How energy secure is Pakistan?

Generally speaking energy security is equated to having a resource endowment or viewed with a geostrategic lens. However with the passage of time — as history unfolded, technological advancements made, more energy sources explored and used, in addition to the alarming situation for global warming, energy security is no longer just that.

Energy security is a multifaceted concept that encompasses the ideas of availability (resource endowment), affordability(prices), reliability( access), resilience(ability to respond to external shocks), sovereignty(vulnerability), efficiency (reduce wastage) and sustainability(environment friendly). Since it can be viewed in so many different ways, there is no single definition. From International Energy Agency’s perspective energy security is the uninterrupted availability of energy sources at an affordable price.¹ Others view it as a low vulnerability of vital energy systems i.e. vulnerability of the specific systems such as electricity security, energy security with respect to oil used for transport etc.² Some academics, in addition to availability and affordability, also go on to include dimensions such as efficiency and sustainability — that is to say that energy not only be made available but the nature of what is available also determines how energy secure a country is.

As incomes are rising and populations are growing, energy is being consumed in innovative ways. We already see energy efficient products for household use, many manuals being converted to automatics, the trend for hybrid and electric vehicles on the rise. This means that global energy demand is rising and therefore presents a challenge to the world as to how to encompass these varied dimensions of energy security in an energy policy which meets the growing requirements in the face of climate change and global warming.

Pakistan’s energy security aims are misaligned..

Analyzing Pakistan’s energy security on all the dimensions mentioned above is a hefty task.

To begin with one must analyze the energy sources that are predominant in our overall energy mix. Is our indigenous production sufficient to meet our energy consumption or are we importing most of these to meet our requirements? Looking at the IEA data we see that Pakistan makes use of a diverse range of resources to meet its energy needs. As shown in Figure 1 below, among the traditional fossil fuels, natural gas and oil are leading the energy mix with the share of coal on the rise from the last five years. Given this, we delve further into the production, consumption and import dynamics of the oil, natural gas and coal.

Figure 1: Total Energy Supply (TES) by source, Pakistan 1990–2018, Source: IEA Data

Oil is a large chunk of imports..

Pakistan is not a major oil producing country and has been importing oil(both refined petroleum and crude oil) to meet most of its needs. Pakistan accounts for about 0.02% of the world’s total oil reserves but in terms of consumption ranked 33rd, accounting for 0.6 % of worlds oil consumption in 2016.³ Internally, this means that without imports and at the current consumption levels, oil reserves wont last long at all. In 2018, refined petroleum topped the list of imports worth 5.76b$ whereas the value of crude oil import in the same year was $4.16billion.⁴In FY 2020, from July to May, Pakistan’s energy imports stood at $9.8 billion, which made up for 25% of total imports of $40.86 billion.⁵ At the same time we see there is no significant addition to the existing oil reserves or upgrade of the existing fields but the natural depletion rate of 4–5 % persists. Latest newspaper reports suggest that as of June 2020, Pakistan’s net oil reserves have declined by 5 percent to 540 million barrels.⁶

Figure 2: Crude oil Imports vs Exports , Pakistan 1990–2018, Source: IEA data
Figure 3: Source: Worldodometer, Pakistan Oil, 2016

Natural Gas exploration is almost halted..

Natural Gas presents a similar picture. Pakistan produces less than 4 billion cubic feet of gas per day (bcfd) whereas the total requirement is around 7 bcfd.⁷ Local demand is mostly met through imports or through load-shedding for the industries. New exploration has mostly been halted since 2010 as is evident by the plateau in the production graph below. At the same time it has been estimated that the average remaining life of the country’s gas reserves is at around 17 years. Simultaneously we see a steady rise of natural gas imports since 2014 as shown in the Figure below

Figure4; Source: IEA Data
Figure 5; Source: IEA Data

There is ample coal but Pakistan prefers to import..

Coal has come into limelight in recent years. Pakistan has large coal reserves( estimated at over 186 billion tons).⁸ Despite this Pakistan has started importing coal especially in the last five years- owing to the newly build coal power plants at Port Qasim and Sahiwal under the China Pakistan Economic Corridor(CPEC). In fact according to Economic Survey of Pakistan coal imports constituted the largest chunk of the imported cargo - 34% of the total from July-December 2019.⁹

