Careful consumption: LNG to be distributed among industrial consumers

The aim is to avoid leakages and losses in distribution system.

KARACHI:

Liquefied natural gas (LNG), which is expected to be imported into the country by the end of next month, will be distributed among industrial consumers located near the Port Qasim, in a bid to avoid the leak-prone distribution system, a top official said.

Re-gasified LNG will be pumped into large consumers like K-Electric, Engro Polymer, Gul Ahmed Energy and manufacturing units located at Bin Qasim and Landhi industrial estates, he said.

“The idea is to avoid the losses, which exist in the pipeline system. Supply to the rest of the city will continue from the usual sources,” said the official associated with Sui Southern Gas Company.

Shortage of gas has become a national emergency and the top priority for the government right now is to ensure that it has a contract for the supply of LNG by next month.

If that is achieved on time, at least 200 million cubic feet per day (mmcfd) or 5% of the existing supply will be supplemented via imports by end-March.

Experts have been voicing their concern over the way LNG will be used in a country which loses over 9% or 350 mmcfd of gas to pipeline leakages and theft.

Since the government has yet to sign a long-term contract with any LNG supplier, the landed price of gas is not known. But it will be more than double the $4 per unit – the average price at which gas is locally produced.



Engro Corporation’s subsidiary Elengy has built a terminal at the Port Qasim to handle imports. It has also hired a Floating Storage and Re-gasification Unit (FSRU), which has the ability to convert super-chilled LNG into gas.

While the unit has the capacity to process 600 mmcfd of gas, the government will initially use only 200 mmcfd and double the off-take in two years.

Elengy officials say that the spare capacity might be used by the company to import LNG for its own clients.

Other LNG project

SSGC is already evaluating bids for another similar project, which will also be located at the Port Qasim.

At least three parties including Elengy, a consortium of Gas Port Limited and Fauji Oil Terminal and Distribution Company, and another consortium of Akbar Associates and China’s Sino Hydro are vying for the contract.

But gas from this second terminal is intended for power plants being planned hundreds of kilometres away in Punjab – a proposition that has raised eyebrows.

“We are looking at the expenditure of hundreds of millions of dollars for the construction of enough pipeline capacity,” said an industry official.

Till Nawabshah in Sindh, SSGC has enough capacity in its pipeline to take care of imported LNG. It is already working on one last 33km-long pipeline patch between Masu and Nawabshah.

The length of the pipeline between the Port Qasim and Nawabshah is roughly around 250km. After that point, SSGC would have to spend money to build an equally long 24-inch diameter pipeline.

Published in The Express Tribune, February 19^th,  2015.

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