Business

With low capacity utilisation, LNG terminal charges go up

OGRA sets levellised tariff for PLL at $0.4177 per unit

Our Correspondent May 10, 2018

OGRA sets levellised tariff for PLL at $0.4177 per unit. PHOTO: EXPRESS

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has set the levellised tariff for Pakistan LNG Limited (PLL) at $0.4177 per million British thermal units (mmbtu) for May 2018.

According to a notification issued by Ogra, terminal charges for handling and re-gasifying liquefied natural gas (LNG) have been determined and the levellised tariff has been set at $0.4177 per unit for PLL in accordance with the decision of the Economic Coordination Committee taken on June 28, 2016.

These terminal charges are based on the optimal LNG handling capacity of 600 mmcfd. However in May, PLL has planned to purchase only two cargoes, instead of six, which is the optimal terminal capacity.

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As a result of capacity under-utilisation, the terminal charges have gone up to $1.1671 per mmbtu, Ogra said.

It noted with concern that inefficient management of the LNG supply chain was unnecessarily increasing terminal charges and directly impacting the re-gasified LNG price, which was contrary to the ECC’s decision and public interest.

In the previous month, according to the regulator, the terminal charges also stood higher, which were provisionally allowed on the belief that PLL would be able to tackle the deficiency in the very next month. However, it could not be done.

Ogra emphasised that it had calculated the weighted average re-gasified LNG sale price keeping in view the federal government’s decision on LNG allocation, pricing and associated matters as well as advice from the Ministry of Energy given on January 22, 2018.

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At the same time, the regulator advised PLL to effectively manage LNG supply in order to efficiently utilise the terminal capacity and meet consumer demand. It also pointed out that PLL, which had the re-gasified LNG sale licence, should explore multiple avenues for the marketing and sale of gas to consumers other than the existing bulk consumers.

In May, Pakistan State Oil (PSO) and PLL will receive six LNG cargoes and provide those to Sui Northern Gas Pipelines and Sui Southern Gas Company. PSO will receive 19.2 million tons whereas PLL will receive 6.4 million tons.

Published in The Express Tribune, May 10^th, 2018.

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