The Oil and Gas Regulatory Authority (Ogra) has reportedly manipulated rules and regulations to grant licence to Pakistan GasPort Limited (PGL) for construction of liquefied natural gas (LNG) terminal, Business Recorder has learnt. Sources said that Ogra had, in defiance of prescribed rule of conducting public hearing, granted 'conditional licence' for construction of LNG receiving terminal to Pakistan GasPort Ltd.
"Ogra is going to conduct public hearing on Tuesday after it has already issued the licence to PGL," sources added. On May 14, 2009, Ogra granted Provisional Licence to PGL to complete formalities as stipulated in rule 33(1) of LNG Rules 2007, pertaining to import of LNG. PGL was also advised that the application for grant of licence for construction of LNG terminal as required under rule 4 of LNG Rules 2007 may be submitted subsequently to meeting requirements to enable the Authority to appoint the consultant of international repute for evaluation of the application in pursuance of rules.
Documents show that Ogra issued 'conditional licence' without hiring consultant to evaluate application for licence, which was violation of LNG rules 2007. According to LNG Rules 2007, rule 31: (i) in relation to each application or licence, the Authority may appoint a firm of international repute which shall assist the Authority in determining whether an application fulfils the requirement of these rules; and (ii) determining whether the licensee is complying with the requirements of the Ordinance, these rules, regulations, standards prescribed by the Authority, the terms and conditions of its licence or the project implementation plan.
Ogra, in the licence issued to PGL, stated that "once the construction of LNG terminal is completed, an independent consultant of international repute, out of the Ogra pre-qualified LNG consultants, shall be deputed by the Authority, selected by the Project Proponent, for evaluation of the project that it has been designed/constructed in accordance with internationally applicable standards of LNG construction and in line with the provisions of Ogra Ordinance, LNG Policy 2006 and LNG Rules 2007".
This was against what had been agreed in 'provisional licence' on the issue of consultant. Sources challenged Ogra's ability to take action against PGPL in case of any irregularity that is identified by the consultant after the LNG terminal is completed.
As per the information provided in documents, the project shall produce 300 MMCFD gas (re-gasified from LNG) to the national grid and the re-gasified LNG shall mainly be used for power generation units. But PGL has not given any details about source of LNG supply and has not provided either the agreements signed with power generation units or the agreements entered into with gas utilities to supply gas to the national grid.
The project also envisages yielding 1000 tons per day LPG as by product. But PGL is still to confirm whether it will seek a licence for LPG production as by product of LNG. According to LNG Policy 2006, LNG developer or LNG buyer is to demonstrate access to sufficient natural gas reserves (in the form of a Heads of Agreement (HOA) with an LNG supplier) to supply LNG at the required import volumes for a minimum period of 20 years.