Figure 6: Coal Production and Imports of Pakistan 1990–2019; Source: IEA Data

The trends are suggestive of the fact that Pakistan’s energy security aims are misaligned. There is heavy reliance on fossil fuels at present and even in the short and long term horizon the situation is not very encouraging. By 2040, Pakistan aims to have an energy mix led by coal and LNG. Latest assessment by IEEFA of the Indicative Generation Capacity Expansion Plan (NEPRA) suggests that the generation expansion plan is in stark contrast to the stated objectives by the government of sustainability and affordability.¹⁰According to the analysis, generation planning is based on highly optimistic demand growth projections and even then, the generation expansion direction is such that it favors fossil fuels, mainly domestic coal, over renewable which will be far cheaper by 2047. In fact there is no planned wind power projects after 2030 and by 2047 the generation share for renewable will fall from 31% in 2030 to 23% in 2047.¹¹ The Generation Expansion plans aims to add 20,000 MW of LNG based power capacity between 2030 and 2047 with no utilization by 2047. The IEEFA report takes notes — and rightly so — of this addition as follows: “The idea that a total 31,000MW of LNG-fired power is needed to balance the intermittency of 37,000MW of wind and solar power in 2047 is, at best, wildly inaccurate, especially given how cheap energy storage solutions will be by that time. In reality, tens of thousands of megawatts of LNG-fired power would be built at great cost and would then sit idle and stranded…”¹²

Smog in the cities..

With the choices made today, Pakistan will also have consequences for its environment in the future which is also an important dimension to be considered for energy security. Pakistan’s current contribution to Co2 emissions is minimal if we compare it to regional giants as India and China but still higher than comparable countries(with respect to population) such as Sri Lanka and Bangladesh.

Figure 7: Carbon Dioxide Emissions; Source: BP Statistical Review of World Energy 2019

Many metropolis in Pakistan face severe issue of smog especially in the winter season from Oct/Nov till Jan/Feb. According to Amnesty International air quality have been rated “near unhealthy” and “very unhealthy” for most of the year in Punjab.¹³ The main contributors as identified by smog studies in collaboration with FAO and World Bank are industry, power plants and the transport sector.¹⁴ This again highlights the detrimental reliance on imported fossil fuels in Pakistan in a way that is making Pakistan energy insecure and also threats health and well being of its population.

Is there hope?

There is ample scope to improve energy security. Most importantly Pakistan should aim to have a long term energy mix which is in favor of local and clean energy resources with increasingly less reliance on imported resources. Efforts should be made to understand as to how best to harness and integrate intermittent renewable energy sources such as solar and wind into existing electricity grids as well as in end-use sectors such as industry and transport . With massive potential for solar and wind as well as global technological advancements in carbon capture and storage(CCS) the existing indigenous resources can be tapped in a manner which ensures an uninterrupted supply of clean and cheap energy for Pakistan. Technological adoption and advancement also requires reforms in the private sector which encourages competition and brings down energy prices. Only by adopting a multi pronged approach can Pakistan achieve energy security in its proper essence.

References:

¹ International Energy Agency https://www.iea.org/areas-of-work/energy-security

² “ What is Energy Security?” by GlobalEnergy Assessment. Available at https://www.youtube.com/watch?v=YVQL90JtlYo

³ https://www.worldometers.info/oil/pakistan-oil/#:~:text=Pakistan%20ranks%2033rd%20in%20the,of%2097%2C103%2C871%20barrels%20per%20day.

https://oec.world/

⁵ Pakistan finds new oil, gas reserves in K-P by Salman Siddiqui, July 15, 2020, The Express Tribune https://tribune.com.pk/story/2254888/pakistan-finds-new-oil-gas-reserves-in-k-p

⁶ Pakistan’s oil reserves diminish to 540mln barrels by Javed Mirza, September 16th, 2020, The News https://www.thenews.com.pk/print/715373-pakistan-s-oil-reserves-diminish-to-540mln-barrels

⁷ Pakistan finds new oil, gas reserves in K-P by Salman Siddiqui, July 15, 2020, The Express Tribune https://tribune.com.pk/story/2254888/pakistan-finds-new-oil-gas-reserves-in-k-p

⁸ ENERGY SECURITY IN PAKISTAN: A QUANTITATIVE APPROACH TO A SUSTAINABLE ENERGY POLICY by Sadia Malik, Maha Qasim, Hasan Saeed, Youngho Chang, and Farhad Taghizadeh-Hesary, ADBI Working Paper Series, October 2019

⁹ Economic Survey of Pakistan 2019–2020, Ministry of Finance, Government of Pakistan

¹⁰ “Pakistan Risks Locking in Long-Term Overcapacity and Expensive Power- Imported Coal and LNG Power Plants Are Stranded According to New Power Plan” by Simon Nicholas, IEEFA, 03 Sept 2020

¹¹ ibid

¹² ibid

¹³ “Pakistan: Hazardous air puts lives at risk” by Amnesty International 30 October 2019.

¹⁴ “Lahore smog” Dawn Editorial, 23rd Oct 2020