The government has yet to place Pakistan Qatar Liquefied Natural Gas (LNG) deal signed on February 10, 2016 on the websites of either Public Procurement Regulatory Authority (PPRA) or Pakistan State Oil (PSO), a legal requirement. When the concerned officials were asked about the non-availability of the deal on an official website, they said that very soon all the details of the contract would be uploaded on the sites; however the officials were not clear about the date they would upload the agreement.
The deal envisages import of 2.25 million tons of LNG in 2016 and 3.75 million tons per annum in 2017. PSO will make payments to Qatargas every fortnight through Standby Letter of Credit (SLBC) at 105 percent of the value of four LNG cargoes. According to officials, the PSO management has written a letter to the Petroleum Ministry to arrange advance payments from LNG consumers which include Punjab CNG outlets, fertiliser plants and power sector.
According to officials, PSO will issue the first SBLC to Qatargas in a few days and supply will commence next month; during the first three months the cost will be $4.75 per mmbtu at Qatar Port and after including all other charges, end-consumers in Pakistan will pay $5.5 to 6 per unit. Local E&P companies are being paid an average of $4.5 per mmbtu gas production price, which after transportation to the end-consumers would reach to $5.5 per unit, but industrial, fertiliser and power plants would pay an additional Gas Infrastructure Development Cess (GIDC) on local gas.
To discourage the use of local gas the Petroleum Ministry is also considering bringing local gas prices at par with the imported LNG price for industrial consumers, so that domestic gas may be limited to more critical (domestic) consumers. Demand for gas by domestic consumers is increasing and 1.5 million applications are pending with the two gas distribution companies for domestic connections.
"We will take LNG imports to over eight million tons per annum within next three years and will strike more deals with the suppliers, besides constructing Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India gas pipeline projects as our gas demand is rapidly increasing," stated a highly placed official. "Our major local gas reservoirs like Sui, Qadirpur and Zamzama fields are depleting while new gas discoveries are too smaller to meet our requirements. During past three years over 70 discoveries were made but all these discoveries only added 500 Million Cubic Feet per Day (MMCFD) of gas into the system, while over 500 MMCFD of gas was depleted from abovementioned gas fields," the official added.
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