ANALYSIS: Enhancing Pakistan’s Energy Security – By Roman Muzalevsky for ISN Insights

Pakistan has historically faced repeated energy crises, suffering from a fragmented planning system, wasteful consumption, and weak production capacity. As of 2005, only half of the population actually had access to electricity, while those that do experience frequent blackouts and shortages.

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Pakistan’s growing urbanization (3.1 percent) and industrial production (4.9 percent) – both key motors of economic growth – demand more energy every day, but production capacity remains weak and distribution systems inflexible. As the country’s population (already the sixth largest in the world) continues to grow, the deficiencies in Pakistan’s energy infrastructure are set to challenge the incumbent regime and the long-standing influence of the military – raising speculation about its internal stability and long-term economic future.

Pakistan depends heavily on energy imports and is projected to see a seven-fold increase in its energy demand by 2030. Much of this increase would have to come from expanded gas imports and domestic production. Pakistan’s economy is one of the world’s most gas-dependent, drawing on reserves in the restive Baluchistan province. In 2006, this province, home to 68 percent of the country’s estimated 28 trillion cubic feet (TCF) of gas reserves, accounted for 36-45 percent of domestic production. Balochi insurgents, however, often target the country’s energy infrastructure, undermining Pakistan’s energy security and any prospect of regional energy schemes.

Expanding the use of indigenous energy sources

Pakistan actually has substantial energy resources (gas, nuclear, hydropower, wind, coal) with which it intends to meet its Energy Security Plan (ESP 2005-2030) targets. It has 300 million barrels of proven oil reserves, 28 TCF of gas, 3,362 million short tons of coal (sixth largest in the world), and hydroelectricity potential of 46,000 MW (of which only 20 percent is in fact being utilized). Its current energy mix is: gas, 50 percent; oil, 30 percent; coal, 5.5 percent; hydro-electric, 12.7 percent; nuclear, 0.8 percent; and renewable, almost zero percent. Of the oil it uses, it produces less than 20 percent.

By 2030 Pakistan plans to increase its power production capacity from 19,540 MW to 162,590 MW, with nuclear power providing 8,400 MW of the projected increase; hydroelectric, 26,200 MW; coal, 19,750 MW; renewable energy, 9,520 MW; oil, 1,360 MW; and gas, 77,820 MW. The ESP intends to increase the share of nuclear power generation from the current 0.8 percent to 4.2 percent by 2030. But given Pakistan’s weak infrastructure, this raises proliferation, health and safety concerns.

Pakistan also aims to better utilize its vast hydro potential. But while thermal and large hydro-electric plants may take up to 12 years to become operational, using wind turbines that can begin producing energy in just two years offers some solutions. Wind is now the fastest growing source of power worldwide, with China alone planning to install 20,000 MW of capacity by 2020. Cooperation with China could provide Pakistan with technology, expertise and cash to develop its embryonic alternative energy industry.

Pakistan is also seeking to exploit 1,000 newly discovered sites that may contain significant uranium deposits, from which it intends to produce at least 117,450 tons of uranium ore annually by 2014. Pakistan will likely look to China, which has already helped build several nuclear plants in the country, to help with the expansion of its nuclear industry.
Capitalizing on the global economic shifts

Pakistan could also benefit from the changing global economic balance of power, as it seeks to establish itself as a major regional energy, trade and transit hub. Asia, primarily Southeast Asia, will account for 61 percent of the global increase in energy consumption by 2035, with China and India alone responsible for 29 percent and 13 percent respectively. Pakistan is expected to pursue much closer collaboration with energy producers and exporters like Saudi Arabia, Iran, Qatar, Russia, Central Asia and heavy energy consumers like India and China, which would increasingly depend on Pakistan as a transit corridor.

While oil pipelines connecting Central and South Asia remain hypothetical, Pakistan and Southeast Asia could rely on expanded Middle Eastern imports in the short run while exploring linkages with Central Asia in the future. China has already helped build the Gwadar port in Pakistan and now intends to invest heavily in the country’s economic infrastructure, including an oil corridor from Gwadar to Xingjian.

The prospects for the emergence of inter-regional gas and electricity lines are even higher. Emerging powers may soon commit unprecedented financial resources to regional energy projects involving Pakistan, Afghanistan and other parts of Central and South Asia, enabling Islamabad to attract more FDI as it seeks to upgrade its ailing energy sector. Asia’s gas and oil demand is expected to increase by 22 percent and 27 percent respectively between 2007 and 2035, making the Middle East and Central Asia critical for energy security and stability in South-East Asia. Russia is considering participating in the CASA-1000 project to deliver electricity from Central Asia to Pakistan and India. Iran, Pakistan and India are exploring the possibility of laying a gas pipeline through Pakistan. Turkmenistan, Afghanistan, Pakistan and India are looking to construct the TAPI gas pipeline linking Central and South Asia. And Qatar and Pakistan may soon be connected by a South Asia Gulf gas pipeline as well.

Addressing infrastructure costs and security risks

But a global gas market has not yet arrived, with LNG and gas pipeline projects involving significant infrastructure costs and security risks. Energy infrastructure costs are arguably manageable given a surge in global infrastructure spending. But wider geopolitical concerns, security and governance issues in Afghanistan and Pakistan, and US-Iranian tensions undermine the viability of these projects, especially if a country’s infrastructure is either underdeveloped, as in Afghanistan, or in need of considerable expansion, as in Pakistan.

Pakistan’s alleged reliance on terrorist networks to project power in the region is therefore clearly unsustainable, especially in light of terrorism problems in Pakistan itself (terrorists acts killed more than 1,000 people in 2010 alone), ongoing instability in Afghanistan and the potential for war between India and Pakistan. India, for instance, may also no longer tolerate another Mumbai, while the unresolved status of Kashmir may yet translate into a major international confrontation.
Pakistan also faces the possibility of a prolonged insurgency at home; severe civil strife in Afghanistan after the coalition’s withdrawal; Saudi-Iranian tensions, destabilization of Iran, and related deleterious impacts on global energy markets; as well as energy clashes involving water- and gas-rich countries in Central Asia.

That said, energy security and the continued economic growth of emerging countries is increasingly dependent on regional cooperation rather than confrontation, allowing Pakistan to facilitate positive relationships with partners and rivals alike, to include Saudi Arabia, Qatar, UAE, Iran, Russia, China, and India. These countries possess, process, deliver and will import considerable amounts of energy resources, enabling Pakistan to serve as a link in the energy supply chain in the emerging regional energy architecture. This is provided Islamabad successfully addresses the governance and security deficit within and across its borders.

Pakistan has long been compelled to look for both internal and external solutions to its energy security challenges. More coherent energy planning and expanded and more efficient use of domestic energy resources would help address Pakistan’s indigenous energy deficiencies, while better governance would enhance prospects for regional energy schemes. Only through sustainable energy security can Pakistan begin to emerge as a viable economic actor.

Roman Muzalevsky is a writer on Eurasian affairs and security for the Jamestown Foundation in Washington, DC. He holds a Master’s in International Affairs with a concentration in Security and Strategy Studies from Yale University. He can be reached at muzalevsky@hotmail.com.

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