Fate of Mashal LNG project unclear

Ministry to send summary to Economic Coordination Committee.

ISLAMABAD:

The fate of multi-billion-dollar Mashal liquefied natural gas (LNG) import project hangs in the balance after the Oil and Gas Regulatory Authority (Ogra), while pushing ahead with a different project, permitted three LNG importers to use the pipeline network of state-run companies for gas supply.

The three LNG importers, who will construct infrastructure at the port as well, will bring 1.4 billion cubic feet of gas per day (bcfd), which will be supplied to consumers under Third Party Access regime.

Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) will have to invest $1.2 to $1.4 billion to create additional capacity in their pipeline networks to transport imported LNG to the consumers. “The government will generate this money through an infrastructure development cess on natural gas,” Petroleum Secretary Ijaz Chaudhry said.

Following the latest development, the ball is again in the court of law ministry, which previously called for re-issuing the tender for the Mashal project. The Economic Coordination Committee (ECC) has also approved revival of the project.

Under the project, LNG equal to 500 million cubic feet per day (mmcfd) was to be imported to overcome energy crisis. “As interested parties want government guarantee, the petroleum ministry will send a summary in this regard to the ECC after seeking opinion of the law ministry,” Chaudhry said.

He said the country would face a deficit of two billion cubic feet of gas per day due to surge in demand in the winter season. “The government will suspend gas supply to the industry for three months during the season,” he said, adding compressed natural gas (CNG) stations would also face gas outages for three days a week.

Under the Third Party Access regime, Sui Southern Gas Company (SSGC) had earlier invited expressions of interest from LNG suppliers.

Besides the three suppliers, “4 Gas also sought capacity allocation,” Member Gas Ogra Mansoor Muzaffar said, adding “we have asked 4 Gas to apply for a licence for constructing an LNG terminal.”

4 Gas had also got approval from the ECC for import of LNG under the Mashal project but the project landed in the Supreme Court due to corruption allegations. The court then directed the government to table a summary again before the ECC for a fresh decision. The ECC decided to start afresh the Mashal LNG project.

SSGC Managing Director Azeem Iqbal Siddiqui told The Express Tribune that the company was yet to take up the project again and legal advice was being sought from the law ministry.

Published in The Express Tribune, November 1^st, 2011.