Cheaper than fuel oil: LNG to be imported at the best price, claims govt

Qatar is likely to agree on a price around 14.5% of Brent crude rate.

ISLAMABAD:

The government on Wednesday disclosed the price of liquefied natural gas (LNG) agreed with Qatar and insisted that the rate was lower than that offered to previous governments, terming it the best deal even when compared with India.

“We have succeeded in restricting the benchmark price to 14.5% (of Brent crude price) and hope that it will be brought further down,” Petroleum Minister Shahid Khaqan Abbasi said while briefing the National Assembly Standing Committee on Petroleum and Natural Resources here.

The last price offered by the Qatari government to the previous administration of Pakistan Peoples Party (PPP) was 14.9% of Brent crude rate.

Abbasi pointed out that because of certain clauses in the pricing mechanism, India was buying LNG from Qatar at around $13 per million British thermal units (mmbtu) whereas the cargo that arrived in Pakistan on April 27 cost $8 per mmbtu.

In the meeting, the parliamentary panel was told that if the price was kept at 14.5% of Brent crude rate, LNG would be around 10% cheaper than high sulphur fuel oil, 20% cheaper than low sulphur fuel oil and 50% cheaper than diesel.

“We hope to strike the deal at 14.5%, which will be among the best prices of LNG that Qatar has offered to anyone,” Abbasi said.

The price would be finalised with Qatar in the next two days, the minister said, rejecting all reports pertaining to LNG supplies as rumours being spread by the oil importing lobby.

“All this misinformation was being spread by the oil importers as Pakistan purchases furnace oil and diesel worth $2.5 billion per annum and if LNG imports become successful, then who will buy furnace oil.”

To reach an agreement, Qatari officials will meet the price negotiation committee constituted by the Pakistan government. A team of experts has already arrived from Doha and they are negotiating the price along with relevant terms and conditions.

“Setting the price is a very complicated matter, but unfortunately many groups have been spreading wrong information in the media that Pakistan has already finalised the price with Qatar,” he said.

“Transparency International (a non-governmental organisation) even wrote a letter, saying the price agreed by us was not fair; we have to tell that the price is still being negotiated.”

The NA committee was told that if the amount that was spent on oil was utilised to produce electricity from LNG, the efficiency of power producers would increase 10%.

“This is mainly because there are regular cases of furnace oil theft whereas gas cannot be stolen this way,” the minister said, adding there would also be savings of around $1 billion if all existing power plants consumed LNG instead of furnace oil.

Published in The Express Tribune, May 7^th, 2015.

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