The News: IP pipeline: fading fast

Pakistan’s natural gas supply hovers around four billion cubic feet per day and is expected to fall to less than one billion cubic feet per day in another decade. This implies that overall gas shortfall is expected to reach a staggering eight billion cubic feet per day, with the potential of crippling Pakistan’s GDP growth rate in the next decade – if there is any more crippling to be done that is.

A recent report published by the Sustainable Development Policy Institute not only makes for a compelling read but also puts forth a strong case for either re-negotiating the IP project’s gas pricing formula, or better still abandoning the project altogether and allocating the same funds to develop hydel power projects.

Before dwelling further on the contents of the report, however, it is imperative to understand the dynamics of Iranian gas production, consumption, exports and imports. Iran possesses the world’s second largest estimated gas reserves (more than 33 billion cubic meters) and its gas production towards the end of 2012 stood at 5.667 trillion cubic feet a day, accounting for 4.7 percent of the world’s total gas production. However, domestic consumption of Iran stood at 5.4 trillion cubic feet a day in 2011 and is constantly on the rise. 

Therefore, according to data, Iran has little surplus natural gas for exports. In fact, according to data, Iran imports more gas than it exports. Hence the argument against the Iran-Pakistan gas pipeline project would be fairly simple – if Iran cannot even meet its own demand for natural gas how will it have space to facilitate another country?  MORE