Introduction
Globally, energy is regarded as one of the core elements of social well-being and an
essential component of sustainable development. Balanced energy supply and demand
are vital considerations for any country when it comes to providing clean, sustainable,
and affordable energy to consumers. For decades, Pakistan’s primary energy supply
mix has remained dominated by indigenous and imported fossils fuels. More than
three fourth portion of the overall energy mix consisted of gas and oil to meet energy
demand. Natural gas remained one of the major contributors to the primary energy
supply, but due to the fast-depleting pace of indigenous natural gas reserves
dependence on imported LNG and oil is increasing, which increases pressure on
foreign exchange reserves. The country may face challenges in the near future, like
scarcity of indigenous resources, rising imported fuel prices, and future supply chain
disorder.
In recent years, to mitigate impending challenges and with the advent of modern and
non- fossil fuel-based energy trends, the country has taken noticeable steps to alter the
energy supply mix by shuffling decades-consistent fuels with an increasing share of
local coal, non-fossil fuels, and renewable electricity generation. As a result, the share
of oil and gas dropped to less than two-thirds of the total country’s primary energy
mix during the last 15 years (see Figure 1).
Figure 1
80.00
70.00
60.00
50.00
Million TOE
40.00
30.00
20.00
10.00
0.00
2006 2010 2015 2020
Oil Natural Gas LNG Import LPG Coal Electricity (non-fossil)
A major portion of the primary energy supply (PES) from 2006 to 2020 was
consumed by various economic sectors and power generation, while the rest of the
shares were consumed by energy transformation and losses (see Figure 2). Energy
transformation remains consistent throughout the 15 years and mainly consisted of
auxiliary consumption by the energy sector, transformation consumption by gas
processing plants, oil refineries, transmission and distribution losses.
Figure 2
In the case of final energy consumption by the economic sectors, statistics show that
the industrial sector is consuming the highest proportion of energy (although its share
has declined over the period studied), followed by the transportation and the domestic
sectors. Commercial, agriculture, and other/government sectors consume the least
amount of energy (see Figure 3)
Figure 3
Historically, thermal power generation has been mainly dominated by FO, followed
by natural gas and diesel; however, the government added coal-based and LNG-based
power generation in recent years and decided to retire FO-based power generation in
the country (see Figure 4).
Figure 4
20.00
15.00
10.00
Million TOE
5.00
0.00
2006 2010 2015 2020
Oil Natural Gas Coal
Assumptions
Assumptions concerning variation in energy prices, population, and urbanization
growth were also considered to develop the model framework. GDP is a major
contributing factor in energy planning and demand assessment. The real GDP growth
and its forecast were based on the three key economic sectors: agriculture, industry,
and services. The annual GDP growth rate is directly proportional to the rise in
energy demand because it causes a significant change in the energy consumption
trends (see Table 1).
Table 1. Assumptions Underlying the Primary Energy Forecast
Energy Consumption Previous energy consumption has a direct link
to future energy demand.
Total and sector-specific GDP Energy intensity is correspondent to GDP,
(Agriculture, industrial, and services) at which implies that higher real GDP for sector
constant prices and GDP per capita correspond to an increase in
energy consumption for various economic
sectors.
Energy Prices The percentage change in energy demand also
depends upon energy prices, implying that
higher real prices decrease energy consumption.
Population & Urbanization Population and urbanization are also controlling
factors for energy demand, the estimation model
also considered these factors in the model.
Among the underlying assumptions, the most critical was the substantial uncertainties
in the future that can create risk for the long-term trends, seasonal and short-term
variations, and volatility in the price of fuels. For instance, the COVID-19 pandemic
had the direct and indirect effects of unanticipated demand-side shocks and short-term
fluctuations on various sectors and agents in the economy.3 Likewise, international
crude oil prices can directly or indirectly affect fuel and electricity prices in Pakistan.
Therefore, underlying assumptions are considered for
each economic sector and energy source. The projected total and sectoral GDP
(agriculture, industry, and services), population, and urbanization from 2021 to 2030
are shown in Figures 5 and 6.
