Pakistan, Qatar sign $16 billion LNG deal

Published: February 11, 2016
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PHOTO: REUTERS

PHOTO: REUTERS

PHOTO: REUTERS PM Nawaz being received by his Qatari counterpart at Doha airport. PHOTO: PPI
DOHA: 

Pakistan and Qatar signed on Wednesday the long-awaited multi-billion dollar liquefied natural gas (LNG) deal which would see it import the fuel for 16 years to meet domestic energy requirements.

The $16 billion sale and purchase agreement was signed by Petroleum Minister Shahid Khaqan Abbasi for Pakistan and Chairman Qatargas Board of Directors Saad Sherida in Doha with Prime Minister Nawaz Sharif and Emir of Qatar Sheikh Tamim bin Hamad bin Khalifa al Thani witnessing the ceremony.

Pakistan inks LNG deal worth $16b with Qatar

Nawaz is on a two-day tour of Qatar, primarily for the LNG deal signing ceremony.

Terming the deal as a ‘game changer’ for Pakistan, Abbasi told the media that it would see Qatar export 3.75 million tonnes of LNG to the energy-starved country. With the supply-demand gap in Pakistan standing at approximately 2-4 BCFD (billion cubic feet per day), the import would help meet 20 per cent of its energy needs.

“This agreement has been hailed around the world as the most cost effective deal for LNG globally under which Pakistan will keep importing fuel from Qatar till 2032.”

The minister claimed that the deal would save the country $1 billion annually while a further $600 million could be saved in diesel costs for power generators.

Pakistan finalises $21b LNG deal with Qatar

In July 2013, the Economic Coordination Committee (ECC) of the federal cabinet had authorised petroleum ministry to negotiate with Qatargas to import up to 500 mmcfd on delivered ex-ship (DES) basis. Subsequently, an agreement relating to energy sector cooperation was signed between the two governments.

The ECC also allowed Pakistan State Oil (PSO) as buyer to execute the long term LNG sales purchase agreement (SPA) with Qatargas as seller, pursuant to a government-level agreement as per due process.

In August 2014, the ECC formed the price negotiation committee (PNC) comprising representatives of the petroleum, finance, water and power, Sui Northern Gas Pipelines Ltd. (SNGPL), Sui Southern Gas Company Ltd. (SSGCL), PSO and Inter State Gas Systems Limited (ISGSL) to negotiate the price with Qatar.

In a meeting on January 13, the government approved PNC’s recommendations regarding the price and key commercial terms of the long term SPA.

According to the agreement, the cost of gas for the month of March is estimated to be $4.78 per mmbtu, lower than the Qatar’s current rate of $5.35 mmbtu.

The venue and setting for Wednesday’s signing ceremony was almost identical to the one almost four years ago when Pakistan and Qatar had first inked a memorandum of understanding (MoU) for importing LNG. The difference: It was Prime Minister Yousaf Raza Gillani overseeing the signing ceremony that day while the signatories were then Petroleum Minister Dr Asim Hussain and Qatar’s minister for energy Dr Muhammad bin Saleh Al Saada.

Pakistan close to clinching $16b Qatar LNG deal

Three other MoUs signed

Apart from the LNG deal, three other agreements were signed between the two countries on Wednesday including cooperation in the fields of radio and television, health and academic research activities.

An MoU about cooperation between the two countries in radio and television was signed by Special Assistant to the PM on Foreign Affairs Syed Tariq Fatemi and Qatar’s Foreign Minister Muhammad bin Abdurrehman Al-Thani.

The MoU on cooperation between the two countries in health sector was signed by Finance Minister Ishaq Dar and Qatar’s Health Minister Hanan Muhammad Alkwari.

An MoU in academic research and cooperation activities between the two countries was signed by Pakistan’s Ambassador to Qatar Shahzad Ahmed and Commander of Strategic Studies in Qatar Armed Forces Staff Major General Saud Ali Alnaeemi.

