Qatargas to assess risks of diverting LNG supply to new terminal

Its team will arrive next week to hold talks with Pakistan LNG Terminals


LNG Terminal. PHOTO: REUTERS

ISLAMABAD/ LAHORE: Though the head of Pakistan LNG Terminals Limited (PLTL) has been appointed at a hefty pay package, he has not been able to arrange first cargo shipment for the second liquefied natural gas (LNG) terminal, a senior government official said.

The government has hired the PLTL head at a package of Rs3 million per month. Among state-owned energy companies, only the managing director of Pakistan State Oil (PSO) is earning more.

In the past, the maximum remuneration of large state-run gas companies like Oil and Gas Development Company (OGDC) was Rs1.6 million.

“The second LNG terminal needs to handle first cargo to mark its official start, but the government is in trouble and does not know how to manage things,” the official said, while blaming the PLTL head for his lack of experience.

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He suggested that PLTL should have made arrangement for bringing the first LNG cargo earlier — either by floating a tender or contacting private sector players like fertiliser producers, textile mills, other industrial units and compressed natural gas (CNG) outlets that are banking on LNG supplies to run their units.

“LNG cargo must be brought 10 days before the commercial operation date of the new terminal,” the official said.

PLTL had counted on Fatima Fertilizer for bringing LNG supplies at the second terminal but the company ran into a dispute with Sui Southern Gas Company (SSGC) over tolling fee on handling LNG imports.

This dispute prompted PLTL to weigh the option of diverting gas imports from Qatar, which were currently being processed at the first LNG terminal, to the second terminal, the official said.

PSO and Qatargas have an agreement on LNG supply, which is being handled at the first terminal set up by Engro subsidiary Elengy Terminal Pakistan Limited at Port Qasim.

PLTL pressed PSO to request Qatargas to divert one LNG cargo to the second terminal for its commissioning. However, PSO asked PLTL to directly talk to Qatargas.

The gas sale-purchase agreement between PSO and Qatargas has a clause that allows diversion of LNG cargo to another terminal subject to the latter’s approval.

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“PLTL is now in contact with Qatargas. A team of Qatargas will come to Pakistan next week to hold talks with PLTL,” the official said.

Qatargas needs to undertake due diligence to assess compatibility and make risk analysis. There are some other challenges like additional cost that should be addressed.

Talking to The Express Tribune, PSO spokesperson said: “PLTL has requested PSO to divert one of the cargoes to the new terminal. Our SPA (sale-purchase agreement) has flexibility to divert cargoes to an alternative terminal subject to approval of Qatargas. Final decision depends on approval of the terminal and consent of the parties including SSGC and SNGPL.”

Published in The Express Tribune, November 2nd, 2017.

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