Dry-docking controversy: Action suggested against SSGCL for not issuing letter to EETPL

ISLAMABAD: Minister for Maritime Affairs Ali Zaidi has reportedly proposed action against officials of Sui Southern Gas Company Limited (SSGCL) for not issuing a letter to Engro Elengy Terminal Private Limited (EETPL), the terminal operator, meant to delay dry-docking that would have helped the government take legal recourse, well informed sources told Business Recorder.

Zaidi offered these comments at a recent meeting of Cabinet Committee on Energy (CCoE) after the presentation by Minister for Railways Azam Swati with respect to delay in dry docking of EETPL’s floating storage and regasification unit (FSRU).

On November 4, 2021, the CCOE was briefed on a report titled “delay in dry docking of EETPL FSRU” made by the Inquiry Committee constituted by the CCoE under the chairmanship of Minister for Railways on June 18, 2021.

The forum held threadbare discussion on the report. The forum observed that OGRA should look into the issues identified in the report from the regulator’s point of view. It also observed that the Petroleum Division should consult with the Ministry of Law and Justice on the legal issues and make appropriate recommendations.

Minister for Maritime Affairs pointed out that a letter was drafted by the Ministry of Maritime Affairs for the SSGCL in order to delay the dry docking. It was vetted by the Ministry of Law & Justice.

That letter was an effort to delay dry docking for a few months and to help the government in taking a legal recourse in case of any dispute. However, the letter was not issued to the terminal operator by the SSGCL.

He added that an inquiry should be conducted to determine the reason for such negligence on the part of SSGCL.

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

The Petroleum Division; however, responded that multiple options were under consideration at that time. There was a concern that any complication/dispute at that stage may further delay the operationalization of the terminal; therefore, the best possible option was taken.

The CCoE noted the report presented by the Minister for Railways contained the following directions to the Petroleum Division: (i) to share the report with OGRA, which must take necessary actions from the regulator’s point of view; (ii) to seek opinion from the Ministry of Law & Justice on legal points raised in the report; and (iii) to make assessment of existing contractual arrangement of the LNG supply chain and propose measures for bringing improvement in it. A report in this regard must be submitted to the CCoE within 30 days.

Recently, Secretary Port Qasim Authority (PQA) wrote a letter to Secretary Ministry of Maritime Affairs, saying that he has been directed to refer M/s Tabeer Energy Private Limited’s letter of August 12, 2021 stating that they have commented on rules/codes highlighting contracting of terminal capacity and subsequent sale of RLNG from such a terminal and discourage investors who are seeking to build new LNG terminals at Port Qasim for which a policy decision at appropriate forum would be required.

It was also added that the current Port Qasim navigation channel is under considerable stress when handling LNG vessels at the current terminal capacities.

Plan for new LNG terminals in limbo

PQA submitted the following comments: (i) the Feasibility Study indicates that the present (theoretical) channel capacity is sufficient for port operations up to the 2030s based on the analysis presented in the Feasibility Report (presently, the port is witnessing something around 1500 vessel calls per year, against a potential channel capacity of 4000 vessels per year; (ii) Feasibility Study discussed that at present two LNG terminals when fully utilized can handle around 200 ship calls. It is anticipated that a further LNG terminal will become operational within the next 3-5 years, thereby increasing total LNG ship calls to around 400 vessels per year by 2022-2024.

Alternate channel has also been considered to serve as an energy corridor as most of the LNG vessels will be able to alternate channels which has been substantiated by FMBS (Full Mission Bridge Simulation); (ii) in terms of options for development along the existing channel (i.e. jetties etc.) described in feasibility report with the key issue raised being the appropriate planning of any channel side development, i.e., ensuring sufficient space for vessels to transit past berthed vessels as well as sufficient space for vessels to manoeuvre.

Clearly, extra space is required when handling LNG. Proper management of increased LNG traffic can be addressed through proper review of operational procedures and extensive pilot training; (iv) there are clear advantages to the deepening and widening of the existing channel at PQA as a first and immediate step, i.e., the ability to accept larger vessels and thus generate larger fees for PQA.

Accepting larger vessels will also potentially offset the demand for vessel slots in the channel whilst increasing port throughput - a larger vessel can carry more per transit. As a second step it will facilitate the vessel movement 24/7; and (v) feasibility study report for deepening, widening and straightening of existing navigation channel and commissioning of alternate inner navigation channel has already been cleared by PQA Board and forwarded to MOMA for seeking approval from Federal Government. However, capital dredging shall be undertaken once its need arises.

Copyright Business Recorder, 2021