Cabinet gives go-ahead for LNG import from Oman

Pakistan will also purchase petroleum products from Gulf country

Zafar Bhutta February 20, 2018
The cabinet was told that Pakistan’s Petroleum Division and Oman’s Ministry of Oil and Gas will coordinate in the implementation of the inter-governmental agreement. PHOTO: FILE

ISLAMABAD: The cabinet has allowed the Petroleum Division to push ahead with contracts for the import of liquefied natural gas (LNG) and petroleum products from Oman in a government-to-government arrangement to meet energy needs of the country.

Currently, the government is engaged in an LNG supply deal with Qatar on the same basis and imports are being handled by the first LNG terminal.

Second terminal has also been set up to handle another 600 million cubic feet per day (mmcfd) of gas imports to meet needs of three LNG-based power projects in Punjab with 3,600-megawatt generation capacity.

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In a bid to ensure smooth and enhanced inflow of LNG, the government has planned to ink import deals with different countries including Oman.

In its recent meeting, the cabinet was informed that after its approval for inking an inter-governmental agreement (IGA) for the supply of LNG and petroleum products between the governments of Pakistan and Oman through their nominated entities on December 6, 2017, the Petroleum Division through the Foreign Affairs Division shared an IGA draft with Oman. In response, the Gulf state conveyed its intent to sign the agreement.

The cabinet was apprised that the Foreign Affairs Division had no objection from the political point of view and the Law and Justice Division had vetted and cleared the IGA and Letter of Intent (LoI) keeping in view the legal matters.

Pakistan’s Petroleum Division and Oman’s Ministry of Oil and Gas would coordinate while implementing the proposed IGA.

Subsequent LNG sale and purchase agreement will be executed by the nominated companies - Oman Trading International Limited and Pakistan LNG Limited and Pakistan State Oil.

The cabinet gave the go-ahead for the purchase of LNG and petroleum products from Oman in a government-to-government arrangement.

A senior government official said the second LNG terminal had started commercial operations in November last year to handle gas imports for power plants.

The terminal, set up by Pakistan GasPort Limited, has a designed capacity of 750 mmcfd and it will provide 600 mmcfd to LNG-based power plants in Punjab.

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The official said the government had entered into two LNG supply contracts for the second terminal. An Italian firm had a contract for providing 100 mmcfd on a long-term basis for 15 years at 11.64% of Brent crude oil price.

Gunvor was also supplying 100 mmcfd under a five-year contract at the same rate.

However, Pakistan LNG Limited is arranging 400 mmcfd through spot purchases. The government has to secure more LNG contracts to supply the remaining 400 mmcfd to the LNG power plants in Punjab.

Published in The Express Tribune, February 20th, 2018.

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