Pakistan close to clinching $16b Qatar LNG deal

Published: October 28, 2015
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ECC set to give its stamp of approval to energy supply contract. PHOTO: REUTERS

ECC set to give its stamp of approval to energy supply contract. PHOTO: REUTERS

ISLAMABAD: 

Pakistan and Qatar are getting closer to sealing a $16-billion liquefied natural gas (LNG) supply deal as the Economic Coordination Committee (ECC) is expected to give the go-ahead to the proposed energy contract.

Under the deal, US energy giant ExxonMobil and French firm Total, which have shareholdings in Qatar Petroleum, will also supply LNG to Pakistan.

Deal with Russia

According to discussions with different officials, the ECC will consider an LNG sale-purchase agreement in its upcoming meeting and its approval will allow the Ministry of Petroleum and Natural Resources to sign a government-to-government contract with Qatar. This will be followed by a commercial agreement with Qatargas, the world’s largest LNG company.

The petroleum ministry had sought the ECC’s nod to clear the way for Pakistan State Oil (PSO) to execute the sale-purchase agreement with Qatargas following the government-to-government deal.

“A summary has been sent to the ECC for consideration in its next meeting,” said Petroleum and Natural Resources Minister Shahid Khaqan Abbasi while talking to The Express Tribune.

Multi-million dollar contract: Gunvor wins LNG deal race, will be PSO’s supplier

“The LNG supply contract will be worth $16 billion keeping in view the existing price of Brent crude oil,” he said, but did not disclose the pricing formula.

According to the officials, the contract will remain in place until December 2030. However, a price review provision will be there that will enable Pakistan and Qatar to seek the price review after 10 years and they will have the right to terminate the sale-purchase agreement if they fail to arrive at a consensus on the price revision.

Under the proposed agreement, PSO will receive 1.5 million tons of LNG from Qatargas in the first year and the annual volume will be enhanced to 3 million tons from the second year.

OGRA sets LNG price ahead of Qatar deal

PSO, a state-owned company whose core business is oil import and its marketing, is now entering a new arena where it will receive LNG cargoes and provide them to the gas transmission companies.

According to the officials, the ECC is expected to allow PSO to sell LNG to the two gas distributors – Sui Northern Gas Pipelines Limited and Sui Southern Gas Company. PSO may also be authorised to provide LNG to third-party consumers.

In the original plan, Qatar had desired that Qatargas would supply LNG through its venture Qatar Liquefied Gas Company 3 (QG3) under the sale-purchase agreement. However, now Qatargas has proposed that LNG should be supplied through QG2.

OGRA proposes slashing fuel prices

The new proposal will deprive US-based ConocoPhillips of an opportunity to capture Pakistan’s market as a stakeholder in QG3. In QG3, Qatar Petroleum has a 68.5% stake, ConocoPhillips has 30% shares and Mitsui & Co has 1.5% shareholding.

QG2 is the world’s first fully integrated value chain LNG venture. It includes two world-class LNG trains with a capacity of 7.8 million tons per annum (mtpa) of LNG, 0.85 mtpa of liquefied petroleum gas, 90,000 barrels per day of condensate production, a fleet of 14 ships and a receiving terminal.

The project includes 30 offshore wells and three new platforms in Qatar’s North Field. This is a joint gas field with Iran from which Pakistan is also likely to buy natural gas under a gas pipeline project.

Published in The Express Tribune, October 28th, 2015.

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Reader Comments (18)

  • on the lighter note
    Oct 28, 2015 - 9:41AM

    $16 billion deal – for LNG ?? are they going to bankrupt pak as its fluctuating foreign reserve is aprrox $ 16 billion only which is much lesser than other smaller SAARC nation like Bangladesh which has $ 25 billion foreign reserve let alone India’s with $350billion!Recommend

  • Lion King
    Oct 28, 2015 - 10:37AM

    Mega deal by Sharifs

    Mega Money for SharifsRecommend

  • Javed
    Oct 28, 2015 - 10:38AM

    Vague reporting.
    $16 billion for how many years?????
    What is the price fixing mechanism????
    Any tender announced??
    What about the Pakistan Iran gas pipeline??
    (only few months are left when sanctions on Iran will end!
    Does this deal makes any business sense????Recommend

  • Observer
    Oct 28, 2015 - 10:39AM

    “The LNG supply contract will be worth $16 billion keeping in view the existing price of Brent crude oil,” he said,

