Seeing winter demand, govt plans fresh LNG tenders

Decides to import another 200 mmcfd, at present it is receiving 500 mmcfd

ISLAMABAD: The government has planned to float fresh tenders for the import of liquefied natural gas (LNG) in an effort to meet domestic needs in the upcoming winter season, when demand reaches its peak as people consume more gas for heating and cooking purposes.

Earlier, two tenders were issued, each of which for the purchase of 100 million cubic feet of LNG per day (mmcfd) from overseas markets. Well-known international firms Gunvor and Shell won one tender each.



However, the government rejected the offer of Shell, citing a comparatively higher price and offered the tender to energy-rich Qatar, which agreed to match the price quoted by Gunvor.

Now the government has planned that the newly established state-owned firm Pakistan LNG Limited will float two tenders this month for the import of 200 mmcfd of LNG to cope with the expected surge in demand during winter this year, say officials aware of the development.



At present, Pakistan State Oil, the state oil marketing giant, is importing 400 mmcfd of LNG from Qatar as part of a long-term government-to-government agreement. Apart from this, Gunvor is bringing 100 mmcfd.

Pakistan started importing LNG in March 2015 after the setting up of a handling and re-gasification terminal at Port Qasim. The government is banking heavily on LNG consumption in power production to bridge the demand-supply gap and other key areas like fertiliser manufacturing and CNG filling stations.

“The government will float two tenders of 100 mmcfd each. After receiving these supplies, the country will be importing 700 mmcfd of LNG,” an official said.

In a bid to ensure uninterrupted and fast-track supplies, Pakistan has shared state-to-state draft agreements with around 22 countries including Russia for LNG import.



Domestically, gas distribution companies are pushing ahead with the plan of augmenting their pipeline capacity in order to transport 1.2 billion cubic feet of gas per day (bcfd) and they are expected to complete work by the end of this year.

“As the country is importing 500 mmcfd at present, the capacity left in the pipeline will be 700 mmcfd,” the official said, adding the government would require around six months for signing a state-to-state LNG supply deal with a country and that was the reason it decided to float tenders in August.

He said the government would try to clinch deal with any country to fully utilise the enhanced pipeline capacity. Different countries such as Italy, France, China, Japan and Russia are vying to strike an agreement with Pakistan for LNG supply.

The first LNG terminal, built by Engro’s subsidiary Elengy Terminal Pakistan Limited, has the capacity to handle 600 mmcfd of gas. For building a second terminal, the government has awarded contract to Pakistan GasPort Limited, which will also be able to handle 600 mmcfd.

The official said the laying of planned North-South and Gwadar LNG pipelines would take some time.

Two more LNG terminals will be built in the country and a state company of the UAE is in the race to enter into an agreement for developing a terminal in Pakistan.

Published in The Express Tribune, August 18^th, 2016.

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