SSGC board set to approve purchase of PSM land

Acquisition aimed at establishing tie-in point for two new LNG terminals

ISLAMABAD:

The board of directors of Sui Southern Gas Company (SSGC) is set to approve the acquisition of a piece of land of Pakistan Steel Mills (PSM) on lease to build a tie-in point for two new LNG terminals.

Sources told The Express Tribune that SSGC was initially reluctant to acquire the land for establishing the tie-in point, however, the company agreed after intervention from Petroleum Division Secretary Dr Arshad Mahmood.

Now, it has acquired nearly 17 acres of land from PSM on lease. The LNG terminals are being set up by private parties.

The Petroleum Division had informed the Cabinet Committee on Energy (CCOE) in a meeting that the issue of tie-in point had been resolved and land was acquired by SSGC on lease from PSM.

Officials said that the SSGC board was likely to discuss the matter in its upcoming meeting and approve the deal.

During the meeting, the Ministry of Maritime Affairs briefed the committee about the two new LNG terminals. It also discussed the order given by the Oil and Gas Regulatory Authority (Ogra) to SNGPL regarding allocation of 250-300 mmcfd of pipeline capacity to each of the new LNG terminal developer.

It told SSGC to provide land for the establishment of a tie-in point for the new LNG terminal developers on the same terms that were offered to earlier terminals.

The CCOE asked both terminal developers to close their final investment decisions (FIDs) within 60 days of signing the Gas Transportation Agreement (GTA).

It said that the allocation of pipeline capacity to the new LNG terminals along with execution of a gas transportation agreement (GTA) would enable the terminal developers to achieve their FIDs.

The Petroleum Division stated that after extensive deliberation, a consensus had been reached with both companies (SNGPL and SSGC) to make the pipeline capacity available on a three-month rolling basis.

According to it, the capacity will be available to the new LNG terminal developers with effect from January 1, 2023.

SSGC would allocate 200 mmcfd of pipeline capacity to Tabeer Energy and 150 mmcfd to Energas while SNGPL will provide 50-100 mmcfd to Tabeer Energy and 100-150 mmcfd to Energas.

Both terminal developers will be requested to communicate (within 60 days) the dates of FID and commercial operations to enable both utility companies to effectively manage the capacity allocation.

They will also be directed to conclude the Gas Transportation Agreements (Access Agreement) with both utilities to allow Ogra to initiate the approval process.

The Petroleum Division added that next steps would include coordination between the entities for the utilisation of allocated capacity after commercial operations date.

The CCOE chairman acknowledged the efforts made by the Petroleum Division in reaching consensus with both parties for the allocation of pipeline capacity to the new LNG terminal developers.

The minister for maritime affairs was of the view that the allocation of pipeline capacity, as proposed by the Petroleum Division, may not serve the purpose.

He stated that the terminal developers would not be able to close FIDs on the proposed capacity allocation as offered by the Petroleum Division.

He informed the cabinet body that both the terminal developers were satisfied with the allocation of pipeline capacity in the SSGC network.

Published in The Express Tribune, October 24^th, 2021.

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