Figure 5
8.00
7.00
6.00
Percentage
5.00
4.00
3.00
2.00
1.00
0.00
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Agriculture Industrial Services
Figure 6
300.0
250.0
200.0
Million people
150.0
100.0
50.0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Population Urban Rural
Primary Supply – A Historical Overview
Historically, POL products have been a major source of energy for the economic
sector and power generation companies, thereby covering a major portion of the
energy mix. Currently, the use of POL products is reduced to 22 percent of the energy
mix from the highest ever value of 35 percent in the year 2006. The country’s primary
energy demand for oil (crude and POL products) is met through imports; less than
one-fourth of the demand is met by local supplies. This fostered dependency on
expensive imported oil put considerable strain on Pakistan’s economy by increasing
import bills (see Table 2).
Table 2. Primary Energy Supply for POL Products (Tonnes)
Supply 2006 2010 2015 2020
Indigenous crude 2,839,085 2,976,660 3,884,022 3,101,679
processed
Imported crude 8,511,595 6,890,993 8,257,484 6,977,760
processed
Total crude processed 11,350,680 9,867,653 12,141,506 10,079,439
Import of POL products 6,009,401 11,178,100 13,347,000 7,539,358
Primary supply 17,360,081 21,045,753 25,488,506 17,618,797
Historical Consumption
Pakistan, in line with the rest of the world, has largely been dependent on the
consumption of POL products by the transportation sector. The two highly consumed
POL products— namely motor spirit and high-speed diesel (HSD)—are the primary
energy providers for the transportation sector. As a general trend, HSD, FO, and
kerosene oil were used as alternative fuels by the industrial sector. However, because
of the significant transportation cost associated with the oil supply and difficult
handling needs, consumption of POL products has shown a fluctuating trend within
the industrial sector (see Figure 7).
Figure 7
20.00
15.00
10.00
Million Tonnes
5.00
0.00
2006 2010 2015 2020
Transport Industrial Others Agriculture Domestic
Historically, thermal power generation has been dominated mainly by FO-based
power plants. Intending to find a more environmentally friendly solution, the GoP in
recent years decided to reduce FO consumption in the power sector by adding other
energy sources. This exercise has resulted in a sharp decline in oil consumption from
2015 to 2020 in the power generation sector. The major change occurred because FO-
based power generation in the country was retired (see Figure 8).
Figure 8
10.00
Million Tonnes
8.00
6.00
4.00
2.00
0.00
2006 2010 2015 2016 2018 2019 2020
Furnace Oil High Speed Diesel
Seasonal Pattern for Consumption of POL Products. Transportation is the most
oil- consuming sector; its significant variance of monthly oil consumption affects
total oil consumption as well. The change that can be observed in the summer months
may be due to vacations and holidays (see Figure 9)
Figure 9
1.40
1.20
Million Tonnes
1.00
0.80
0.60
0.40
0.20
0.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total Consumption Transport
Forecasting Results (2021–2030)
The forecasting results are produced based on the historical baseline trends of the oil supply
and consumption in the country. Similar to the historical trends, oil and POL products will
constitute the major part of the energy mix for serving the sectoral demand. Because transport
is a major sector in oil and POL products consumption, its demand will be met by local
production and imports. The demand for the transport sector, coupled with the recent
industrial growth, demographic changes, and economic progress, will increase the overall
consumption from 17.03 million tonnes in 2020 to 24.15 million tonnes by 2030. The
demand for motor spirit and HSD is expected to reach a level of 20.8 million by 2030,
compared to 13.86 million tonnes in 2020. Based on the recent government policy, the 33
percent share of FO in power generation will be phased out by 2030 (see Figure 10)
Figure 10
25.0
20.0
Million Tonnes
15.0
10.0
5.0
2020 2021 2025 2030
Transport Industrial Others Agriculture Domestic Power
Outlook for Natural Gas, Including LNG
This chapter discusses the outlook of natural gas and LNG as energy sources in
Pakistan. It gives an overview of the historical primary supply and consumption
patterns. The forecasting results (2021-2030) have been discussed to better analyze
the future demand trends. The chapter then discusses the upstream natural gas
production in the country and the present status of the LNG import infrastructure.
Finally, some recommendations have been presented to improve the supply of natural
gas and LNG in the country.
Primary Supply – A Historical Overview
Pakistan has mainly relied on gas as a primary energy source. Natural gas was stood
up as the leading energy source to meet the energy demand in different sectors. Ever
since, the discovery of the Sui gas field in Balochistan in early 1950, natural gas has
been depleting fast. The government has imported LNG over the last 10 years to keep
up with the growing demand for gas in different sectors. Natural gas and imported
LNG now contribute more than a 40 percent share to the current energy mix of the
country. The historical pattern for indigenous gas production and imported LNG as a
primary energy supply is reflected in Table 3.
