Conditions apply: Algeria wants govt-to-govt LNG export contract

Published: April 29, 2012

Another plan to import LPG from Algeria was shelved due to some technical issues. PHOTO: FILE

ISLAMABAD: 

Algeria has refused to export LNG to Pakistan through traders and wants a government-to-government contract for doing so, The Express Tribune has learnt.

The Pakistani government had decided to explore the option of importing LNG from Algeria after Qatar expressed her reluctance to export gas at a price less than $18 per Million British Thermal Unit (mmbtu). Pakistan has already signed a Memorandum of Understanding with the latter to import 500 MMCFD LNG, in order to utilise it in the generation of 2,500 megawatts of electricity.

A senior official of the Ministry of Petroleum told The Express Tribune that the LNG import plan was discussed in a recent meeting of the Pak-Algeria Joint Ministerial Commission (JMC), held in Algeria. Petroleum Minister Dr Asim Hussain had led the Pakistani delegation.

The official revealed that the focus during the meeting remained on mutual cooperation between Pakistan and Algeria in the oil and gas sectors. “The government is currently pursuing the import of LNG to overcome the energy crisis, and Algerian authorities were offered to export LNG and set up an LNG terminal in Pakistan.”

“However, Algerian authorities said that they would strike a deal with Pakistan on a government to government contract basis, and no LNG traders must be involved in the deal,” the official revealed. He said that Pakistan is interested in striking a deal with Algeria if it offers a price lower than that offered by Qatar.

The official said that a Pakistani technical team will visit Algeria soon in order to negotiate the LNG price and other related issues.

During the second session of the JMC, options of LPG export, a joint venture between oil and gas exploration companies of two countries and the setting up of fertiliser plants by private Pakistani enterprises in Algeria were also discussed.

The official said that the possibility of LPG export by Algeria was discussed, but the plan was shelved due to some technical reasons. “Algeria exports LPG in a refrigerated form and Pakistan has no facility at Karachi to handle that form of LPG,” the official said.

During the meeting it was also decided that Pakistani oil and gas exploration companies like the Oil and Gas Development Company Limited and Pakistan Petroleum Limited would enter into joint ventures with Algerian oil and gas exploration companies to available opportunities in both countries. “Pakistan is going to announce an auction of exploration blocks soon, and Algerian companies have been invited to participate in joint ventures with exploration companies working here,” the official added.

He said that Pakistan and Algeria had made some headway in cooperation agreements for the setting up of fertiliser plants in Algeria.

“Algeria has huge reserves of phosphate, and allied facilities have also been set up there,” he said. Delegations of some Pakistani fertiliser companies have already visited the country to assess opportunities in setting up fertiliser plants.

“It was decided that private Pakistani fertiliser companies will be offered the opportunity to set up manufacturing plants there,” the official said. He added that more delegations of fertiliser companies will visit Algeria along with a technical team to discuss proposals. The official said that fertiliser companies in Pakistan were facing a crisis due to gas shortages, and Algeria could be a good option for plants which depend heavily on phosphate.

Published in The Express Tribune, April 29th, 2012. 

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Reader Comments (5)

  • realist
    Apr 29, 2012 - 9:08AM

    Et tu Algeria?

    Recommend

  • Shami
    Apr 29, 2012 - 1:30PM

    **Algerians are smart and donot want any controversy
    Instead of promoting local investment MP&NR is now pursuing overseas!
    Give gas to local mfgs!
    Pakistan can handle refrigerated cargoes upto -6degrees c
    And cryogenic tanks can be constructed where is the offtake demand?

    Recommend

  • khalsa
    Apr 29, 2012 - 3:58PM

    pakistan needs to improve relations with other nations to get cheaper electricity.
    india is sourcing gas from oman at the concessional rate of $3 which is 1/6 of the price demanded by algeria.

    Recommend

  • Naresh
    Apr 30, 2012 - 1:36AM

    @khalsa Ji:
    .
    **India is sourcing gas from oman at the concessional rate of $3 which is 1/6 of the price demanded by algeria.**
    .
    The Price of USD 3 per MMBTU is per the Old Contract which has a Total Twenty to Twenty Five Year Period. I do not know the exact Year when this contract was signed but would think that it must have about 10 Years to run.
    .
    CheersRecommend

  • khalsa
    Apr 30, 2012 - 5:56PM

    @Naresh:
    as per old contract the gas price was .77$ which rose upto $3 mark this very month. indo-oman joint venture use this gas to make what all india requires in terms of fertilizer etc to ship the entire produce back to India.
    and the new contract price is $3 and old contract price was $ 0.77

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