LNG import: Pakistan to resume stalled talks with Qatar
ECC gives top priority to import of 500 mmcfd in a govt-to-govt deal.
The previous govt had signed an MoU with Qatar for the project, but it never materialised. The new govt, however, wishes to pick up right where it was left off. PHOTO: FILE
ISLAMABAD:
The new government, in its drive to end energy shortages as quickly as possible, has decided to accord top priority to liquefied natural gas import from Qatar in a government-to-government arrangement and has given the go-ahead to resuming stalled negotiations with Doha.
According to the LNG import plan proposed by the Ministry of Petroleum and Natural Resources, two or more import projects of 500 mmcfd each may be undertaken jointly by Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) keeping in view all LNG rules including PPRA rules.
Under the proposed project structure, the ECC said in line with the cabinet approval, preference should be given to Qatar Gas for negotiations between the two governments for purchase of up to 500 mmcfd of LNG.
Some other options could also be explored to encourage LNG suppliers to construct a storage and re-gasification terminal for taking delivery of LNG. In this regard, a public-private partnership model may be worked out, the ECC said.
The ECC asked the petroleum ministry to prepare a separate summary on whether government-to-government negotiations could be started with other countries for LNG import and also whether bids for import through private parties could be invited simultaneously.
In its June 27 meeting, the ECC had cancelled bids invited in two tenders for import of 400 mmcfd of LNG each by the previous government and asked the petroleum ministry to pursue the plan for import of 500 mmcfd from Qatar in a government-to-government deal keeping in view the energy crisis in the country.
It also suggested that a transparent process for rebid should get under way in line with applicable rules for other integrated LNG import projects.
However, the ECC noted lack of consultation with the stakeholders and called for starting negotiations with them for going ahead with the integrated import projects of 500 mmcfd each to ensure transparency.
The previous Pakistan Peoples Party-led government had signed a memorandum of understanding with Qatar for LNG import, but the plan got stuck because of a price row.
Just before the PPP’s five-year tenure was going to end, Qatar came up with a revised proposal and put the price at $17.437 per million British thermal units (mmbtu), a 0.5% discount over the previous price of $18.002, which would lead to savings of $1 billion over the 20-year life of the project.
The price did not include capital cost of LNG terminal and its charges, import expenses, re-gasification, wastage and shipping costs. These additional charges would add about $2.084 to the quoted price.
If all charges are included, then Qatar LNG will cost $19.521 per mmbtu and Pakistan will have to spend $200 million to lay infrastructure for handling imports, resulting in higher prices for the product.
The price is even higher than that offered by private suppliers in two integrated LNG import projects of 400 mmcfd each.
In one of the projects, Pakistan Gas Port quoted a price of $17.7074 per mmbtu and Global Energy International quoted $18.16 per mmbtu. Engro’s wholly-owned subsidiary Elengy Terminal Pakistan submitted a formula instead of a base price. The prices included the cost of setting up the LNG terminal.
Published in The Express Tribune, July 3rd, 2013.
The new government, in its drive to end energy shortages as quickly as possible, has decided to accord top priority to liquefied natural gas import from Qatar in a government-to-government arrangement and has given the go-ahead to resuming stalled negotiations with Doha.
According to the LNG import plan proposed by the Ministry of Petroleum and Natural Resources, two or more import projects of 500 mmcfd each may be undertaken jointly by Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) keeping in view all LNG rules including PPRA rules.
Under the proposed project structure, the ECC said in line with the cabinet approval, preference should be given to Qatar Gas for negotiations between the two governments for purchase of up to 500 mmcfd of LNG.
Some other options could also be explored to encourage LNG suppliers to construct a storage and re-gasification terminal for taking delivery of LNG. In this regard, a public-private partnership model may be worked out, the ECC said.
The ECC asked the petroleum ministry to prepare a separate summary on whether government-to-government negotiations could be started with other countries for LNG import and also whether bids for import through private parties could be invited simultaneously.
In its June 27 meeting, the ECC had cancelled bids invited in two tenders for import of 400 mmcfd of LNG each by the previous government and asked the petroleum ministry to pursue the plan for import of 500 mmcfd from Qatar in a government-to-government deal keeping in view the energy crisis in the country.
It also suggested that a transparent process for rebid should get under way in line with applicable rules for other integrated LNG import projects.
However, the ECC noted lack of consultation with the stakeholders and called for starting negotiations with them for going ahead with the integrated import projects of 500 mmcfd each to ensure transparency.
The previous Pakistan Peoples Party-led government had signed a memorandum of understanding with Qatar for LNG import, but the plan got stuck because of a price row.
Just before the PPP’s five-year tenure was going to end, Qatar came up with a revised proposal and put the price at $17.437 per million British thermal units (mmbtu), a 0.5% discount over the previous price of $18.002, which would lead to savings of $1 billion over the 20-year life of the project.
The price did not include capital cost of LNG terminal and its charges, import expenses, re-gasification, wastage and shipping costs. These additional charges would add about $2.084 to the quoted price.
If all charges are included, then Qatar LNG will cost $19.521 per mmbtu and Pakistan will have to spend $200 million to lay infrastructure for handling imports, resulting in higher prices for the product.
The price is even higher than that offered by private suppliers in two integrated LNG import projects of 400 mmcfd each.
In one of the projects, Pakistan Gas Port quoted a price of $17.7074 per mmbtu and Global Energy International quoted $18.16 per mmbtu. Engro’s wholly-owned subsidiary Elengy Terminal Pakistan submitted a formula instead of a base price. The prices included the cost of setting up the LNG terminal.
Published in The Express Tribune, July 3rd, 2013.