LNG cargo: all charges under OSA to be computed at actual price

The federal government has reportedly decided that all transportation, re-gasified and tolling charges of LNG under Operation and Services Agreement (OSA) will be computed at actual price, well-informed sources told Business Recorder. Pakistan is currently facing a shortage of natural gas, both for its electricity generating plants and for general use by all sectors. This shortage of energy is not only causing hardship for the people but also inhibiting economic growth of the country. Therefore, the government is pursuing import of LNG to minimize the gas shortfall.
The ECC in its decision of June 28, 2016 had approved the capacity charge of $ 245,220/day and utilization charge of $ 0.009/MMBTU (levelised service charge of $ 0.4177/MMBTU) for tolling services. Pakistan LNG Terminal Limited (PLTL) has signed Operation and Services Agreement (OSA) for 15 LNG cargoes that have been handled at this terminal.
Oil and Gas Regulatory Authority (Ogra) has now intimated that M/s Pakistan LNG Limited (PLL) being aggrieved with the Authority's decision has requested for revision of RLNG price owing to terminal charges determined by Ogra for May 2018 @ $ 0.4177/ MMBTU based on levelised service charge approved by the ECC, whereas M/s PLL claim that it is entitled to charges as per contract/ECC decision regardless of the LNG supplies throughout. M/s PLL request for review of RNLG price is under process by the Authority, Ogra has approached Petroleum Division to clarify whether capacity and utilization charges are applicable based on the supply of LNG or otherwise.
In the case of 1st LNG terminal, the ECC had decided that all charges under the LSA including but not limited to capacity charges and utilization charges as well as retainage are to be included at actual. SSGC/PSO will share all relevant details with Ogra.
In order to satisfy Ogra's requirements for the purpose of calculation of tolling charges for 2nd terminal and in line with the decision of ECC, the Petroleum Division proposed that all charges under the OSA including but not limited to capacity charges and utilization charges are to be computed at actual. PLTL/PLL will share all relevant details with Ogra. The issue was brought before the Economic Coordination Committee (ECC) of the Cabinet which accorded approval to the proposal submitted by the Ministry of Energy (Petroleum Division).