ISLAMABAD: Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi on Monday rejected the speculation about the signing of an agreement for purchase of energy on high prices on the pressure of a friendly country.
Speaking on a motion in the Senate, the minister said, "No contract has been signed with anybody for the purchase of energy. Similarly, no issue of price fixation for energy has been discussed with anybody."
"We are going to procure LNG on the lowest price. Therefore, speculations for any other agreement or energy purchase are baseless," he informed the House in response to points raised by the members.
The members had claimed that Pakistan was under pressure by certain friendly countries to shelve Iran-Pakistan gas pipeline and purchase costly gas from others.
The minister said the country at present was facing gas shortage for domestic and industrial use as well as for production of electricity. "Our production is four billion cubic meter and demand is six billion cubic meter and we need vast quantity of gas to bridge this gap."
He also rejected the notion that the government was planning to purchase gas on high prices than the other countries and said, "the gas purchase and pricing mechanism will be transparent and gas will be purchased on lower possible price."
The minister mentioned to five attempts of previous government to purchase gas and said the proposed price was also on record. "Why these attempts failed and why three previous petroleum policies could not be implemented."
He said at present 50% power was produced through gas and if the gas supply was suspended to these power stations, the country would be facing 50% shortage of power immediately. "Therefore, we continue to need gas to avoid immediate power shortage," he added.
He said the present government was implementing its petroleum policy and had promised returns to the investors. "This will provide us sufficient funding. We have ample shale gas but its materializing will need funds that will come through foreign investment."
He said there was no $ 10 gas in the world today. Even agreements by countries like Japan and India were above this rate. "But, I assure that gas will be procured at market price or even lower and it will be completely a transparent process."
He said the government would not sign any contract that was irrational. "We will toll 400 mmcfd gas in near future with zero investment from our side."
He further explained that all LNG (liquefied natural gas) contracts were linked to crude oil because there was no bench mark for gas pricing in international agreements. "Therefore, the cost of producing electricity will be almost the same either we produce it from crude oil or from LNG. All agreements will also be on the basis of 'take and pay'."
He clarified that cost of Iranian gas would be lesser a dollar or two because the agreement was signed a few years back. But, due to sanctions on Iran, no investor would invest in that project. "However, if the sanctions are lifted, the Iranian gas will be in our system within 30 months."
"But, we have no third party pressure or any obligation to purchase Iranian gas. The only hurdle is the sanctions and we have asked the Iranian government to link this project with lifting of sanction so, as and when the sanctions are lifted, we proceed with the project," he added.
He said $ three to four billion were required to materialize the shale gas and "until we do not have investors and sanctions are not lifted from Iran, we shall have to depend on imported gas to meet our needs."
Shahid Khaqan said the government was focusing on both the LNG and TAPI and during this year LNG would be included in the system. "We have the ownership of the LNG project and we will deliver it to the system this year. We will also pursue bid-based mechanism to have good price."
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