LNG Import: Another opportunity petering out

Asian liquefied natural gas prices have been creeping up ahead of summers towards $16 per mmbtu. This trend is likely to continue up until the end of the summer season with Japan-the largest LNG importer-gearing for its fist summers without nuclear power after the tsunami catastrophe. On the supply side, world would see tightened supplies during the year as the worlds largest LNG supplier, Qatargas, recently scheduled a shutdown of all the units at one of its plants for 3 weeks. This is certainly not good news for Pakistan as the country has chalked out an LNG import plan to serve its burgeoning energy crisis on fast track basis. However, one must not forget that the country has a huge tight gas supply, pricing of which is still undecided. Where government might be paying higher prices for LNG imports, these imports could be beneficial to the power companies which are importing an even expensive fuel-furnace oil With the country swaying between IP and TAPI pipeline and the decision still in limbo, the liquefied natural gas import has been considered a quick fix relatively. Moreover, recent activity in this regard seems to have toppled the LNG import plan. Displaying a lack of swiftness, the entire LNG import plan is in perils now as all the three LNG importers-Engro Corp, Global Energy and Pakistan Gas Port-have been unable to meet the 6 month deadline by failing to find LNG suppliers from amongst the prospective lot. The plans to import LNG from Qatar shattered to pieces when the supplier blatantly quoted an extravagant price of $18 per mmbtu. Historically amid public outcry over escalating energy and power prices, there exists significant disparity between domestic and international gas prices. LNG pricing of $18 per mmbtu from Qatar is definitely a no-no option. With much dejection, especially after the signing of Memorandum of Understanding (MoU) with Qatar for the import of 500 mmcfd, the opportunity to import from Algeria also seems to have been resting on the condition of government-to-government contract basis. The ministry has planned a visit to Malaysia and has shown interest in Brunei as well as prospective suppliers of LNG. However, all now rests with OGRAs decision on extending or withdrawing the LNG pipeline allocation to the three LNG importers. At least, the likely strict stance by the oil and gas authority regarding the import procedures would be favourable precautionary effort, especially in the wake of an already out-of-control circular debt issue.