After the Oil Crisis Inquiry Report became public there was an immediate discussion on this report which resulted in Kamran Khan hosting a debate between Minister of Energy Nadeem Babar and ex-PM Shahid Khaqan Abbasi
The debate was interesting but I’m glad to note that it remained respectful, my opinion was that Nadeem Babar had facts to share which Shahid Khaqan Abbasi had very little proof and based his discussion on speculation and heresy. Nadeem Babar scored and 8-2 victory. I do feel Kamran Khan gave a lot more time to Shahid Khaqan to express his views which was a bit unfair
As usual Zuhair Abbasi, on twitter immediately deciphered the debate separated out the facts from speculation – I share here his twitter thread which I think is worth a ready, it can be fully read on twitter as well
My two cents on Shahid Khaqan vs Nadeem Babar debate on @AajKamranKhan show. It started well and digressed towards the end. May sound partisan, but SKA was way off the mark in most things. I’d say 8-2 to NB, out of 10.
NB’s argument that LNG was declared as petrol not gas, which meant weighted average price was out of question. Domestic Rs250-375/mmbtu, LNG Rs1400/mmbtu, is right on the money. That is where the debate should now move to, but did not.
NB then questions the rationality of Qatar term deal and challenged the price. Said there was supply glut and striking a 10 year deal does not fit any economic metric. This is an unfair criticism in my view.
BecauseNearly 70% of global LNG is traded on term basis. It sure does fit in the economic matric. You cant predict glut with certainty, as seen in oil markets. Supply in winters gets tight, and you could risk losing supply when you need it the most.
Term is critical for supply security as well. Don’t forget Pakistan was just starting its LNG journey, and the terminal charges were to be paid regardless. Ensuring supply was needed.
Opinion: When NB rightly points out they can’t charge LNG on weighted avg gas rates b/c it is treated as petrol, he is also indirectly admitting that the current govt has not done nay lawmaking to that effect.
Also, Latest domestic average price is Rs400/mmbtu. not Rs300.
SKA’s whole argument seems loosely built around the “Savings” resulting from improved energy generation mix. PML-N is rightly credited for that, but nobody ever doubted that LNG is cheaper than FO and HSD. He has no point here. Comparing apple vs oranges. Irrelevant.
SKA keeps insisting on “new” terminals. NB correctly pointed out that a number of months the demand is under 800 mmcfd. Unless there is concrete demand from private buyers, new terminals would not make sense.
Also, the obsession with everything “new” is nauseating. New licenses, new exploration blocks, new schools, new terminals, new hospitals. Fix what you have. New can come later.
Demand assessment has been a problem, and we have long argued the shortfall figures are overhyped – and are just based on compounding some random figure thrown 15 years ago. Can’t sell – why buy?
The GIDC bit is tricky. While the money collected may well have spent, it was never contested by the federation in the Supreme Court. The GIDC judgment clearly orders using Rs295 bn already collected for pipeline purposes, which implies it considers it “there”.
But then the court order assumes that the amount collected by the government has to be expanded on projects or consider the GIDC dead. This is still tricky open to interpretation. Also, is the government collecting the GIDC installments in the marked account?
And boy, did SKA really say “even if that (GIDC) money could have been used for these pipelines we would not have used that”??? Why would you say that? Why? The GIDC use of funds clearly state pipeline for LNG terminals as one of the three avenues. Still can’t believe my ears.
NB goes back to Qatar contract and tries to make a point that the ENI contract at 12% 10 months later prove that Qatar was wrong. Now this is not a very valid argument that just because you are entering a contract after 10 months, you should attract lower rate.
Market realities change. And Pakistan got a good rate in the Qatar deal, comparable to other deals done during same time. The criticism does not sit on merit. This is the same hindsight argument, which NB has been so against.
Fact is Qatar wasn’t a half bad deal . The contract price around that time was much higher. It was better than spot rates too.
SKA then makes frivolous arguments, mostly the ones making round on Geo, regarding opportunity loss. Then says “Spot cargo is generally cheaper”– there is no general rule here, but then refutes himself as he built the entire premise (and not wrongly) on how term contract was good
SKA then adds “We don’t have gas and we cant produce electricity”. Way off the mark here. Winters, you would not need much LNG. The power sector demand is very manageable. The pressure is from domestic. He should know better.
Then says “it was time to shut our domestic gas and import from outside for $3-4/mmbtu.”
Wish he could unsay that. He has been the petroleum minister. He knows indigenous gas is so vital, and shutting down and restarting gas fields is not a matter of joke
NB tries to take the credit of improved generation mix that only 3.9% ran on FO. Not fair. The transmission argument is correct, as evacuation is a problem from LNG. And continues to remain, which is why merit order is violated.
The debate again descends to the same brent vs slope argument, which has been time and again used by both sides to whatever suits at whatever time. It is unfair to compare winter price of today vs that of 3 years ago. NB knows that well too but still hammers to score the point.
All in all, it could and should have been a much better quality of discussion. But if you were to pick a winner, NB won it fair and square. SKA was unprepared, way off the mark and just politicking.
P.S. I am a fan of neither.