Nawaz invites Qatari investment

In a one-on-one meeting with Qatar’s Emir at the Aiwan-e-Emiri, Nawaz said that Pakistan was an ideal destination for investors and called upon the Qatar Investment Authority to explore opportunities in Pakistan’s oil and gas sector and the power sector. They also discussed ways to enhance cooperation in various fields.

Cheaper LNG only solution to energy woes

Nawaz added that Qatar could benefit by utilising the services of the large manpower Pakistan has.

Earlier upon his arrival in Doha, Nawaz and his entourage was warmly received by Prime Minister of Qatar Sheikh Abdullah bin Nasir bin Khalifa Al-Thani.

They witnessed a demonstration of Pakistan’s JF-17 Thunder fighter jet and the Super Mushshak light trainer aircraft.

Published in The Express Tribune, February 11th, 2016.

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Reader Comments (24)

  • Kaleem
    Feb 11, 2016 - 9:36AM

    1 million metric tons LNG = 1.38 billion cubic meters NG. So if we are importing 3.75 million tons, are we importing 5 bcfd per year. That should make the current 2-4 bcfd gap to zero then. And our industries, power plants, domestic users will not have to face load shedding for next few years atleast. If this is so positive, why is everyone not feeling optimistic despite getting lower rates than Iran and TAPI.

    P.S. Please correct me if I made mistake in calculations. Recommend

  • Ashanti Sumra
    Feb 11, 2016 - 9:41AM

    :) $4.78mmbtu ? When the market rate is 2.06? And India renegotiated a previously signed agreement for 2.76

    Good job.Recommend

  • Sonya
    Feb 11, 2016 - 9:45AM

    With this deal will now Qatari Sheikhs start respecting Pakistan laws and stop hunting Houbara bustards.Recommend

  • X-Rays
    Feb 11, 2016 - 9:46AM

    Well done PNL-N..!Recommend

  • Malik Saab
    Feb 11, 2016 - 9:55AM

    Qatar is one of the countries of the world where there is a total ban on all Pakistanis getting work visas. For an Indian guy they approve the application within 24 hours. So atleast the Pakistani government could stipulate and negotiate with Qatar to stop this Racist and Discrimination against Pakistani individuals. Qatar is even pushing other Arab countries to do the same.

    If they are going to profit form us, then we should make sure to get some profits from them in return. Time to look Racist Arabs in their eyes and talk with them on an equal basis.

    Unfortunately I am sure Mr Nawaz Sharif would have never mentioned this issue with them at all. Also Mr Imran Khan never mentioned it at all as he is busy in agitation rather than doing any constructive opposition. Recommend

  • Malik Saab
    Feb 11, 2016 - 10:09AM

    @Kaleem:
    Bcfd stands for Billion Cubic feet per day. Our daily consumption is 3.5 to 4 bcfd. You get the maths wrong my friend and in a big time manner. You have mixed Tcf with bcf. 5 bcf per year is not even enough for 2 days. Our annual consumption is around 1.4 tcf ( trillion cubic feet). Recommend

  • Pakhtun
    Feb 11, 2016 - 11:31AM

    More commission for Raiwand wali sarkar. The fees of the port will be charged from consumers to make Arab masters happyRecommend

  • Xnain
    Feb 11, 2016 - 11:35AM

    @Pakhtun:
    Don’t worry KPK will generate electricity from A Billion Trees.Recommend

  • ZAK
    Feb 11, 2016 - 1:11PM

    The deal will definitely reduce gap of NG supply and demand.
    This is one of the clean source of energy. Industries will produce more
    and hopefully more tax for government.

    Job less than half done.Still a lot to do in energy sector.

