LNG terminal at Port Qasim

The signing of an agreement between Port Qasim Authority and Pakistan GasPort Limited regarding establishment of an offshore LNG import terminal at Port Qasim marks a major step towards increased availability of liquefied natural gas in the country. The accord was signed on April 28 following endorsement by ECC of the proposals submitted by the Ministry of Ports and Shipping.
The government has already exempted import and distribution of LNG from GST and Central Excise Duty in order to promote use of this clean and efficient fuel. The ECC has meanwhile authorised the petroleum ministry to issue appropriate instructions to Ogra for removal of any impediments in the way of speedy implementation of the accord. The Ministry of Ports and Shipping had issued NoC to the Gasport Group in November last year for setting up a floating LNG terminal at Port Qasim. According to available details, the facility will be established at Kadiro Creek, opposite Khiprianwala Island.
The terminal is to be housed in a dedicated LNG vessel, as a floating terminal is not only more cost-effective than a land-based storage facility, it is also time-efficient in that the construction of a land-based facility takes three to four years to complete.
What makes the accord between Port Qasim and Pakistan Gasport Limited of crucial significance is that Pakistan is expecting a severe gas supply crunch as early as 2008, and it will have to import LNG in bulk quantities. As the Qatar pipeline project or IPI are not within the realm of implementation in the near future, the construction of an offshore LNG terminal to offload gas into our pipeline system seems to be the only viable option available to us.
Augmenting gas supply through LNG import has in fact become an important element of the government's energy security strategy. And the government wants to encourage LNG import through active participation of the private sector.
(The government announced its first ever LNG policy in 2005-06, which laid down the basic policy parameters.) Although natural gas pipelines are comparatively economical, these are impractical to build across oceans and mountain ranges. Hence the use of LNG, whose demand world-wide increased by nearly 40 percent between 2002 and 2005.
And the use of natural gas, which is cleaner and less carbon intensive than oil or coal, has grown faster than that of any other fossil fuel. Incidentally, LNG provides many advantages for storage and distribution. It is these advantages that have led many experts to conclude that the supply and demand imbalance can be met largely through greater volumes of imported LNG. Fortunately, Pakistan has the world's second largest pipeline network after the United States. LNG imports can be off-loaded into this system, and used for industrial, commercial and domestic purposes.
The Qatar pipeline project on which Pakistan was counting for supply of gas appears to be comparatively too expensive. Liquefied natural gas technology has revolutionised the energy sector, and demonstrated its worth as a more commercially viable option. That is why the consumption of liquefied gas is increasing faster than that of piped gas, making it likely that LNG's share in total gas use world-wide will increase manifold over the next decade or so.
It augurs well for Pakistan's energy sector that the Gasport Group is prepared to make hefty investment in it. A floating LNG terminal at Port Qasim will obviously inject greater efficiency by reducing the time consumed and the cost incurred on delivery of liquefied fuel to tankers for export purposes. The government should sign similar agreements with international energy giants to overcome the country's mounting energy crunch not only through an increase in the quantum of LNG imports, but also through augmented production of LNG at the local level.