    Blockquote

    “but did not disclose the pricing formula.”Recommend

  • Waqar
    Oct 28, 2015 - 11:12AM

    Why are we so much cynical on the broken deal which is not yet finalized?
    So many pathetic people we are … Sorry!
    Negatively, Negatively and Negatively…Recommend

  • Aam Admi Bechara
    Oct 28, 2015 - 11:18AM

    Yummy yummy more money for the Sharifs of this landRecommend

  • Haider
    Oct 28, 2015 - 11:26AM

    @javed
    Read the article it says till 2030…
    @on the lighter note
    Deal of 15 years…..you cant say good or bad before seeing the facts…16bn$ too much…Recommend

  • Sharath Chandra
    Oct 28, 2015 - 12:18PM

    Shariff will think about the pricing and logic behind this deal after solving the Kashmir Issue.Recommend

  • Rohail
    Oct 28, 2015 - 1:07PM

    And Qatar has blocked visas to Pakistan. Shame on Pakistani government.Recommend

  • Saud
    Oct 28, 2015 - 1:51PM

    Great achievement by a government that is still not done with half of its term. Musharraf and PPP failed to make any progress on LNG. This government has established the first LNG terminal in Pakistan, started work on the 2nd terminal, signed a north-south gas pipeline with Russia and now entering into a $16bn supply agreement with Qatar. Well done PMLN and well done Prime Minister!Recommend

  • Ali
    Oct 28, 2015 - 3:04PM

    Great achievement for the Govt., and an applaudable measure, indeed.Recommend

  • Shakil Ahmed Khan
    Oct 28, 2015 - 3:12PM

    They talk about clinching? wow they talk about 16 billions like petty cash and dont even release at what rate its being imported?

    why we need expensive LNG when we can import gas directly from Iran now?
    Though focus should be more to explore within Pakistan and also offshore in coastal Pakistan. If Iran and Qatar can find gas near to their shores why not Pakistan? why focus only to import when Pakistan have own exploration results in gas and petroleum.

    But corrupt to the core government wants their kickbacks and dont think about Pakistan.
    They will not build dams but install thermal power plants!
    They will not explore gas and oil in Pakistan but import it!

    as it pays mega bucks! Recommend

  • tellmore
    Oct 28, 2015 - 3:28PM

    This is a good move by Nawaz Shariff. The cost is paid by the people of Pakistan when they buy Gas. So there will be no burden on Govt. In turn, availability of Gas push up the Industrial Production which boosts employment generation. This will result in improvement in economy. So full marks to Nawaz Shariff.Recommend

  • zahid
    Oct 28, 2015 - 6:04PM

    this LNG will be used to run our industry and power plants as well as CNG stations and fertilizers industry and last but not the least domestic users of natural gas. well done pMLNRecommend

  • cautious
    Oct 28, 2015 - 9:40PM

    but did not disclose the pricing formula.
    .
    Why is that? LNG prices are published daily – transportation and offloading cost are pretty std. No reason to keep pricing secret unless someone is embarrassed or the price includes kickbacks.Recommend

  • Raghu
    Oct 29, 2015 - 8:13PM

    Good job PMLn. Let haters hate you keep working and delivering. The masses will no doubt vote for you again in 2018.Recommend

  • Shakil Ahmed Khan
    Oct 29, 2015 - 8:45PM

    @tellmore:
    no burden on Govt? any Govt debt is your debt, you and your children will pay it! plus so called Qatar Company that signed the deal with PSO is signed by none other than frontman of Sharif – Mr Saif ur Rehman Khan! This 19 billions paid by Pakistan tax payers will go straight to Mr Sharifs company in Qatar definitely it will not registered directly in his name but very cleverly through another offshore British Virgin Island company whose benefactor will not be disclosed unless requested by a government!

    They are spending cash like Pakistan so rich, its all loans money that generations will have to pay through high fuel prices and everything they buy from shops! Pakistanis need to wake up and smell the coffee these guys are there to make money and looting their future generations in the process. Recommend

  • KSS
    Oct 30, 2015 - 3:00AM

    As a businessman of long standing, I find the word “clinching” really surprising. Words of this nature means of some achievement and is normally used by a seller rather than a buyer.

    Unless of course Pakistan has negotiated a superb deal i.e. half price deal, long term credit etc.

    Knowing Qatari govt., this is highly unlikely. They are one of the most hard nosed, tough and
    very pragmatic along with UAE.

    I recall some time back they refused to sell gas to Pakistan as she asked for extended credit.

    Only Saudis did this but that was before Yemen implosion.

    kssRecommend

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