A Time Series Forecasting Analysis of Overall and Sector-Based Natural Gas Demand

Abstract

Pakistan is developing South Asian country which is currently considering alternative energy sources including coal, solar, compressed natural gas, and wind energy to cope with the worst energy crisis in its history. Moreover, the policy promotion of compressed natural gas especially in the transport sector has raised concerns about the demand management of natural gas to avoid future shortages and ensure sustainable use of this precious non-renewable source of energy. Against this background, this study aimed to forecast natural gas demand in Pakistan for the 2016–2030 period by applying relevant univariate time series econometric methods. Apart from forecasting the overall natural gas demand, the forecasting analysis is also conducted for natural gas demand in Pakistan’s total natural gas consumption and also for natural gas consumption across the household, industrial, commercial, transport, fertilizer production, power generation, and cement production sectors. Overall, the fndings revealed that ARIMA is the appropriate model for forecasting gas consumption in Pakistan. Further, the growth of increase in the level of compressed natural gas consumption in the household sector is more as compared to all other sectors of the economy up to the year 2030. The key fndings show that (a) natural gas consumption is likely to grow with time, (b) mixed projection trends are observed for the overall natural gas consumption and other sector-based natural gas consumption trends, and (c) the diference between natural gas consumption and production in Pakistan is likely to grow leading to 2030. As part of the policy recommendation in line with the fndings, policymakers in Pakistan should increase the availability of natural gas, particularly in sectors where its consumption is likely to be declining. In addition, more proactive measures should be undertaken to explore the existing natural gas reserves in the long run while also importing natural gas from the neighboring nations in the short run. Furthermore, the government of Pakistan should seriously consider strategizing the development of the nation’s compressed natural gas sector. Keywords Natural gas demand · ARIMA · Holt-Winter · Forecasting · Forecast evaluations · Pakistan