New terminals: Cabinet asks PD to ensure pipeline capacity allocation availability

ISLAMABAD: The Federal Cabinet has directed Petroleum Division to ensure pipeline capacity allocated to each new terminal developer be available on firm basis post Commercial Operation Date (COD)/ till commissioning of Pakistan Gas Pipeline, official sources told Business Recorder.

Earlier, Minister for Maritime Affairs, Ali Zaidi was unhappy at the volume of capacity for the two terminals arguing that allocation of pipeline capacity, as proposed by the Petroleum Division, may not serve the purpose.

Last month, the Petroleum Division briefed the Cabinet Committee on Energy (CCoE) that as directed by the OGRA, SNGPL will allocate 250-300 MMCFD pipeline capacity to each of the new LNG terminal developers whereas SSGC will provide land for the establishment of fire-fighting station and tie-in-points to the new LNG terminal developers on the same terms and conditions on which the tie-in-points were allocated to the earlier existing terminals.

The Petroleum Division further stated that both new LNG terminal developers should close their Financial Investment Decisions (FIDs) within 60 days of signing of the Gas Transportation Agreement (GTA).

It was also noted that the allocation of pipeline capacity to the new LNG terminal developers along with execution of GTA will enable the new LNG terminal developers to achieve their FID.

The Petroleum Division stated that after extensive deliberation, a consensus has been achieved with both companies (SNGPL and SSGPL) on arrangements, in consideration of existing contractual commitments with domestic, industrial and commercial clients apart from other seasonal variations which are as follows: (i) the firm commitment for making available pipeline capacity on three months rolling basis; and (ii) capacity to be available with effect from January 1, 2023 to the new LNG terminal developers. The split of proposed capacity distribution by the two utilities for two new licences will be 500-600 MMCFD, of which 250-300 MMCFD will be for Tabeer Energy and Energas, each.

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SSGCL will allocate 350 MMCFD capacity of which 200 MMCFD will be to Tabeer Energy and 150 MMCFD to Energas, whereas SNGPL will allocate 50-100 MMCFD to Tabeer and 100-150 MMCFD for Energas.

Both terminal developers would communicate (within 60 days) dates of FID along with dates of Commercial Operations so that both utilities are enabled to effectively manage capacity allocation accordingly. Both terminal developers would be requested to conclude GTA (Access Agreement) with both utilities so as to enable OGRA to initiate approval process.

Petroleum Division further revealed the following next steps to be taken: (i) signing of GTA by respective parties; (ii) approval of signed GTA by OGRA; (iii) communication of dates of FID and COD; (iv) finalizing dates for ground breaking; and (v) coordination of entities for utilization of allocated capacity after COD.

The Petroleum Division also stated to the forum that the issue of tie point has been resolved and land has been acquired by the SSGPL on lease from the IDSM. It will be approved in the next meeting of the Board.

The CCoE directed the relevant parties to proceed with the execution of Gas Transportation Agreement (GTA) and take subsequent steps accordingly.

Copyright Business Recorder, 2021