Iran, Pakistan to launch gas pipeline project

[ice_man]

I cannot believe Zardari did it and that too in the face of immense US pressure.

this is just an election gimmick nothing to get excited about!

 

[Musalman]

I am also very much against Zardari but itni badgumani achi nahi

 

[Argus Panoptes]

that very unbelievable.. so much that im finding it hard to digest

Like I said before, the devil is in the details, and being hidden by the present wave of unjustified euphoria. Reality will soon set in, sadly.

 

[niaz]

Pakistan energy problems are very serious and one must look at the ground realities first.

1. Total reserves are only 34 TCF and at current rate the same will be exhausted in next 10 years. For example Qadirpur field will be dry by 2022. What do we do then? New discoveries are very small and not much to scream about.

Tight/shale gas is there but the technology is with the great Satan the US. In this morning press conference, Dr Asim revealed that one block needing investment of about $1.5-billion has been given to some company. Total investment requirement is about $5-billion. Main obstacle being that GOP has no funds and with bomb blasts everywhere FDI is virtually zero. Even Pakistani entrepreneurs are reluctant to invest in Pakistan.

2. You cannot compare prices paid for the indigenous gas producers by the GOP with the imported gas. Power generated from local sources, be it hydroelectric or hydrocarbon fuel such as natural gas, coal or locally produced oil will always be cheaper than based upon imported fuel.
Had proper attention been given to Thar coal; whether UCG or open pit mining; we would have many coal fired power plants up & running by now. But again the same problem – No funds and lack of FDI.

3. Understand Pakistan is paying about $3.20 per MMBTU for Qadirpur gas. This is really cheap. Qatar, being the largest exporter of LNG in the world (about 80-million tons per annum = roughly 1.5-million bbl. /day oil equivalent), charges $10 per mmbtu for term price to India on FOB basis. Spot prices have been as high as $16/mmbtu. Guess Iran had asked for $7.8 per mmbtu with price linked to Dubai crude in 2009. Add about $1.2 pipeline charges, and with the adjustment due increased Dubai crude prices, it should be close to $10 per mmbtu delivered basis. This is still cheap Vis a Vis alternate of Qatar LNG.

4. Just by clearing the circular debt at least 3- 4 K megawatt can be added to the grid, significantly alleviating the energy shortage. But how is it possible when there are Rs 50 lakh outstanding against the house of Interior Minister for electric charges? Rehman Malik says he does not who pays the bills of Minister’s housing enclave. In the country with energy shortage, isn’t his responsibility to ensure that at least his house bills are cleared? It shows lack of political will to resolve energy crisis. We are far more interested in rental power!

Conclusion:

Energy shortage is killing off Pak economy and needs immediate attention. In all likelihood IP pipeline project is going to be delayed. Primarily because in addition to the US, our Wahhabi friend the Saudi Arabia (arch opponent of Shia Iran) can’t be too happy about it either. Also there is a strong anti-Iran lobby in Pakistan. Do you think that Wahhabi/Salafi/Takfiri alliance will like Pakistan to be dependent upon Iran for energy?

If IP comes to fruition, well and good but it is stupid to put all your eggs in one basket. A multi-pronged approach is needed.

a. Circular debt. Borrow or beg, but circular debt needs to be cleared in its entirety.

b. GOP depends upon FDI for new power projects for which we need good law & order situation. Supporter of TTP & Lej have to accept elimination of TTP & Lej or live with 18 hour black outs for ever.

c. Increase well head gas price in Pakistan to about $5 per mmbtu to encourage investment in exploration & tight gas.

d. Give development of Thar coal top priority.

e. Subsidize solar panels & encourage investment in wind power.

 

[ajpirzada]

@niaz do u know how much will we be paying Qatar for LNG and also TAPI per mmbtu?
so if india is getting at $10 per mmbtu then this deal seems reasonable. wat do u think @Argus Panoptes?
and this spot price of 16$ per mmbtu is in the international market or regional?

 

[Hack-Hook]

What kind of economic calculation justifies a price for the commodity at 4 times the prevailing market prices?

Can you prove that Iran gas is more expensive than the alternative

 

[Argus Panoptes]

Pakistan energy problems are very serious and one must look at the ground realities first.