Table 3. Primary Energy Supply for Gas (Million CFt)
Supply 2006 2010 2015 2020
Natural gas 1,400,02 1,482,847 1,465,760 1,316,635
production 6
Imported LNG - - 20,192 355,577
Primary supply 1,400,02 1,482,847 1,485,952 1,672,212
6
Historical Consumption
Past trends show that the industrial sector consumes the most gas. Since the decline in
gas reserves, the government has prioritized the domestic sector over industry in
recent years. With the substitution of natural gas for cooking and heating, its use
significantly increased when replacing kerosene oil in the domestic sector (see Figure
11).
The aggressive demand for Compressed Natural Gas (CNG) in the transportation
sector, coupled with declining gas reserves, created a deficiency in natural gas supply
to other sectors. Therefore, the GoP reviewed and revised the natural gas allocation
policy and consequently, the consumption of CNG declined in the transportation
sector. The use of natural gas in the commercial sector continued to increase until the
GoP changed its natural gas supply priorities; as a result, LPG started to replace
natural gas.
Figure 11
800,000
700,000
600,000
Million CFt
500,000
400,000
300,000
200,000
2006 2010 2015 2020
Domestic Industrial Transport Commercial
Historically, gas was the primary source for thermal power generation, but due to the
decline in gas reserves in the last decade, its contribution to power generation has
declined significantly. However, recently, the government decided to add LNG as a
gas resource for power generation (see Figure 12).
Figure 12
500,000
450,000
400,000
Million CFt
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2006 2010 2015 2020
Gas being a country’s leading energy source contributes to its use in almost all
sectors, including the fertilizer industry as a feedstock (non-energy) and as a fuel. The
use of gas as a non-energy source is increasing due to the increased demand for
feedstocks and the increasing use of fertilizer inputs in the agriculture sector (see
Table 4).
Table 4
Source 2006 2010 2015
Fertilizer (as feedstock) 155,259 175,631 170,266
Fertilizer (as fuel use) 42,918 44,481 59,459
Seasonal Pattern for Consumption of Natural Gas. Because the domestic sector
mostly consumes gas, its demand during the winter months (November–February)
increases sharply for space and water heating; it also surges in terms of month-wise
total gas consumption. During the summer months, gas consumption in the domestic
sector remains sluggish and shifts to the industrial sector for effective utilization of
available resources (see Figure 13).
80,000
70,000
60,000
50,000
40,000
30,000
20,000
Million CFt
Forecasting Results (2021–2030)
Similar to past trends, forecasting indicates that domestic use will be the top-
consuming sector based on population and urban growth. Because natural gas
production is on the decline, more imported LNG will be required in the near future to
meet the demand of the domestic sector.
Figure 14
1,800,000
1,600,000
1,400,000
1,200,000
Million CFt
1,000,000
800,000
600,000
400,000
200,000
0
2020 2021 2025 2030
Domestic Industrial Transport Commercial Power
Based on industrial growth and the government’s policy tilt toward promoting overall
exports, the industrial share along with fertilizers (feedstocks) may increase sharply in
the future and it will constitute the highest share of gas consumption.
Previously, the gas consumption for power generation remained around 400 billion
CFt per annum, however, due to depletion in reserves, its share will come down to
200 billion CFt per annum by 2030 (see Figure 14).
Outlook for LPG
This chapter discusses the outlook of LPG in Pakistan. a brief overview of the
historical supply and consumption trends of LPG has been presented. The forecasting
results (2021- 2030) depict the demand side scenario for LPG in the country. The
energy balance of the LPG sector has been calculated to study the increasing national
demand. Finally, substantial recommendations have been presented to meet the future
LPG demands.
Primary Supply – A Historical Overview
Currently, there are 11 LPG producers with 216 marketing companies. In addition,
significant investment has been made in the LPG supply and distribution
infrastructure. Due to growing pressure from different sectors, the production of LPG
and its importation has witnessed significant growth. Apart from supplying the
country’s domestic needs, it is important to meet the country’s other growing
demands (Table 5).
