IPPs agree to buy 265mmcfd imported LNG

The independent power producers (IPPs) have agreed with the government to purchase 265 million cubic feet per day (mmcfd) of imported Liquefied Natural Gas (LNG) for power production, it was learnt on Monday. The first shipment of the LNG is likely to arrive in the country on March 31, the sources added.
"Orient, Saif, Sapphire, Hallmore, Fuji Kabir Wala and Kot Addu Power Company Limited (KAPCO) have agreed to purchase a total of 265mmcfd of LNG by providing guarantee of a standby Letter of Credit (SLoC). Orient, Saif, Sapphire and Hallmore will purchase 40mmcfd of LNG each by providing SLoC of Rs 2.5 billion each, Fuji Kabir Wala will purchase 20mmcgd by providing SLoC worth Rs 1.5bn and KAPCO will purchase 85mmcfd by providing an SLOC of Rs 4.5bn," sources in the Ministry of Petroleum and Natural Resources told Business Recorder here on Monday.
The Petroleum Ministry has directed the relevant quarters to finalise all arrangements for bringing the first shipment of LNG in the country on March 31. The government of Pakistan on a fast track basis wants to begin importing 400mmcfd of LNG from Qatar for which a terminal, having a capacity to handle a maximum of 650mmcfd LNG, is in its final stages of completion at Port Qasim.
Under the agreement, the government is required to arrange LNG imports and pick up 250mmcfd with effect from April 1, 2015, failing which they will have to pay the Engro LNG terminal operator $270,000 per day. The first shipment will require a $40m letter of credit to facilitate a larger than normal shipment because the terminal has to be tested at its full capacity. In 2014, Sui Southern Gas Company Limited (SSGCL) and Engro Elengy Terminal (Pvt) Limited (EETPL) executed an LNG Services Agreement (LSA) on April 30, 2014 for provision of LNG's storage and re-gasification services under a tolling fee arrangement. EETPL has also executed an Implementation Agreement (IA) with Port Qasim Authority on June 23, 2014 to develop and operate LNG terminal at Port Qasim.
Petroleum Ministry was authorised to engage in negotiations with Qatargas on government-to-government basis for importing LNG up to 500mmcfd on delivered ex-ship basis. Accordingly, Pakistan State Oil Company Limited (PSOCL) and Qatargas Operating Company Limited (QOCL) have been nominated by their respective governments to negotiate the LNG sales-purchase agreement. A committee which was approved by the Economic Co-ordination Committee (ECC) on August 15, 2014, was currently negotiating price of LNG with Qatargas.