ISLAMABAD: In a major development, the Ministry of Petroleum and Natural Resources has accepted the responsibility of liquefied natural gas (LNG) imports from Qatar by Pakistan State Oil (PSO) after the Economic Coordination Committee (ECC) refused to give its seal of approval to the gas purchase.
The ministry’s remarks came in the wake of an investigation initiated by the National Accountability Bureau into the import of six LNG cargoes by PSO from Qatargas at high prices in the spot market.
Earlier, the Oil and Gas Regulatory Authority (Ogra) sought the ECC’s approval for LNG purchase in an attempt to enforce all relevant rules.
In a meeting, the ECC was told that six cargoes were bought on spot purchase basis under a master sale and purchase agreement signed between PSO and Qatargas. It was asked to grant ex-post facto approval of the federal government to the master sale and purchase agreement as well as import prices. However, the ECC denied its endorsement.
“Now, the petroleum ministry has written a letter to Ogra, claiming it had authorised PSO to import LNG from Qatargas on spot purchase basis,” an official said, adding the PSO board of directors was given powers to take such a decision.
According to officials, consumers will be paying $14.95 per million British thermal units (mmbtu) if Ogra determines the provisional price of LNG, which has already been consumed.
“Six cargoes have been imported at the landed cost that ranged between $12 and $13.20 per mmbtu,” an official familiar with the development said. “Its provisional price stands at $14.95 per mmbtu after including margins of companies associated with the business.”
PSO made the costly purchase at a time when international crude oil prices had plunged to multi-year lows. Petroleum and Natural Resources Minister Shahid Khaqan Abbasi also claimed at that time that LNG had been brought at $8 per mmbtu, but the supplier remained unknown.
However, now it has been disclosed that six cargoes had been bought from Qatargas by signing a master sale and purchase agreement, a non-binding document. According to officials, prices were higher than even the rate of furnace oil.
Of the six cargoes, PSO imported three by inviting bids and their purchase price was lower than the price of LNG produced in Qatar.
The refusal of Sui Northern Gas Pipelines Limited (SNGPL) Managing Director Arif Hameed to extend unconditional support to the LNG imports also cost him his job as the government removed him from the slot.
According to officials, a top official of the Prime Minister’s Office opposed the removal of SNGPL’s top man and even the board of directors of the company did not back the prime minister’s decision to sideline Hameed. However, later the court reinstated him to the post.
Published in The Express Tribune, September 13th, 2015.
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