Table 5. Primary Energy Supply for LPG (Tonnes)
Supply 2006 2010 2015 2020
Field 344,875 298,457 276,891 603,510
Refineries 212,974 186,658 191,664 158,400
Local 557,849 485,115 468,555 761,910
production
Import 24,779 67,721 145,634 344,639
Primary 582,628 552,837 614,189 1,106,549
supply
Historical Consumption
LPG represents a substitute for natural gas that is consumed primarily in the domestic
sector for cooking and heating purposes. The use of natural gas in the commercial
sector increased until natural gas supply priorities were changed by the government;
as a result, LPG started to replace natural gas because of the ease of portability that it
offers to consumers and its competitive pricing compared to natural gas. As a result,
an increase in LPG consumption has been observed in the domestic and commercial
sectors since 2015.
Spikes in LPG use by the commercial and domestic sectors have also been witnessed
due to natural gas supply and distribution disruptions. Hence, LPG has become the
second most used cooking fuel in both rural and urban households. Surprisingly, LPG
consumption in other economic sectors (commercial transport such as auto-rickshaws,
etc.) has increased aggressively from minimal to becoming the third most highly
consumed fuel (see Figure 15).
Figure 15
illion Tonnes
1.20
1.00
0.80
0.60
0.40
2006 2010 2015 2020
Domestic Commercial Other
Seasonal Pattern for Consumption of LPG. Similar to natural gas, LPG has a
monthly consumption variance. Due to decreased demand during the summer months,
the price of LPG cylinders also declines—making it ideal for other sectors (autos,
rickshaws) to use as a cheap primary fuel (see Figure 16).
Figure 16
0.10
0.08
Million Tonnes
0.06
0.04
0.02
0.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total Consumption Domestic
Forecasting Results (2021–2030)
Despite an increase in the price of LPG, the consumption of LPG is predicted to
increase within the domestic, commercial, and transport (2–3 wheelers transport)
sectors. The LPG demand will increase by 50 percent to 1.68 million tonnes by 2030
compared to 1.10 million tonnes in 2020. Based on its ease of portability and
comparative price relative to that of natural gas, the commercial sector is also
preferring LPG, thereby becoming the largest LPG consumer of the sectors (see
Figure 17).
2.00
Figure 17
2.00
1.50
Million Tonnes
1.50
1.00
1.00
0.50
0.50
0.00
2020 2021 2025 2030
0.00
2020 Domestic2021 Commercial Others
2025 2030
Domestic Commercial Others
Outlook for Coal
This chapter discusses the outlook of coal in Pakistan. It sheds light on the historical
supply and consumption trends of coal in the country. The forecasting results (2021-
2030) show the change in the expected demand for coal in different economic sectors
in Pakistan. The energy balance of coal analyses the future consumption of coal in
power generation. The chapter concludes with an option to substitute imported coal
with local coal and a set of recommendations for the management of the coal supply
in the country.
Primary Supply – A Historical Overview
Pakistan has abundant coal resources, found in all provinces, that are still untapped
and underutilized. The largest reserves are in the Thar Desert of Sindh, which has
7,025 million tonnes of measured reserves. Coal is the cheapest source of energy that
can be used as fuel for power generation and industrial use, such as the brick-kiln and
cement industry. A country with a plentiful reserve can provide a hedge against
international fuel price volatility. With the advancement of the Thar coal project,
domestic coal is contributing a considerable share to the country’s current energy mix
relative to past practices (see Table 6).
Table 6. Primary Energy Supply for Coal (Tonnes)
Suppl 2006 2010 2015 2020
y
Thar Coal - - - 3,669,968
Non-Thar Coal 4,871,159 3,480,674 3,711,561 5,065,122
Local coal 4,871,159 3,480,674 3,711,561 8,735,090
Import 2,842,829 4,657,829 5,003,806 16,421,787
Primary supply 7,713,988 8,138,503 8,715,367 25,156,877
Historical Consumption
Coal mining enhancement, the advancement of coal-burning technologies (that
enabled the extraction of more heat due to the high carbon content present in coal),
and the use of coal by- products by various industries (e.g., brick-kiln and cement),
gradually increased the consumption of coal and replaced a fair portion of oil and
natural gas consumption in the industrial sector. In past years, the major share was
consumed by the brick-kiln and cement industry, followed by the Pakistan steel mill
(see Figure 18).
