than half of the population uses biomass, including wood and animal waste, for cooking due to natural gas and electricity shortages. Natural gas accounted for 21 percent of the nation’s total energy consumption in 2017, according to the International Energy Agency, but biofuels and waste accounted for 37 percent.
The lack of reliability in energy, combined with security threats from terrorism and lax rules against corruption, have long kept foreign investment away. Other developing countries such as India or Indonesia are perceived by investors as a safer bet, experts said. And while Pakistan has increased its generation of power in recent years, transmission and distribution remain an issue, meaning many still face unreliable access to electricity.
But if foreign companies can swallow the unknowns and trust the current administration, they have a big potential for profit, Krishnamoorti said. More than 216 million people live in Pakistan, the fifth largest population in the world, and more than half the population is less than 25 years old, meaning there is a large potential workforce and expected demand for goods and services.
“If you can get your foothold there in terms of delivering the LNG, then it is a pretty large market with lots of really good opportunity,” he said, “but it has to all come together.”
At least one Houston-area company is trying to put together the pieces. Excelerate Energy L.P., an LNG company based in The Woodlands, announced at the end of January that it signed a deal to expand an LNG import terminal in Port Qasim, Pakistan by more than 150 million standard cubic feet per day. Excelerate specializes in offshore import terminals that use floating storage and regasification units, or FSRUs, which convert LNG back into a gaseous form to be fed into an underwater pipeline back to shore.
The expansion of the terminal, a joint venture of Pakistan’s Engro Corporation, an energy company, and Royal Vopak, a Netherlands energy storage company, will increase storage capacity from 150,900 cubic meters to 173,400 cubic meters.
“We are proud to partner with Engro and Vopak on this expansion to help meet the growing demand for natural gas in Pakistan,” said Daniel Bustos, Excelerate’s chief commercial officer, in a statement.
Citizens abroad
Pakistan’s leadership is working to make more deals like this a reality, Khan said. Reforms in an effort to stamp out corruption and provide aid to struggling areas of the country, the government hopes, will make the country more attractive to foreign investors.
“One of the things that has been a very high priority with this government is to improve the ease of doing business in Pakistan,”
Khan said. “If you have power security and a domestic market, what you need is fair and friendly regulatory frameworks.”
Key to the country’s stabilization efforts are Pakistanis living abroad. Imran Khan, previously an international cricket star, wants to use Pakistan’s large diaspora across the globe — particularly in the U.S. — to help in foreign investment efforts, the ambassador said.
In the energy capital of the world, Houston’s large Pakistani population presents huge potential, Ambassador Khan said.
“I was very happy to see them thriving,” he said of meeting Pakistani Americans in Houston. “Our prime minister is someone who is deeply connected personally with overseas Pakistanis as an international sports star. He sees overseas Pakistanis as very important players that can help Pakistan turn around the economy.”