Petroleum ministry proposes setting up LNG plant

Plan will be tabled before the Economic Coordination Committee for formal approval

ISLAMABAD:

As the uncertain law and order situation hinders the transportation of gas to Balochistan, the Ministry of Petroleum and Natural Resources has come up with a plan that will allow Sui Southern Gas Company (SSGC) to set up a liquefied natural gas (LNG) plant at the Jhal Magsi gas field in the province.

This plan will be tabled before the Economic Coordination Committee (ECC) of the cabinet for formal approval and if granted, this will be the first LNG plant in Pakistan.

The volatile security situation has limited oil and gas exploration activities in the province and even utilities are facing difficulties in laying pipelines for gas supply due to resistance from different tribes.

The petroleum ministry has framed different proposals including the setting up of an LNG plant in a summary for consideration of the ECC. These proposals have also been circulated to the ministries concerned for their suggestions.

Read: SSGC cancels tender for second LNG terminal

In the summary, the petroleum ministry said approval was given for the supply of 15 million cubic feet of gas per day (mmcfd) from Oil and Gas Development Company’s Jhal Magsi field to Sui Northern Gas Pipelines Limited (SNGPL) and SSGC on an equal sharing basis on February 25, 2013.

In order to provide gas from the field to the transmission network, SSGC is required to lay an 85km pipeline up to its nearest injection point in the network.

Earlier, the SSGC board of directors approved the development of the pipeline project in 2011 at an estimated cost of Rs878 million, but the cost was later revised by the management to Rs1.1 billion.

A contract for route survey of the pipeline was awarded in March 2012, however, work on the project could not be initiated because of the law and order condition and later the contract was terminated.

According to SSGC, 70% of the pipeline area has been declared safe, which falls under the jurisdiction of the Magsi tribe. However, they were demanding the provision of gas to the area. The remaining 30% of the area comes in different tribal regions that pose a security threat due to the volatile law and order situation.

Meanwhile, OGDC said it was working on the Jhal Magsi field and would be ready to supply 15 mmcfd of pipeline-quality gas.

The Ministry of Petroleum has come up with a plan to allocate gas from the field for power generation for an interim period until the construction of the pipeline, work on which has come to a stop.

In its proposal, the ministry has offered three possible ways to execute the project. Firstly, 15 mmcfd of gas from the Jhal Magsi field may be placed at the disposal of the Private Power and Infrastructure Board or the local power distribution company.

Read: First LNG shipment from Qatar arrives at Port Qasim

This will be used for setting up a short-term power plant under the relevant power policy until the laying of pipeline for the supply of gas to the SSGC’s transmission system.

Secondly, SSGC may be allowed to float a tender and invite proposals for the installation of a small to medium-sized LNG production plant and its transportation on build, own and operate basis. Thirdly, any other purpose that SSGC may determine for the usage of gas.

Published in The Express Tribune, August 15^th, 2015.

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