Alternative fuel: Pakistan likely to receive first LNG cargo by month end

Price not yet finalised, PM may visit Qatar to seek a discount

ISLAMABAD:

Qatar has assured Pakistan of the delivery of first liquefied natural gas (LNG) cargo by the end of the current month.

Earlier, both the countries had agreed on all the clauses of the contract including the volume and contract terms, official sources told The Express Tribune. However, the two sides have yet to decide on the price.

Once the country quotes its price for LNG, Prime Minister Nawaz Sharif will likely visit Doha in order to seek a discount from the king of Qatar.

Officials familiar with the development said Pakistan and Qatar had agreed on the supply of 400 million cubic feet of gas per day (mmcfd) this year. Earlier, Pakistan was supposed to import 200 mmcfd in the first year and 400 mmcfd in the second year. The two sides have also agreed on a 15-year supply contract.

During a meeting held on January 14, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi asked Sui Southern Gas Company (SSGC) and Port Qasim Authority (PQA) to be ready in all respects by February 28 for receiving LNG supplies. He also advised Pakistan State Oil (PSO) managing director to give a window of the said period to Qatargas for the supply of commissioned cargo.

PSO MD said that a letter from Qatargas had been received for the cargo.

During the meeting, Elengy Terminal Pakistan Limited Chief Executive Officer Imran Sheikh said that the construction of the LNG terminal was in progress as per schedule. He said that the Floating Storage and Re-gasification Unit (FSRU) would be ready to pick LNG cargo for sellers by February 28 and would reach Karachi within two to three days.

It was informed during the meeting that since only six weeks were left in terminal commissioning, the LNG supply agreement needed to be expedited. It was also informed that LNG prices were linked to crude oil and in view of the prevailing low crude prices, Qatargas may demand a larger ratio.

It was also told that independent power plants (IPPs) and Kapco had been identified as LNG consumers and the CNG sector may be supplied LNG as an alternative buyer. Government plans to allocate 100 million cubic feet of LNG per day to the CNG stations of Punjab, which were shut down during the winter season for three months.

In a bid to address the woes of the CNG industry, the government has already announced that the sector in Punjab will receive the first shipment of LNG in March this year from Qatar.

LNG imports will provide a boost to the CNG industry and the country is likely to see a financial impact of Rs200 billion due to the usage of LNG in CNG stations. The CNG industry has invested Rs450 billion and the infrastructure is already available.

According to Petroleum Minister Abbasi, the government would give LNG to the CNG industry from its share as an interim arrangement, which would provide relief to the consumers while easing the pressure on petrol. It would also generate employment.

Published in The Express Tribune, February 8^th, 2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.