.............
If IP comes to fruition, well and good but it is stupid to put all your eggs in one basket. A multi-pronged approach is needed.

a. Circular debt. Borrow or beg, but circular debt needs to be cleared in its entirety.

b. GOP depends upon FDI for new power projects for which we need good law & order situation. Supporter of TTP & Lej have to accept elimination of TTP & Lej or live with 18 hour black outs for ever.

c. Increase well head gas price in Pakistan to about $5 per mmbtu to encourage investment in exploration & tight gas.

d. Give development of Thar coal top priority.

e. Subsidize solar panels & encourage investment in wind power.

A. Clearing circular debt will take getting government finances in order in addition to capital, and both are unlikely for the time being.

B. TTP/LeJ and their supporters would happy to take us all back to the age of darkness, literally and figuratively, if we let them succeed.

C. Any revenue generated by increasing well-head prices will be offset by reduced consumption and likely be frittered away rather than spent on exploration.

D. Thar coal is a mirage. We need to let it go.

E. This is one way to help decrease shortages, but the bulk of energy will continue to be need from conventional hydrocarbon sources for the foreseeable future.

@niaz do u know how much will we be paying Qatar for LNG and also TAPI per mmbtu?
so if india is getting at $10 per mmbtu then this deal seems reasonable. wat do u think @Argus Panoptes?
and this spot price of 16$ per mmbtu is in the international market or regional?

Given our massive shortfalls, any increase in supply is to be welcomed, even if it is at somewhat higher rates than the market. The real problem is that the price of Iranian gas is tied to the price of oil, not to the price of gas. That can only cause us grief as oil prices rise and gas prices fall.

Can you prove that Iran gas is more expensive than the alternative

What sort of "proof" are you talking about, Sir?

 

[niaz]

@niaz do u know how much will we be paying Qatar for LNG and also TAPI per mmbtu?
so if india is getting at $10 per mmbtu then this deal seems reasonable. wat do u think @Argus Panoptes?
and this spot price of 16$ per mmbtu is in the international market or regional?

New York Mercantile Exchange or Nymex futures have touched $17 in 2008 but with fracking, the same are now down to less than $4/mmbtu. Qatar price is FOB Qatar add freight to it for delivered price to India which should be close to $11.00/mmbtu.

I had heard that talks with India for additional quantity broke down because Qatar wanted $11 per mmbtu FOB. There is a publication called LNG daily which gives current prices but I don’t subscribe to it and my ex company where I still have access only subscribes to crude and product price publications.

Based on October 11, 2012 quotations; Japan Dec 2012 LNG price was about $13.40 per mmbtu, North West Europe Dec. futures because of North Sea gas were $9.85/mmbtu. FOB Arab Gulf was priced at $9.85 & delivered West Coast India $10.45/mmbtu. On the other hand US futures were $3.22.

It must be kept in mind that most term contracts would have an escalator/de-escalator in the price clause. For example if crude drops to $80 per bbl, LNG term price will also drop and if it shoots up to $150 /bbl. the price will also go up. Can’t be sure but I remember reading somewhere that Pakistan LNG price was about 80% of the price of Dubai crude international price.

 

[Argus Panoptes]

New York Mercantile Exchange or Nymex futures have touched $17 in 2008 but with fracking, the same are now down to less than $4/mmbtu. Qatar price is FOB Qatar add freight to it for delivered price to India which should be close to $11.00/mmbtu.

I had heard that talks with India for additional quantity broke down because Qatar wanted $11 per mmbtu FOB. There is a publication called LNG daily which gives current prices but I don’t subscribe to it and my ex company where I still have access only subscribes to crude and product price publications.

Based on October 11, 2012 quotations; Japan Dec 2012 LNG price was about $13.40 per mmbtu, North West Europe Dec. futures because of North Sea gas were $9.85/mmbtu. FOB Arab Gulf was priced at $9.85 & delivered West Coast India $10.45/mmbtu. On the other hand US futures were $3.22.

It must be kept in mind that most term contracts would have an escalator/de-escalator in the price clause. For example if crude drops to $80 per bbl, LNG term price will also drop and if it shoots up to $150 /bbl. the price will also go up. Can’t be sure but I remember reading somewhere that Pakistan LNG price was about 80% of the price of Dubai crude international price.

