Delay in setting up of merchant LNG terminals: Ogra identifies certain bottlenecks

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has identified some of the bottlenecks, which are causing delay in the construction of two upcoming merchant LNG terminals that can ensure provision of gas to the users at competitive rates.

The oil and gas regulator issued two new construction licenses to private companies - Tabeer Energy (Pvt) Limited (TEPL) and Energas Terminal (Pvt) Limited (ETPL) - in April 2021 for establishing at Port Qasim. Both the companies have not taken a final investment decisions (FIDs) so far due to the issue of pipeline capacity, which is under deliberation with the gas companies.

Once resolved, the construction and operation shall take another two years. These private LNG re-gasification terminals shall operate on third-party access (TPA). To regulate the TPA to the LNG terminals, the Ogra has drafted "LNG Terminal Access Rules and Code" in consultation with all the relevant stakeholders.

The said rules have been sent to the federal government on October 1, 2021 for notification as the rules requires federal government approval as per OGRA Ordinance 2002. The said code has also been drafted and shall be notified at the earliest.

Plan for new LNG terminals in limbo

At present, the factors, which are hindering the private sector import of gas are mainly the delay in establishment of new terminals, lack of pipeline capacity availability for transportation of RLNG, non-expansion of existing LNG terminals due to contractual constraints, which pertain to the Sui Southern Gas Company (SSGC) and the Pakistan LNG Limited (PLL), and resistance of the gas companies to let go their monopoly.

These impediments can be resolved by early establishment of new LNG terminals, expeditious work on "Pakistan Stream Gas Pipeline" for which MOU was signed between Pakistan and Russia, which shall enhance the gas pipeline capacity from South to North of the country. At present, the federal government contracted the storage and re-gasification capacity of two LNG terminals.

The peak re-gasification capacity of Engro Elengy Terminal Limited (EETL) as per operations license issued by OGRA is 690 mmcfd.

The SSGC contracted 630 mmcfd of this terminal on firm basis and 690 mmcfd on best endeavour basis on behalf of government through LNG Services Agreement (LSA). There is no spare capacity available at the EETL terminal.

The real regasification capacity of Pakistan Gasport Consortium Limited (PGPCL) LNG Terminal, the second terminal, as per operations license granted by the Ogra is 750 mmcfd.

Pakistan LNG Limited (PLL) hired 600 mmcfd of LNG regasification capacity of this terminal on firm basis and 690 mmcfd on reasonable endeavour basis.

The utilisation of the remaining capacity i.e. 60 mmcfd is still under deliberation between the respective parties and the same shall be available for use by third parties once agreed by the parties to the contract.

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

Sources in the gas sector said that the country would expectedly face a serious natural gas shortage in the upcoming winter months due to a gap between the demand and supply of gas.

They said that during winter months, gas consumption by the domestic sector increased manifold on account of use of room and water heaters.

They said the SNGPL network would face around 370 mmcfd shortfall while the SSGCL network also faced shortage of approximately 250 mmcfd during the winter season.

Copyright Business Recorder, 2021