While hailing efforts of Pakistan to set up LNG import terminal, United States (US) says that it places no bar on any non-Free Trade Agreement (FTA) countries including Pakistan to ink LNG supply deal with US private enterprises. "Having an LNG import terminal and re-gasification facility is the first step for Pakistan to negotiate a supply contract. We are fully supportive of Pakistan's efforts to increase its natural gas supply through LNG imports," US Embassy officials said.
They said that Pakistan was facing energy crisis and TAPI gas pipeline project and LNG imports were options for increasing gas supply and they would integrate the region.
They said that all natural gas production and LNG manufacturing in the United States was the endeavour of private enterprises and US government did not have any agreement to sell LNG and was not negotiating with any country for LNG export.
"To export LNG to any foreign country, a company must get licence from the Department of Energy (DOE).Licences for exports of LNG to nations that have a certain type of the FTA with United States are deemed to be consistent with the public interest and are granted more or less automatically," officials said, adding that currently the FTA agreements are in place with 20 countries but most of these countries are not large LNG importers
They said that the applications for exports to non-FTA countries, the Department of Energy must make a determination that the license will not be detrimental to the public interest and it takes into consideration of the economic effect on US markets, the environmental impact and energy security.
"The licence is not given for export to a specific country like Pakistan," they said, adding that to date, licenses have been approved for seven companies to export a total of up to 9.27 billion cubic feet per day to non-FTA countries. Several additional license applications are pending before Department of Energy. The officials said that there were several applications pending before US Federal Energy Regulatory Commission (FERC) for the construction of LNG terminals but so far only Cheniere Energy has received a license to build its terminal in Sabine Pass. When completed in 2017, it will be capable of exporting 2.7 billion cubic feet per day (bcfd).
They also said it was too early to know if the prices of LNG would drop after LNG supply from companies in US. They said that the demand and supply situation would determine the price. "The Government of Pakistan should also enhance indigenous gas production by raising wellhead price to encourage exploration companies," they said, adding that transmission and distribution losses in gas utilities were also big issue. They said that 10 per cent loss by gas utilities meant 400 million cubic feet per day loss.
"If it is taken as 400 mmcfd LNG, it would be $1.3 billion per year loss adding that the government would have to reduce losses in gas sector before injecting LNG in the system. They said that the World Bank was working on a good project to reduce losses. They added that the recovery of bills should be improved in power sector and losses should be slashed to bring efficiency.
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