This one?

http://www.platts.com/IM.Platts.Content/ProductsServices/Products/lngdaily.pdf

 

[Argus Panoptes]

The international gas markets are going to be affected by new supplies such a frozen methane hydrates too:

BBC News - Japan extracts gas from methane hydrate in world first

Japan extracts gas from methane hydrate in world first

Japan says it has successfully extracted natural gas from frozen methane hydrate off its central coast, in a world first. Methane hydrates, or clathrates, are a type of frozen "cage" of molecules of methane and water. The gas field is about 50km away from Japan's main island, in the Nankai Trough. Researchers say it could provide an alternative energy source for Japan which imports all its energy needs. Other countries including Canada, the US and China have been looking into ways of exploiting methane hydrate deposits as well.

Pilot experiments in recent years, using methane hydrates found under land ice, have shown that methane can be extracted from the deposits. Offshore deposits present a potentially enormous source of methane but also some environmental concern, because the underwater geology containing them is unstable in many places.

"It is the world's first offshore experiment producing gas from methane hydrate," an official from the economy, trade and industry ministry told the AFP news agency.

A survey of the gas field is being run by state-owned Japan Oil, Gas and Metals National Corporation (JOGMEC). Engineers used a depressurisation method that turns methane hydrate into methane gas. Production tests are expected to continue for about two weeks.

Government officials have said that they aim to establish methane hydrate production technologies for practical use within five years. A Japanese study estimated that at least 1.1tn cubic metres of methane hydrate exist in offshore deposits. This is the equivalent of more than a decade of Japan's gas consumption. Japan has few natural resources and the cost of importing fuel has increased after a backlash against nuclear power following the Fukushima nuclear disaster two years ago.

 

[niaz]

Can you prove that Iran gas is more expensive than the alternative

I don’t have current price levels, this is as of Feb9. 2012.

Asia Times Online :: South Asia news, business and economy from India and Pakistan

It is certainly not cheap either. However if I am correct that it is linked to Dubai crude prices, we expect crude prices to start falling from 2015 when there should be sufficient US shale crude production in the market. Iranian gas should become cheaper.

It is expected that geo-politics will change as US dependence on Mid East crude decreases. Even now main increase in the crude demand is coming from the BRIC countries not the OECD. That is why OPEC production quotas haven’t changed much over the last 5 years. For Example OPEC production quota in 2005 was 29.971 million barrels per day. In December meeting OPEC countries decide to keep production level to 30-milion barrels per day.

Energy is the lubricant of economic growth and $100 per barrel oil is a serious obstacle in the growth of OECD countries. IMHO OPEC has every right to control production of their national wealth (Petroleum & gas) to get maximum possible prices. Nevertheless side effect of this policy is hurting less developed countries such as Pakistan far more than the Western countries that have the technical know-how to seek alternate sources such as tight gas & shale oil.



Hon Argus Panoptes.

I beg to disagree about your comments on the Thar coal. One of the advantages of German unification was access to East German lignite. Lignite is now one of important sources of energy in Germany.

EURACOAL - European Association for Coal and Lignite

Thar coal is not a mirage. Pakistan cannot afford to depend upon imported energy. That is recipe for bankruptcy. Frankly speaking Pakistan has only two long term choices.

Either go the Atomic route that India has been offered from the US. This is clearly not on the cards given strong anti US feeling and that fact that Taliban/Khilafat lovers would rather eat grass and enjoy 72 houris in the after life (could be a billion years from now) than go into bed with the US to get access to cheap nuclear technology.

Alternately exploit what you have and Thar lignite is there to be exploited. All other options such wind energy & solar power cannot resolve Pakistan’s energy problem. Of course if we can find 50-billion barrels of oil, all problems disappear, but can we for ever live in the hope of winning lottery? I rest my case.

 

[bala]

It is about time that Pakistan pulled their finger out and went against Western wishes!

The country could also benefit from more electricity as well as there still are massive cuts!


It is probably against forum rules, am new here so if it is I apologise, I suggest people to read Fars news on their website. It is Iranian news and is unbiased and excellent source.

