The Oil and Gas Regulatory Authority (Ogra) has raised several questions over a petition of Shell Pakistan that is seeking licence for sale and marketing of regasified liquefied natural gas (RLNG).
Shell Pakistan is seeking the licence for sale and marketing of RLNG by utilising the additional capacity of Engro LNG terminal. Earlier, Ogra had conducted public hearing of Energas and Tabeer Energy applications. It also grilled the two companies that were seeking licences for sale and marketing of LNG.
The regulator held a public hearing on Thursday of the application of Shell Energy Pakistan, which sought licence for sale and marketing of natural gas/ RLNG of the additional 150mmcfd capacity of Engro LNG terminal.
Ogra raised legal, technical and other issues. Presiding over the hearing, Ogra Vice-chairman Noorul Haq raised a number of questions over legal matters, transparency and delayed third-party agreement (TPA) between Shell Energy Pakistan and Engro Elengy Terminal Ltd (EETL).
Shell Energy made a stunning revelation, claiming “it cannot bring RLNG this year because SSGC (Sui Southern Gas Company) blocked TPA between the two sides.”
Member Gas Mohammad Arif asked the applicant to explain the additional allocation of EETL capacity to Shell Energy Pakistan. He questioned whether it was allocated through a transparent manner of “open bidding” or bilaterally.
“Also, why has Shell Energy Pakistan registered a Single Man Company (SMC) in SECP for marketing and sale of natural gas/ RLNG in Pakistan?
“Also, provide a legal opinion on the issue,” the member gas added. Ogra officials asked Shell Pakistan to update the authority about the TPA between Shell Energy and SSGC and why SSGC did not notify the agreement.
The authority also asked the applicant to explain why the coordination agreement between the two parties was still “incomplete”.
Shell International Chief Financial Officer (CFO) Nathan Turner briefed the authority that EETL had engaged a number of interested parties for the allocation of additional capacity of 150mmcfd but Shell Energy and EETL had a bilateral agreement. Imran Akhtar, an official of Ogra, said that the issue whether it was bilateral or open bidding would be taken up when the authority would take up the issue of additional capacity of EETL.
Shell International CFO made it clear to the authority that Shell Energy Pakistan would not bring RLNG to Pakistan unless it fulfilled all conditions of the regulator and government organisations. Shell Energy Pakistan and SSGC held a number of meetings to conclude the coordination agreement and finalised it in June 2020, the Shell CFO said, adding that SSGC was likely to notify it in the first quarter of 2021.
Meanwhile, Shell Pakistan Chairman Haroonur Rashid told the authority that Shell Energy Pakistan would bring RLNG from its global network and sell it to local consumers like CNG, power, fertiliser and other industrial units.
Shell International, having 12 RLNG terminals, supplies RLNG to 25 countries around the globe with an average of two cargoes per day.
Published in The Express Tribune, December 25th, 2020.
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