An implementation agreement between Port Qasim Authority (PQA) and Elengy Terminal Pakistan Limited (ETPL) for setting up of an LNG terminal is expected to be signed sometime next week. Following a meeting held here on Saturday between PQA and ETPL officials, Chairman, PQA, Aga Jan Akhtar told Business Recorder that everything has been agreed between the two sides and the implementation agreement will be signed after it is approved by PQA board meeting to be held here next week.
Neither there have been any lacunas nor any disagreement on the terms and conditions and all details have been finalised in a smooth manner and congenial atmosphere. The board of directors will be briefed by Aga Jan Akhtar on the finer points of the agreement and after its approval, implementation agreement will be inked to usher in an era that would go a long way in alleviating the gas shortages in the country.
The fast track LNG project meeting, aiming to import LNG by end of 2014, was held here on March 7. It was attended by Shahid Khaqan Abbasi, Minister for Petroleum & Natural Resources (MP&NR), Senator Kamran Michel Minister for Ports & Shipping, Abid Saeed Secretary P&NR, Habibullah Khattak Secretary for P&S, Miftah Ismail Chairman SSGC, Zuhair Siddiqui MD SSGC, Mubin Saulat MD ISGS, QED & USAID representatives, Ali Ansari CEO Engro and CEO ETPL Sheikh Imranul Haque.
The meeting was apprised that government of Pakistan, Ministry of P&NR through Inter State Gas Systems (Pvt) Limited (ISGS) had decided to import LNG on fast track basis and Elengy Terminal Pakistan Limited (ETPL), a subsidiary of Engro has been selected through bidding process. The project is on tolling basis for a period of 15 years, to handle 400 MMSCFD. The location of the LNG Terminal as proposed by ETPL is adjacent to existing Engro Vopak Terminal Limited Chemical and LPG Jetty.
Earlier, ECC had approved the fast track LNG import project and had forwarded the summary of the LSA to the prime minister for final acceptance. Engro Corporation''s subsidiary Elengy Terminal Pakistan Limited''s (ETPL''s) had successfully bid for the fast track LNG. The RFP had requested LNG handling capability of up to 1.5 MTPA within 11 months and up to three MTPA from year two onwards whereas ETPL possesses the expertise to provide the ramped-up quantities within 11 months.
The tolling price of USD 0.66/MMBTU is extremely competitive given that in India, LNG tolling price ranges from $0.605 for 1,400 through-put to $1.106 per mmbtu for land terminals. In Indonesia, tolling price is $1.8 per mmbtu for handling LNG at a floating terminal and $1.2 per mmbtu for a land terminal. Average tolling price based on the year 2010 was $0.73 per mmbtu in the US and Canada, $0.87 in China, $0.81 in Europe, $0.89 in South Korea and Japan, $0.72 in the Middle East and $0.71 in Southeast Asia.
While giving a briefing to the delegation, CEO ETPL stated that Engro has technical expertise to handle the LNG using Floating Storage Re-gasification Unit (FSRU) vessel and Engro is the only company with the manpower, skills and the environmental and regulatory approvals to provide terminal facilities in the shortest possible time to facilitate offloading of LNG into the country and alleviate the energy shortage in next years winter. He said that Engro''s joint venture with Royal Vopak (EVTL) has an extensive experience of handling LPG and was the first company to construct and commission LPG storage in 1999 and cryogenic facility of ethylene (-103oc) in 2009 in Pakistan. EVTL has handled to date 350,000 KT of LPG.
SSGC Chairman confirmed that the LSA has been discussed in presence of international legal experts and national team from SSGC, ISGC and MP&NR and no material changes were made to the LSA. The LSA has a formula in place for the retainage which ensures that a retainage of 1 percent is not exceeded at 400 MMSCFD. Unlike standard LNG import deals, the liability of Engro Corporation is unlimited and without cap. SSGC has even the right to terminate within four months of signing of the LSA if certain governmental approvals are not place saddling Engro Corporation with significant [dead] investment. In case Engro Corporation is not able to meet the first gas date of 11 months from signing of LSA, then Engro Corporation is liable up to US $0.15 million per day.
Chairman PQA informed that their LNG consultants (QED UK) while going through the Lloyd''s Register Report (QRA) confirmed that the proposed ETPL site is feasible for the LNG project. PQA has a commendable safety and security record over the last 40 years and possesses the expertise to handle vessels with more dangerous cargo and much larger vessels than the proposed LNG vessels. Minister Ports & Shipping stated that PQA and ETPL are finalising the Implementation Agreement (IA) at Port Qasim due to be approved by PQA Board / MP&S.
Engro has been pursuing a floating terminal since the days of Maashal. Engro had earlier conducted a thorough site specific QRA in line with SIGTTO and PIANC guidelines wherein the QRA assessed three of the proposed sites of Engro. The QRA after conducting of thorough real time marine navigation simulations, risk dispersion modelling and hazard identification studies concludes the ETPL Brownfield site adjacent to the EVTL terminal as a safe and viable option, having "certain operational advantages".
Hazards of Operability (HAZOP) study for the project was conducted in London in January 2014. The studies were attended by SSGC, PQA, Royal Vopak, QatarGas, Excelerate Energy, Technica LTD and were lead by Lloyd''s Register and ensured that the project meets all international safety requirements. Furthermore, a recently conducted consequence analysis study for the project by Lloyd''s Register concludes that the "operational permanent exclusion zone (PEZ) for the project is determined not to extend beyond the berthing pocket of the Elengy Terminal".
A maneuverability study was undertaken and will be followed by a full bridge simulation. Such studies are normally not undertaken for terminals in Port Qasim (eg new terminal of coal).
It is expected that Engro''s high safety standards based on DuPont will be also implemented in the new terminal and it will obtain certification of OHSAS 18001, ISO 9001, 14001, ISPS and safety audits will be done by the PQA, SSGC, Ogra, QatarGas, and Excelerate Energy during and prior to commissioning of the terminal.
Expressing his views during the visit, Minister P&NR said, "After due diligence and conforming to all reasonableness on international and regional parameters, the petroleum ministry is satisfied that the project is a good deal and worth putting on fast track in order to meet the existing shortfall of gas in the country".
Shahid Khaqan Abbasi informed that Prime Minister Muhammad Nawaz Sharif will inaugurate LNG terminal at the end of March 2014 and emphasised the signing of LSA and finalisation of implementation agreement by PQA. Kamran Michael supported the project which is of natural importance.
The two ministers, Senator Kamran Michael and Shahid Khaqan Abbasi also took a harbour cruise and visited the site of the LNG terminal.
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