Pakistan has been in the headlines a lot recently and too often with bad news — floods, military attacks and power crises top the list. It is not hard to imagine that Pakistan is headed toward ‘failed state’ status. Setting aside floods as an act of God and the security situation as intractable, lets focus on the energy situation in Pakistan where improvement is possible and recently started making some headway.
Two recent news stories discuss pipeline deals that, when finished, should provide Pakistan with an additional supplies of natural gas and help relieve chronic energy shortages.
On May 30′th, the Tehran Times reported:
Iran, Pakistan sign gas pipeline accord
ISLAMABAD (Dawn) – Iran and Pakistan signed on Friday an agreement for supply of gas from Iran through the $7.5 billion pipeline project to be completed by the end of 2014. The cost for the Pakistan section of the project is estimated at $1.65 billion.
On September 20′th, Reuters published:
TAPI gas pipeline project inked-Pakistan official
ISLAMABAD, Sept 20 (Reuters) – Turkmenistan, Afghanistan, Pakistan and India on Monday signed the framework of an agreement to construct a gigantic pipeline pumping natural gas to South Asia, a Pakistani official said.
The Iran-Pakistan-India pipeline looks like it will go ahead without the participation of India — one cannot blame them for being having concerns about Pakistan as the transit nation.
The framework agreement for the Turkmenistan-Afghanistan-Pakistan-India pipeline is a step in the right direction but requires more stability in Afghanistan before actual construction can proceed.
To fully understand the importance of these pipeline deals we need to better understand Pakistan’s growing energy needs.
Population
A growing population needs increasing amounts of energy.
Pakistan has a large and growing population, currently increasing at at an annual rate of 2%. The historical data show several interesting features, the standout being the years 1980-1981. These were the darkest years of Zia ul-Haq’s military dictatorship and also of the Russian invasion of Afghanistan. (The no-growth year of 1980 followed by a spike in 1981 is probably a data processing mistake by the Census Bureau. Much of the 1981 growth probably occurred in 1980.)
The large influx of Afghan (mostly Pashto) refuges leading up to and continuing throughout the Soviet war in Afghanistan (1979-1989) is clearly seen in the increased YoY change in population during this period.
With growth rates like this, Pakistan desperately needs to increase its energy supply in order to avoid civil unrest related to power outages. These were occurring with increasing frequency up until the recent floods.
Energy Resources
To understand the importance of the IPI and TAPI pipelines it is helpful to look at Pakistan’s total energy usage. Even though Pakistan has seen robust growth in total energy supplied over the past two decades, the last 3 years have seen merely level supplies — barely increasing enough to account for population growth.
Looking at the mix of fuels we see that fully 50% of their energy consumption is met by gas with 30% oil and <10% each for hydro, coal and nuclear. Gas is by far the most important fuel for Pakistan. To understand how Pakistan is meeting its energy needs we need to focus on supplies of natural gas.
Natural Gas
All along, Pakistan has been self-sufficient in natural gas. In this case ‘self-sufficient’ should be interpreted more along the lines of “unable to bring in imports” as opposed to “producing as much as they need”. Being a poor country, Pakistan has been unable to afford LNG imports and has been forced to live within its indigenous production up to now. After big production increases a few years ago, growth in gas has returned to a very modest rate of increase.
With all of its problems, it is no wonder that Pakistan is eager to sign agreements with neighboring countries that have ample supplies. The suppliers in these agreements, especially Iran, also stand to benefit with increased export alternatives. It seems possible that the Iran-Pakistan pipeline may actually be built in the next few years, greatly relieving pressure on Pakistan’s internal production facilities.
Yes, there will still be many problems related to electrical transmission and the infrastructure damage caused by natural disaster and armed conflict. But Pakistanis desperately need some good news and we can hope, for their sake, that these pipeline projects go ahead and help stabilize the “Land of the Pure”.
Recent Headlines:
- Pakistani team leaves for Tehran for gas line talks (People’s Dailiy, Apr 13, 2011)
- 77% car owners in Pakistan use CNG as fuel (TheNews, Dec 29, 2010)
- Turkmens Open New Gas Export Market After Agreement on Trans-Afghan Pipe. (Bloomberg, Dec 13, 2010)