LNG supply: US energy giant helps Pakistan, Qatar reach deal

Ministry officials went to Dubai and London for talks with ConocoPhillips.

Zafar Bhutta July 25, 2012


US energy giant ConocoPhillips is mediating between Pakistan and Qatar to enable them to strike a multi-billion-dollar liquefied natural gas (LNG) deal, in an apparent attempt to drive Islamabad away from the Iran-Pakistan (IP) gas pipeline project due to tensions between the West and Tehran.

An official of the Ministry of Petroleum and Natural Resources told The Express Tribune that the Qatari government had designated ConocoPhillips to clinch an LNG supply deal with Pakistan.

Earlier, Qatar had asked Shell to finalise the LNG contract with Pakistan, which could not be reached due to controversy over the Mashal LNG import project.

According to sources, high-ups of the petroleum ministry went to Dubai and London this month to hold negotiations with representatives of the US energy company on the terms of LNG contract.

“Former US Secretary of State Richard Armitage is a member of the board of ConocoPhillips and playing a role to help Pakistan and Qatar reach an agreement,” a senior government official said. This may force the government to shelve the IP pipeline project, he said.

Headquartered in Houston (Texas), ConocoPhillips has operations in about 30 countries and has a 30% share in oil and gas reserves being explored under the Qatargas-III project in the North Field near the Iranian border from where LNG will be supplied to Pakistan.

Under the IP pipeline project, Pakistan will get gas from Iran’s South Pars field, the world’s largest gas field situated along the Iranian border with Qatar in the Persian Gulf. The Qatari side of the field is called the North Field.

According to reports, delay and low production by Iran may shift some gas reserves to the Qatari side and lead to loss of yield due to low field pressure.

Pakistan and Qatar have already signed a memorandum of understanding, under which Islamabad will import 500 million cubic feet per day (mmcfd) of LNG to generate 2,500 megawatts of electricity.

According to the term sheet, Qatar had demanded a price of $18 per million British thermal units (mmbtu) for LNG supply. In response, Pakistan quoted a price of $10 per mmbtu.

“Pakistan and ConocoPhillips are discussing terms of the agreement and price is also part of the discussion,” the government official said.

US embassy officials in Pakistan have also been lobbying and holding meetings with stakeholders of the power and energy sector to try to convince them that the Iran gas project will not be viable for Pakistan.

The US diplomats stress that Pakistan should shelve the IP project, terming it ‘bad’ and call for inking an LNG deal with Qatar to meet the country’s pressing energy needs.

“Pakistan should shelve the IP gas pipeline project and move ahead with LNG deals,” a US diplomat said on condition of anonymity.

The petroleum ministry is also receiving technical help from USAID consultants for LNG import.

Published in The Express Tribune, July 26th, 2012.