LNG importers: Gas companies to charge transportation fee

Access to pipelines to be given on first-come-first-served basis.

ISLAMABAD:

Liquefied natural gas (LNG) importers will lose contracted utilisation capacity and access to gas companies’ pipeline networks in case capacity utilisation is below 40 per cent in the first calendar year, according to LNG rules for third party access drafted by the Ministry of Petroleum.

To ensure transparent and non-discriminatory third party access and allocation of capacity to shippers, first-come-first-served criteria will be applied by the Oil and Gas Regulatory Authority (Ogra) for LNG projects undertaken by licensed developers, LNG buyers or LNG sellers, the rules say.

Gas companies – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) – will be allowed to charge transportation fee from the LNG importers. Ogra will approve transportation tariff in accordance with the laid methodology.

According to the rules, 80 per cent income earned on account of transportation charges will form part of revenue requirement of the transporter determined under Section 8 of Ogra Ordinance 2002. The remaining 20 per cent income will be treated as non-operating income for the respective utility (gas company).

In order to recover annual revenue requirement, the transportation tariff shall consist of capacity charges, maintenance cost and commodity charges. The capacity charges will be worked out on the basis of contracted capacity in relation to the technical capacity of relevant segments of gas pipeline transportation system used by the shipper.

Three parties will be competing to get first access to the pipeline network of gas companies to transport imported LNG. Ogra has issued licences for constructing LNG terminals to three parties – Pakistan Gas Port, Turkish firm Global Energy Holding (GEH) and Engro Corporation.

The government is working on a plan to import LNG equal to 500 million cubic feet per day (mmcfd) on an emergency basis to generate 2,500 megawatts of electricity. Infrastructure construction for the import of LNG is expected to be completed by the third quarter of 2012.

Published in The Express Tribune, October 6^th, 2011.