ASSESSMENTS

Pakistan Strives to Switch to Natural Gas

Oct 2, 2019 | 09:00 GMT

The sun rises over an LNG terminal at sea.

The sun rises over an LNG terminal at sea. Pakistan is hungry for LNG imports, but a variety of issues could cause some investors to hesitate.

(WOJCIECH WRZESIEN/Shutterstock)

Highlights

  • Pakistan will continue to shift its economy from oil to natural gas, a cleaner and less expensive option.
  • The government's wide-ranging campaign against graft, and other problems like debt and energy bottlenecks, will likely complicate future Pakistani LNG terminal projects.
  • Nevertheless, its energy transition will drive demand for increased LNG imports, creating investment opportunities.

Hoping to quench its economy's growing thirst for energy, Pakistan has turned to several multinational companies for an ambitious expansion of its liquefied natural gas terminals on the Arabian Sea. On Sept. 20, Petroleum Minister Omar Ayub Khan said Pakistan had chosen ExxonMobil, Trafigura, Royal Dutch Shell, Gunvor and Tabeer Energy to build five LNG facilities. Ayub's announcement touches upon a broader plan to boost the country's LNG processing capacity while shifting the economy's reliance away from oil. With a shortfall in domestic production expected to persist as more customers sign on to the grid, Pakistan's burgeoning demand for natural gas will drive ever-more LNG imports in the next few years. And though some might hesitate to invest in Pakistani LNG lest local partners run afoul of a far-reaching (and allegedly politically motivated) anti-corruption campaign, the growth of the country's LNG demand creates major opportunities for international energy companies looking...

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