Lagging behind: LNG terminal awaits first regular cargo

KARACHI: Behind the fanfare surrounding Pakistan’s entry in the liquefied natural gas (LNG) market, anxiety has started to creep in among officials whose stakes in the latest energy venture run high.

Regular and scheduled import of LNG should have started by now. Not just because the country desperately needs to address energy woes, but due to its commitments with a private terminal operator.

Every day, the government is paying $272,000 to Engro Elengy Terminal, which has invested millions of dollars to build a jetty and hire a floating storage and regasification unit (FSRU) to handle LNG, which is basically a super-chilled liquid form of natural gas.

“That’s a fixed charge we have to pay the terminal operator in any case.  It’s important that government realises that and starts importing at the earliest,” said an official connected with the project.

After much delay, the FSRU docked at Port Qasim on March 26. It also brought in its tanks around 3,000 million cubic feet of gas. Initially, it was expected that the cargo will last for 15 days considering a throughput of 200mmcfd.

But now officials say that average of 100mmcfd is going into the system, adding to perception that the government is trying its best to stretch use of the first cargo for as long as possible.

The terminal is designed to handle 600mmcfd. Contractually, the government can use up to 400mmcfd of capacity.

Notwithstanding its cash flow issues, Pakistan State Oil (PSO) has been designated as the LNG import agency.

“A deal between the Pakistan government and Qatargas has not yet been finalised,” said a PSO spokesperson about the delay in import shipments. “Then, there are also operational constraints at the port.”

However, the Port Qasim Authority (PQA) where the LNG terminal is located says it stands ready to receive LNG carriers.

“Actually, Qatargas wants to bring in Q-flex, which is a relatively larger ship than what was agreed upon as per initial plan. Even handling a Q-flex is not an issue since we have handled bigger vessels in our channel,” said a senior official.

Reports that the LNG vessel along with the FSRU could block movement of other ships in PQA’s channel were baseless, he said.

“Parking one vessel on the side to let the other pass is part of a routine for us. People should stop looking for controversies in that.”

While the government has announced a deal has been signed with Qatargas, it has not shared information about the cargos lined up for imports and how it intends to pay for imported LNG.

Pakistan produces around 4000mmcfd of gas but needs much more to run factories and one of the largest pipeline infrastructure feeding households from Karachi to Peshawar. Shortage of gas has increased its reliance on relatively expensive furnace oil to produce electricity.

Published in The Express Tribune, April 11^th, 2015.

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