Pakistan is facing energy crisis, high inflation and depleting remittances while its exports have declined from USD 3 billion to USD 2.2 billion. Power cuts are crippling household and commercial activities, while gas rationing to the textile sector has resulted in a loss of USD 1 billion in export orders. Despite energy conservation efforts, many areas continue to experience load shedding of upto 14 hours as the generation shortfall reached 8 gigawatts.
The Russia-Ukraine war has further distorted the energy market due to political and economic factors. When the situation is so grave, Pakistan government is desperate to find new energy alliances to ensure uninterrupted energy supply to households and industries. For overcoming energy crisis, Pakistan is trying to diversify its energy sources. A delegation of Pak Ministers including the Minister of State (Petroleum Division) Musadik Masood Malik visited Kazakhstan during November 8-11 and met Kazakh Minister for Energy Akchulakov Bilat Uralovich. They explored possibility of connecting Kazakhstan’s existing natural gas pipeline network with the proposed TAPI (Turkmenistan-Afghanistan-Pakistan-India) pipeline network to facilitate gas supplies from Russia through Kazakhstan and Kazakh investment in Pakistan in pipeline and refinery projects. However, Kazakhstan disappointed them and declined to cooperate on Pak proposals.
The Kazakh side cited many reasons for turning down Pak proposals. Kazakhstan does not produce sufficient gas to be able to join the TAPI project, Kazakhstan’s own domestic pipeline network is still a work in progress and hence funds cannot be spared for investing in the Pak network. Since Pakistan’s crude oil requirement of 2,50,000 bpd is not enough to develop a commercially viable project, such proposal could only be considered if India also chooses to join the same. Pakistan had also floated in its previous meeting with Kazakh Minister, on the sidelines of the 6th CICA Summit way back in 2013, the idea of inclusion of Kazakhstan in TAPI project, but the proposal was turned down by the Kazakh side on the pretext that it does not have enough gas to supply.
Pakistan intends to complete the TAPI gas pipeline project but the project is moving forward very slowly due to differences among the promoters and financial shortage. It would be beneficial to Pakistan if it is completed soon, not only by ensuring increased supply, but also by cutting the cost of energy imports. Pakistan has been importing LNG at an average price of USD 12 per Metric Million British Thermal Unit (MMBtu). Pakistan has 5% shares in TAPI and if it would acquire gas through TAPI pipeline, the cost would come down to around USD 6-7 per MMBtu. The TAPI Pipeline, also known as Trans-Afghanistan Pipeline, is a natural gas pipeline being developed by the TAPI Pipeline Company Limited with participation of the Asian Development Bank. The TAPI pipeline is expected to carry 33 billion cubic meters (bcm) of natural gas each year along a route stretching 1,800 km from Galkynysh, the world’s second-biggest gas field in Turkmenistan to the Indian city of Fazilka near the Pakistan border.
Pakistan’s indigenous gas resources are depleting fast and the country needs two pipelines to meet its gas requirements. It requires about 2,50,000 barrels per day (bpd) of crude oil. Gas from Kazakhstan and the TAPI pipeline project may meet Pakistan’s current needs that will be cheaper than LNG to ensure its energy security. Pakistan was looking up to Kazakhstan for some respite from energy shortage. Among the members of the Commonwealth of Independent States (CIS), Kazakhstan has the 2nd largest liquid hydrocarbon fields after Russia. Most of Kazakhstan’s natural gas reserves or over 98% are located in the west of the country. The Kazakh natural gas is mainly exported to Russia and Kyrgyzstan. Earlier, during his trip to Russia in February, erstwhile Prime Minister of Pakistan, Imran Khan in a key meeting with President Vladimir Putin requested the Russian investors to build a USD 2 billion worth gas pipeline in the wake of the country’s fast-depleting local reserves. The Russian investment seems hard to come, especially as long as Ukraine war continues. Now Pakistan is looking up to its next intergovernmental commission with Kazakhstan likely to be convened shortly to again push its energy cooperation proposals forward.