16.00
Million Tonnes
14.00
12.00
10.00
8.00
6.00
4.00
The 2.00
government 2006 to use coal for
decided 2010 2015
thermal power generation 2020
because it is the cheapest
Industrial
source of energy. An aggressive spike can be observed in the current coal consumption for
thermal power generation compared to the last one and a half decades. Currently, almost 70
percent of imported coal and 30 percent of domestic coal is being used for thermal power
generation (see Figure 19).
Figure 19
14.00
12.00
Million Tonnes
10.00
8.00
6.00
4.00
2.00
0.00
2006 2010 2015 2017 2018 2019 2020
Forecasting Results (2021–2030)
Considering the government preferences for using local coal resources, the demand
for coal in power generation and the industrial sector will almost double by 2030.
From 2021 to 2030, coal will become the country’s second-largest primary energy
source to serve the overall energy demand. The use of coal will increase to 50 million
tonnes in 2030, as compared to 26 million tonnes in 2020 (see Figure 20).
Figure 20
60.00
50.00
40.00
Million Tonnes
30.00
20.00
10.00
2020 2021 2025 2030
Outlook for Electricity
This chapter discusses the outlook of electricity in Pakistan. It gives a brief overview
of the historical power generation and consumption trends in the country. The
forecasting results (2021-2030) shows the electricity demand in all economic sectors
including transportation. An analysis of future installed capacity (2021-2030) and
energy mix for power generation (2021-2030) have been given. Finally, the chapter
closes with recommendations to improve the supply of electricity in the country.
Power Generation – A Historical Overview
Due to the sharp spike in electricity demand, both state-owned power generation
companies and independent power producers are aggressively engaged in producing
electricity. Pakistan’s electricity generation mix relies heavily upon unsustainable
thermal generation. The country’s electricity installed capacity (Mega Watts (MW))
and power generation (Giga Watt Hour (GWh)) historic patterns are shown in Figures
21 and 22, respectively.
Figure 21
40,000
35,000
30,000
25,000
MW
20,000
15,000
10,000
5,000
2006 2010 2015 2016 2017 2018 2019 2020
Hydel Oil Gas LNG Local coal Imported coal Nuclear Renewable
Figure 22
140,000
120,000
100,000
80,000
GWh
60,000
40,000
Historical Consumption
Electricity consumption in the domestic sector increased from 2006 to 2020 because
of increased rural electrification, rapid urbanization, and the increasing use of
electricity as an efficient alternative fuel for domestic heating/cooling and cooking.
Likewise, due to the enormous use of electricity in the commercial sector (lighting,
heating, cooling, commercial cooking, small-scale production, etc.) and the lack of
suitable alternate fuels, the consumption of electricity increased during the period of
review (see Figure 23).
Figure 23
120,000
100,000
80,000
GWh
60,000
40,000
20,000
0
2006 2010 2015 2020
Domestic Commercial Industrial Agriculture Other
The use of electricity in the agriculture sector increased because of multiple
government- sponsored initiatives (such as the provision of subsidized electric
motors, pumps, etc.) and the advancement of electricity-based agricultural equipment
to encourage farmers to adopt modern farming practices. As a result, electricity has
replaced a significant portion of POL consumption in the agricultural sector.
Electricity consumption in other economic sectors, like governmental entities,
institutes, etc., also significantly increased from 2006 to 2020.
Seasonal Pattern for Consumption of Electricity. Higher temperatures and
changing climate effects drive an increase in electric appliance usage for cooling and
raise the electricity demand within the domestic sector in the summer season (April–
September), eventually increasing total consumption demand (see Figure 24).
Figure 24
10,000
8,000
GWh
6,000
4,000
2,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Total Consumption Domestic
Forecasting Results (2021–2030)
Economic growth, increased urbanization and population, and ever-improving
lifestyles of the citizens drive the increased future consumption of electricity in all
economic sectors. If business proceeds as usual, domestic demand will be boosted to
more than 75,000 GWh— almost half of total electricity consumption —in 2030,
followed by industrial, agriculture, commercial, and other sector demands. With the
inclusion of electric vehicles in the transport sector, consumption of electricity by the
transport sector will be more than 6,000 GWh by 2030 (see Figure 25).
Figure 25
160,000
140,000
120,000
GWh
100,000
80,000
60,000
40,000
20,000
0
2020 2021 2025 2030
Domestic Industrial Others Commercial Agriculture Transport