Final LNG price to range between $10 and $11

The final price of the imported Liquefied Natural Gas (LNG) will be in the range of $10 to $11 per Million British Thermal Unit (MMBTU), it is learnt. The procurement price from Qatar as publicly announced by Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi is 8 dollars per mmbtu which can be calculated at 13.5 percent of the current Brent price.
An agreed charge to be paid by the government to Engro Elengy Terminal Private Limited (EPTL) is capacity payment charges at the rate of $0.66 per MMBTU. Other charges which have yet to be negotiated and agreed to be paid by final consumers in Pakistan are as follows: port charges, transportation and other charges to Pakistan State Oil (PSO), Sui-Southern Gas Company Limited (SSGCL) and Sui-Northern Gas Pipelines Limited (SNGPL).
Asian countries' LNG imports are based on the following formula: CP = BP + ? X (BP: constant part or base price; ?: gradient; X: indexation). The formula is widely used in Asian LNG Sales Purchase Agreements (SPAs), where base price refers to a term that represents various non-oil factors, but usually a constant determined by negotiation at a level which can prevent LNG prices from falling below a certain level. It thus varies regardless of oil price fluctuations. Oil parity is the LNG price that would be equal to that of crude oil on a barrel of oil equivalent basis. If the LNG price exceeds the price of crude oil in BOE terms, then the situation is called the broken oil parity.
EPTL's terminal will handle a maximum of 700 Million Cubic Feet per Day (MMCFD) by the end of November 2015 while as per the contract, the EPTL will provide a maximum of 400 MMCFD of LNG to the government. At present, the existing capacity of the transmission system is limited to 325 MMCFD, which has been allocated to independent power producers.
"The Ministry of Petroleum and Natural Resource has forwarded a summary to the Economic Co-ordination Committee (ECC) of the cabinet seeking amendments in the Oil and Gas Regulatory Authority (OGRA) rules to deal with LNG-related issues, including pricing and distribution. The ECC is likely to approve the summary in its upcoming meeting," an official said.
At present, SNGPL and SSGC are engaged in the transmission and distribution of natural gas in the country. Upon availability, the re-gasified LNG will be transported from the SSGC network to the SNGPL system under a swap arrangement between them to meet the demand of consumers, including power plants.