The Iranians wish to form a UN like pact with the Arab league and Muslim countries.

We could benefit from this as currently our countries are not united hence we get pounded all over the place. The Iranians wish to help the Palestinians who are treated like animals/prisoners.

They are 100% right and I hope Muslim countries do unite to form such a pact.

As USA has proven, USA is not a direct terror state but a player of dirty politics - tells one country something else then favours another country and tells them to do the opposite.

USA in concluson has not benefited Pakistan in any way til date.

Iran very importantly has learned from the Iran-Iraq war that they are being set against other Muslims hence their policies have changed and are now looking to help other countries.

Fact is Fact - Iran is offering to physically help other countries. What does the USA do? Provide dirty money to dirty 2faced regimes who ruin the country even more - pure money greed.

Also, Iran is right about raging its concerns over the Shia Muslims killed in Karachi - we should not kill one another, this is the dirty game and dirty politics being used by the West. If the Iranians were bad they could have called of the pipeline by saying "you killed our Shias" but NO they didnt!!

 

[Argus Panoptes]

I................


Hon Argus Panoptes.

I beg to disagree about your comments on the Thar coal. One of the advantages of German unification was access to East German lignite. Lignite is now one of important sources of energy in Germany.

EURACOAL - European Association for Coal and Lignite

Thar coal is not a mirage. Pakistan cannot afford to depend upon imported energy. That is recipe for bankruptcy. Frankly speaking Pakistan has only two long term choices.

Either go the Atomic route that India has been offered from the US. This is clearly not on the cards given strong anti US feeling and that fact that Taliban/Khilafat lovers would rather eat grass and enjoy 72 houris in the after life (could be a billion years from now) than go into bed with the US to get access to cheap nuclear technology.

Alternately exploit what you have and Thar lignite is there to be exploited. All other options such wind energy & solar power cannot resolve Pakistan’s energy problem. Of course if we can find 50-billion barrels of oil, all problems disappear, but can we for ever live in the hope of winning lottery? I rest my case.

Respected Sir,

I am well aware of the use of lignite as a power source, but please note that requires power stations to be close to the mining site because of its low energy density and high moisture content, as lignite is not efficient to transport over long distances unless dried, which raises the spontaneous combustion risk. Even in Germany the use of lignite is 50:50 with anthracite/ bituminous coal. That famous underground coal gasification project is a total mirage, and conventional exploitation is simply not possible due to the large capital expenditure required. I do agree that it is there to be exploited, but the reason I say that it is a mirage is because it is simply not possible for us to exploit at the moment. We need to work more on nuclear and renewable resources, and keep exploring for oil and gas both. May be we will indeed get lucky.

Back to the topic of this thread, I fear that IP pipeline project will give us the worst of both worlds: high priced gas from Iran that we cannot afford to use economically, and potential sanctions from the West on top of that. Only fools rush in where the wise fear to tread.

PS: Thar coal is actually pretty poor quality:

http://www.sindhmines.gov.pk/pdf/Thar Coal White Paper.pdf

5.2 Chemical Composition

The weighted average chemical analysis of the coal samples of the four blocks show variation and are as given below:

Moisture (%) 43.24 to 49.01
Ash (%) 5.18 to 6.56
Volatile Matter (%) 26.50 to 33.04
Fixed Carbon (%) 19.35 to 22.00
Sulphur (%) 0.92 to 1.34

Heating value (Btu/lb)
As Received 5780 to 6398
Dry 10723 to 11353

 

[bala]

Back to the topic of this thread, I fear that IP pipeline project will give us the worst of both worlds: high priced gas from Iran that we cannot afford to use economically, and potential sanctions from the West on top of that. Only fools rush in where the wise fear to tread.

Why Pakistan fails? Always no hope.

Why no hope? Because you go for the wrong parties - i.e. the US who doesnt help you this affects your hope.

Like the Qu'ran says we wont win until we unite, and Iran is tyring to do this, end of all topics.

Pakistan always wants spoon feeding but there stil is pathetic corruption i.e. rishwath. Sh!t like this stops the country from progressing - Iran doesnt have this look at its nuclear and scientific capabilities.

What Pakistan got since 1947? Nothing!

 

[mitth]

Good Job and Choose great line :iran: