Govt to set up LNG terminal with importers’ help

Developers will be asked to inject equity of up to $800m.

ISLAMABAD:

The government is studying a proposal to set up a liquefied natural gas (LNG) terminal by raising equity financing worth $700 to $800 million from LNG importers and project developers.

The proposal was discussed in a meeting held at the Prime Minister House on Thursday. According to sources, the participants of the meeting told the prime minister that the LNG import programme was still facing hurdles.

Petroleum Minister Dr Asim Hussain told The Express Tribune that LNG import would not be possible without reducing circular debt, which had accumulated to Rs410 billion. He said the prime minister had set a five-day deadline to come up with different options to resolve issues coming in the way of LNG import.

“The government has the option to allow Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) to set up an LNG terminal and raise financing from gas importers,” Hussain said.

He said letters of credit (LCs) worth $3 billion would be involved in LNG imports and “if power producers fail to pay to LNG suppliers, the gas importers will not be able to continue imports”.

During the meeting, a representative of the Oil and Gas Regulatory Authority (Ogra) said demands made by Turkey’s Global Energy International (GEI) were not in line with the Expressions of Interest (EOI) invited by SSGC for LNG import as well as construction licence and policy, which could lead to fresh international competitive bidding.

GEI has sought sovereign guarantee against LNG import and reframing of Third Party Access rules. The company has also asked SSGC and SNGPL to buy 150 million cubic feet per day (mmcfd) and 200 mmcfd respectively and enter into gas transportation agreement with LNG buyers.

Published in The Express Tribune, December 23^rd, 2011.