    Well done and keep doing good deeds for Pakistan.Recommend

  • Feb 11, 2016 - 2:30PM

    Let’s see if they can generate electricity from this gas !Recommend

  • Feb 11, 2016 - 2:40PM

    this LNG was very important for Pakistan….plus Nawaz Shareef has chosen a better country like Qatar…..If Qatar agrees to purchase jf-17 or super mushaq …..this can be a great deal for both the countries.Recommend

  • KH
    Feb 11, 2016 - 3:29PM

    @Malik Saab:
    Thats KUWAIT….Recommend

  • Pakistan Zindabad
    Feb 11, 2016 - 3:35PM

    I see a lot of Brighter effects in economy and public sector in Pakistan.Recommend

  • Naeem
    Feb 11, 2016 - 4:40PM

    Here are the correct calculations….
    1million metric ton—–>48700 million cubic feet
    3.75————————>182625 million cubic feet

    divided by 365 days we will get around 500MMcfd and our peak shortfall is around 2400MMcfpd
    So, it will be enough clear the shortage in the energy sector, industries, fertilizers, power plants, refineries, CNG sector etc that will decrease the consumption of our domestic produced gas, which will be available domestic purposes…. Recommend

  • SHAH
    Feb 11, 2016 - 5:58PM

    @Kaleem:
    You have just mixed cubic meters with cubic feet. Recommend

  • SHAH
    Feb 11, 2016 - 5:59PM

    @Sonya:
    After this deal, they now have this hunting as their birth right; Recommend

  • SHAH
    Feb 11, 2016 - 6:00PM

    @Malik Saab:
    Once they are no more PM and CM of Pak, they will also not get any work visa to enter Qatar.. Work Visas for Pakistanis are banned in Qatar. Only renewals of existing ones. Recommend

  • hamza
    Feb 11, 2016 - 7:25PM

    @Ashanti Sumra:
    India is buying LNG from RASGAS at $6-7mmbtu. Educate yourself before you start writing. Recommend

  • curious2
    Feb 11, 2016 - 9:44PM

    It took 4 years to negotiate a deal that normally would take weeks/months. It good that something has finally been finalized – but ample evidence of lack of Leadership.Recommend

  • Feb 11, 2016 - 11:53PM

    @Ashanti Sumra:

    The final costs, as indicated in this excerpt from the Tribune are: PAK: $4.680 IND: $5.361

    *”Pakistan will buy LNG from Qatar at 13.37% of Brent crude price, which amounts to $4.680 per million British thermal units (mmbtu) when oil is sold for $35 per barrel. This also includes port charges of $320,000 per vessel.

    On the other hand, India is buying LNG at 12.66% of Brent crude price plus $0.6 constant and $0.33 shipping cost. This is equal to $5.361 per mmbtu based on $35-per-barrel crude price.

    Average regasification charges in Pakistan stand at $0.66 per mmbtu whereas in India these are $0.90 per unit.

    Pakistan has planned to import 3.5 million tons per annum compared to Indian purchases at 8.5 million tons per year.”*

    India vs Pakistan Qatar LNG cost
    Why do Indians never tire of trying to rub Pakistan’s nose in? Some irrational obsession with undermining and demeaning Pakistan apparently.Recommend

  • bechari-awam
    Feb 12, 2016 - 12:07AM

    I just realized we are blessed to have so many petroleum marketing and pricing experts as you read comments here, some have skills to negotiate a $16B deal within a few weeks and some are analyzing pricing using their God given accounting talents down to 1/millionth of a penny. btw these are the same experts whose night time job is to analyze security and political issues this world is facing today taking cue from equally talented anchors and news readers of their liking at various channels. Recommend

  • zaf
    Feb 12, 2016 - 2:21AM

    We have do much gas our self why these brainless leaders not exploring this. There is need for energy so we can revive our donors. why is idiotic Dar borrowing so much money. I think they will spend big to get reelected and put their spoiled kids in charge. .mariam is readyRecommend

  • Muneer
    Feb 12, 2016 - 5:20AM

    @Malik Saab:
    Done with your xenophobic rants? Ok, its Kuwait not Qatar which has imposed the ban. Pakistn enjoy excellent relations with Qatar with around a 100,000 Pakistani expats residing in Qatar. Instead of rambling it would be better if you do some real research next time.Recommend

  • Muneer
    Feb 12, 2016 - 5:23AM

    @SHAH:
    You are mixing Kuwait with QatarRecommend

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