The Sui Southern Gas Company (SSGC) has received 17 Expressions of Interest (EoIs) from interested parties, which include some leading LNG operators, on its invitation for Liquefied Natural Gas (LNG) import under a 'third party access regime'.
The leading LNG operators include Shell, Vitol, GDS, Glenco, Norwegian Fund, Nishat-Kapco and others. The Sui Southern Gas Company (SSGC) invited EoIs for LNG import under a 'third party access regime' last month. The bidding companies are expected to develop their own LNG Floating Storage Re-gasification Units (FSRUs), arrange their own supply of LNG and sign firm contracts with buyers of re-gasified LNG which may also include Sui companies.
Sources said that the Federal Minister of Petroleum Dr Asim Hussain has decided with dogged determination and dour persistence to solve this perennial problem by ensuring urgent and uninterrupted supply of energy on a fast-track basis through LNG import by connecting the re-gasification unit at the port with the transmission system of Sui Southern Gas Company (SSGC) for onward transmission and distribution to Sui Northern Gas Pipeline Company (SNGPL).
"This may be a quick fix solution of gas shortage problem acutely affecting the gas users in Punjab in particular," sources added. They said that establishing LNG import facility and re-gasification units will be capital intensive. The investment cost could be between $250 million and $300 million. "The government should therefore encourage the big boys to sign up with international firms," they added.
Analysts argue that the LNG import is a major part of the solution, not the whole solution; it may be the best way to quickly overcome the existing shortage. However, it cannot be a permanent substitute for efforts aimed at initiating a flurry of domestic exploration and production (E&P) activities.
They said the present petroleum policy needs to be looked afresh. "We must offer 60 to 70 percent of the crude price for newly discovered gas in order to attract investment," they said, adding that "We could also allow 5 to 10 percent domestic investment in place of government holding to attract local investors".