OGRA to hold hearing on LNG licences

ISLAMABAD:

The Oil and Gas Regulatory Authority (Ogra) is set to conduct a public hearing on Thursday for the grant of licences for sale and marketing of liquefied natural gas (LNG) to two companies.

Subsidiaries of Energas and Tabeer Energy have submitted applications, seeking licence for sale and marketing of LNG.

However, different quarters have raised questions and said the licences, if allowed, will be like oil marketing companies’ licences without having storages. At present, these companies do not have storages as they are under the process of constructing LNG terminals. The storage is a mandatory requirement for companies seeking licence for sale and marketing of LNG.

Critics have even raised questions over the acceptance of applications by the regulator, saying the authority has given favour by ignoring the mandatory requirement of having an agreement/MoU with a licensed terminal operator. In the case of Energas and Tabeer, neither has taken a final investment decision nor have they started construction of terminals.

Moreover, the critics argue how a company can claim government-owned capacity without following due process and it is surprisingly accepted by the authority for public comment.

Both companies have already been granted licence on a provisional basis, so it covers all the aspects required to construct, commission and operate a terminal.

Therefore, the grant of sale licence shall be considered based on the existing practice of equal requirement/ terms, which were adopted by the authority for other licensees/ applicants for having an arrangement with the licensed terminal operators only, they said.

Discussions with different quarters revealed that any company seeking licence for the sale of LNG should have an LNG supply agreement, agreement with a gas utility and terminal capacity. Moreover, it needs buyers. At present, the two parties do not have buyers and are building terminals on their own risk.

The government had announced a new policy for setting up LNG terminals by private parties on their own risk.

Under the policy, Energas and Tabeer Energy decided to set up LNG terminals. The policy requires these parties to find their own customers as the government does not give any guarantee to lift the gas. In other words, the LNG terminal operators will have to operate without the ‘take-or-pay’ clause.

In addition to these two companies, Dutch company Shell had also filed an application with the regulator, seeking licence for sale and marketing of LNG in Pakistan.

The two parties have obtained all the required approvals for setting up LNG terminals. However, they have submitted applications to Ogra.

Energas submitted application on behalf of Energas Marketing (Private) Limited (EMPL) for the gas sale licence as per the Natural Gas Licensing Rules 2002. EMPL is a sister organisation of Energas Terminal Private Limited (ETPL), which has already obtained a provisional licence from Ogra for the construction of an LNG terminal.

EMPL has also formed a strategic partnership with Exxon Mobil, through which Exxon Mobil will supply LNG to EMPL.

EMPL’s LNG import strategy is based on near-term and long-term scenarios. In the near term, EMPL plans to import LNG by utilising the idle capacity available at the Pakistan GasPort Consortium Limited (PGPC) terminal supervised by Pakistan LNG Terminals Limited (PLTL).

By utilising this capacity, EMPL will help mitigate the annual loss incurred by the government of Pakistan in the form of payment of capacity charges to the PGPC terminal and also in the form of revenue from underutilisation of the Sui pipeline network. In the long term, the EMPL LNG terminal will be used for importing LNG when it is operational.

Tabeer Energy Marketing (Private) Limited (TEMPL) had applied to Ogra for grant of licence for sale of natural gas/ RLNG in Pakistan.

Mitsubishi Corporation is currently engaged in the development of Pakistan’s first fully integrated LNG terminal and to date has set up two wholly owned subsidiaries, Tabeer Energy Private Limited (TEPL) and TEMPL.

TEPL is responsible for providing terminal and LNG regasification services to TEMPL. While TEMPL has been set up to market LNG within Pakistan after procuring it from Diamond Gas International (Singapore), which is also a 100% owned gas marketing wing of Mitsubishi Corporation.

With the grant of marketing licence, TEMPL will be in a position to sell RLNG/ LNG to customers in Pakistan.

Published in The Express Tribune, December 16^th, 2020.

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