ISLAMABAD: To conclude the Liquefied Natural Gas (LNG) deal with Pakistan Qatari ruler Sheikh Tamim bin Hamad Al Thani is likely to reach Islamabad next week, it is learnt. According to sources privy to the developments, the Qatari ruler is expected to arrive in Pakistan on March 22-23. Sources said that as per plan, the first LNG shipment will reach Port Qasim later this month, adding that except pricing all other major factors of the LNG deal have been finalised.
"We have three options to initiate LNG import; long-term agreement with the suppliers, short-term, and spot purchase, while the government is to strike a long-term deal with Qatar on government-to-government basis; keeping in view current international commodity prices Pakistan is likely get a price of $8 per Million British Thermal Units (MMBTU)," sources added.
The government has also allowed Compressed Natural Gas (CNG) stations of Punjab to start LNG import to make their business operational, which dormant since November 2014 due to gas shortage. The owners of CNG stations have established a Universal Gas Distribution Company (UGDC) to commence LNG import by pooling their own resources. The CNG Association has informed the Petroleum Ministry that it could open up to $70 million worth letters of credit (L/Cs) for importing three shipments of LNG which would meet CNG sector's 45 days' requirement. The imports could be arranged in 10 days, it had told the government.
So far the owners of 1,350 CNG stations have contributed to the initial paid-up capital required for the registration with the UGDC and it is expected some 2,000 CNG stations out of 2,300 operating in Punjab would become a part of the UDGC.
The imported LNG will be supplied to independent power producers (IPPs) which recently have agreed with the government to purchase 265 Million Cubic Feet per Day (MMCFD) for power production. "Orient, Saif, Sapphire, Hallmore, Fuji Kabir Wala and Kot Addu Power Company Limited (KAPCO) have agreed with the government to purchase a total 265 MMCFD of LNG on a Standby Letter of Credit (SLOC) guarantee basis. Orient, Saif, Sapphire and Hallmore will purchase 40 MMCFD of LNG each, providing SLOC of Rs 2.5 billion, while Fuji Kabir Wala will buy 20 MMCFD of LNG by providing Rs 1.5 billion SLOC and KAPCO will purchase 85 MMCFD of LNG by providing SLOC of Rs 4.5 billion," reliable sources in the ministry of Petroleum and Natural Resources told Business Recorder.
The government of Pakistan wants to commence on a fast track basis the import of 400 MMCFD of LNG from Qatar for which the construction of an LNG terminal to handle a maximum of 650 MMCFD of the commodity has reached its final stage at Port Qasim Karachi. Under the agreement, the government is required to arrange LNG imports and pick up 250 Mmcfd with effect from April 1, 2015, failing which they will have to pay Engro LNG terminal operator $270,000 per day.
"As yet both the countries have not agreed on LNG price, but it will be in the range of $8 to $10 per MMBTU. The Qatar government has assured Pakistan of supplying required quantity of LNG. Pakistan has addressed all the concerns of the Qatari government and they are ready to supply LNG," the official stated.
Pakistan is facing a massive demand/supply gas gap at present and the government intends to meet the gap through 2 Billion Cubic Feet per Day (BCFD) LNG imports by 2017. The official said that Malaysian LNG producer and supplier Petronas has also assured Pakistan of supplying 200 MMCFD of LNG per annum, adding that Petronas has agreed with Pakistan of supplying 1.5 million tons LNG per annum.
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