Pakistan is likely to strike a long-term agreement with Qatar for the import of Liquefied Natural Gas (LNG), as a Qatari delegation is expected to arrive in Islamabad in the first week of January 2015, Petroleum Ministry officials said. A senior Petroleum Ministry official while talking to Business Recorder on Friday said that a Qatari delegation was expected to visit Pakistan on the start of the New Year to discuss LNG prices and other terms of the agreement.
"Pakistan is likely to strike a 10 years' LNG contract with Qatar and so far we are not in a position to tell about the prices, but we will ensure best possible deal with Qatar," the official said when asked about the price of the commodity. Pakistan at present is facing serious gas demand/supply gap due to which gas supply to many industries and other sectors has been suspended during the winter and to deal with the huge demand/supply gap the government has decided to import up to 2 Billion Cubic Feet per Day (BCFD) LNG within next three years. On fast track basis, the government is making all-out efforts to start importing 400 Million Cubic Feet per Day (MMCFD) of LNG from Qatar for which a KLNG terminal is under construction at Port Qasim Karachi with a capacity to handle a maximum 600 MMCFD of the commodity.
The official said that Malaysian LNG producer and supplier Petronas has also assured Pakistan of supplying 200 MMCFD of LNG per annum. He added that during a recent visit of Pakistan by senior management of Petronas showed great interest in supplying 1.5 million tons LNG per annum to Pakistan.
According to officials, the USAID consultant has recommended sealing short-term LNG import deal for two to five years to benefit from a price cut in the global market. The consultant had also forecast the possibility of a further reduction in the LNG price in the global market to as low as $6 per MMBTU in coming years due to shale gas production by US and Australia.
However, he said that Qatar wants to strike a long-term deal and maintained that the government was following a two-pronged policy: to import LNG on government to government basis and short-term deal through spot purchases. "We should install power plants to operate on imported LNG during this period," he said, adding that replacement of LNG fuel in power plants would result in cutting fuel cost by 17 percent compared to furnace oil.
"Petronas after Qatar gas is the largest LNG supplier and producer with operations across the globe. The company produces a total of 25 million tons of LNG per annum of which 13 million tons in Malaysia and 12 million tons in other countries including Australia and Canada," the official maintained.
As a result of serious gap between natural gas supply and demand, the government of Pakistan has planned to take LNG imports to 2 BCFD by 2017 for which required infrastructure including LNG terminal is under construction. Pakistan's first LNG terminal with a total capacity to handle 4.5 million tons of LNG per annum currently is under construction by Engro Pakistan at Port Qasim Karachi. It will be ready by the end of February as per contract, but the Ministry of Petroleum has asked the company to complete it by mid January 2015.
According to another official of the Petroleum Ministry, Qatar gas which is demanding $18 per Million British Thermal Unit (mmbtu) in 2012 is likely to cut its demand to $13-14per mmbtu, adding that LNG spot price had come down to as low as $10 per mmbtu. The government has formed LNG pricing committee to negotiate LNG price with Qatar gas and currently terms and conditions of the agreement are being finalised while LNG price and other terms of the agreement are expected to be finalised during upcoming visit of the Qatari delegation.
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