Second LNG terminal: Court asks SSGC to invite bids again

Govt may instead give the task to exploration firm GHPL

ISLAMABAD: The Sindh High Court has ordered Sui Southern Gas Company (SSGC) to restart the bidding process for a second liquefied natural gas (LNG) terminal, but the government is expected to give the task to Government Holdings (Private) Limited (GHPL), which is primarily an oil and gas exploration company.

The court gave the directive while hearing a petition filed by Pakistan Gas Port that argued that the winner of bids invited for building the terminal had not submitted required legal documents, say officials aware of the development. SSGC had called the bids in October last year.

However, the government appears convinced to give the vital task to GHPL, which mainly looks after the state’s working interest in oil and gas exploration and production.

The second LNG terminal will have the capacity to handle up to 500 million cubic feet per day (mmcfd). The first terminal has already started functioning at the end of March this year in Karachi and the second facility will further bridge a huge demand and supply gap for gas in the country.

According to officials, GHPL will float tenders for developing the second terminal under tolling arrangements. The selected project developer will be responsible for installation of the terminal, re-gasification of LNG and delivery to SSGC’s designated delivery points.

GHPL will also hire a consultant that will advise on different commercial aspects pertaining to construction of the terminal.

Pakistan is facing an acute shortage of natural gas in electricity production and for general consumption by all sectors. Domestic gas production stands at 4 billion cubic feet per day (bcfd), far short of the growing demand estimated at 6 bcfd. This means a shortfall of 2 bcfd that the government wants to bridge through gas imports.

The government has been engaged in negotiations for a long time to enter into an LNG supply contract with Qatargas. Under the deal, Qatargas will supply 1.5 million tons of LNG in the first year and push volumes to 3 million tons later.

In the process, Fact Global Energy is acting as a consultant. It has been engaged by the US Agency for International Development (USAID), which is advising Pakistan State Oil about commercial aspects of the LNG procurement process.

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

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