A ship with an onboard re-gasification plant and storage tanks, being hired from US-based Excelerate Energy, will be permanently berthed at the jetty. PHOTO: FILE
Pakistan expects to receive its first Liquefied Natural Gas (LNG) consignment by March 2015 to meet its burgeoning demand for gas, which meets half of the country’s energy requirement, Petroleum Minister Shahid Khaqan Abbasi said on Wednesday.
Between $2 billion to $2.5 billion would be spent annually to import LNG but Islamabad is confident that it would comfortably manage the payments, he said.
“We should not confuse the power sector with the gas sector,” he said, speaking at the signing ceremony of services agreement between Sui Southern Gas Company (SSGC) and Engro. “The gas sector is sustainable. We can easily raise gas price to recover cost.”
The agreement is the first step in the LNG procurement process, which also involves Pakistan State Oil (PSO). The trillion-rupee-revenue petroleum marketing firm will import LNG using the strength of its balance sheet.
Engro has won the contract to build a terminal at Port Qasim to receive liquid gas, convert it into gaseous form before pumping it into SSGC’s pipeline system.
The government will now sign agreements with LNG suppliers.
Abbasi said the cost of imported LNG will be less than $17 per MMBTU (million British thermal unit) but much higher than the average $6, which consumers pay currently.
“We will be selling the gas at weighted average cost,” he said, explaining that gas tariff will go up once imports start. “But it’s not like tariff will double or triple. Domestic consumers won’t be affected.”
Pakistan produces around 4,000 million cubic feet per day (mmcfd) of gas against a demand of over 6,000 mmcfd. The LNG project will add 10% or 400 mmcfd to current production.
The LNG terminal will be the first in Pakistan and follows multiple attempts to import LNG that were bogged down because of transparency issues.
Unlike on-shore LNG terminal, which costs much more and takes longer to be built, Engro Vopak’s design includes a jetty to be constructed near its existing liquid terminal at Port Qasim.
A ship with an onboard re-gasification plant and storage tanks, being hired from US-based Excelerate Energy, will be permanently berthed at the jetty.
Abbasi said EVPL is entitled to a tolling tariff of $100 million a year. “This might look a lot but it’s not since operational cost of running the terminal is high.” He said the project went through a transparent process. “We have considered everything and this will contribute to our GDP.”
If imported gas is used to run thermal power plants instead of oil, the country could save around $100 million annually, he said. “This is the monetary advantage we should aim for.”
Work began on LNG import project in 2005 but every attempt ended up with enquiries over transparency issues. Industry officials say that Pakistan must immediately start imports if it intends to maintain the current GDP growth rate.
Published in The Express Tribune, May 1st, 2014.
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Why our leaders cannot negotiate a cheap price of LNG for our country from Qatar specially when the latter has already cut a deal with India to supply the same in the range of $10-12 MMBTU. The LNG price mentioned by government is $17, which will definitely increase to $20 MMBTU after adding the services and taxes. which in 80% more as compared to our nation. Do the leaders really think that they are gonna reduced the financial burden on the gas sector of Pakistan by importing a much more expensive LNG?????
Suggest you build LNG terminal and sign LNG purchase agreements before you announce date that LNG will commence.