The Economic co-ordination Committee of the Cabinet (ECC) will take up the issue of import of Liquefied Natural Gas (LNG) from Qatar in its next meeting. Federal minister for Petroleum and Natural Resources Shahid Khaqan Abbasi told Business Recorder that Pakistan and Qatar have yet not initiated talks on the pricing of LNG but it will be in the range of $16-17 per Million British Thermal Unit (MMBTU).
"If any person or entity can import LNG at a lower rate to Pakistan I, on behalf of the government of Pakistan, assure him full co-operation," Abbasi challenged. He said: "although I have visited Qatar, we did not talk about LNG prices". While rejecting claims of some energy experts citing Qatar's deal with other countries at a price not exceeding 12 dollars per mmbtu, Abbasi contended that "these people are not serving Pakistan's interests and instead they want Pakistan to remain in darkness. Why are these people not coming forward and starting import of LNG if they can get a cheaper price from Qatar as the Petroleum Ministry has invited all to start LNG imports", the minister queried.
Former Finance Minister Saleem Mandviwalla said he visited Qatar once to negotiate on the LNG price. He said the conditions of LNG from Qatar were so tough that it was not acceptable to PPP government. Qatar conveyed to Pakistan that it would agree to sign an LNG contract but for a period not less than 25 years and Pakistan must import continuously during the contract period.
Qatar further demanded that the contract of transporting LNG be awarded to Shell Petroleum Company as it was the strategic partner of Qatar Petroleum. Saleem further said Qatar was offering $18 to $20 mmbtu to PPP government which the government found very high. The government also conducted a comparison study of both sources of gas-LNG from Qater and Iran-Pakistan gas pipeline - and found the price of IP gas much cheaper than the import of LNG.
Abbasi said the government will negotiate the LNG price from Qatar in coming weeks. He, however, re-emphasised that so far nothing has been finalised. The objective would be to get the cheapest possible price but it could be around $17 per MMBTU. Engro Vopak Terminal Limited (EVTL), a private company, would construct an LNG terminal at Port Qasim. The company would collect $0.66 per mmbtu as service charges, the minister added.
Abbasi further stated that the first shipment of 200 Million Cubic Feet per Day (MMCFD) of LNG would be added to the system from November 1, 2014. He accused the former government of not safeguarding the interests of the common man and not being serious about importing LNG to address the growing energy demand-supply gap.
He contended that LNG import is the only option to deal with the current energy crisis with a capacity to reduce power outages by half. If uninterrupted gas is supplied to power plants operating on gas then power production would automatically increase, the Minister said. The Pakistani government has also shown an interest in importing LNG from the US but the US government does not allow export of the commodity to countries with which it has not signed a Free Trade Agreement (FTA). On the possibility of importing LNG from the US, a senior official of Petroleum Ministry, who visited the US along with a team of senior Pakistani officials, told Business Recorder that US authorities had assured Pakistan that they would consider the request but had cautioned that approval is linked to a congressional approval.
"If we are considering an LNG deal with Qatar for the next 20 years which requires $70 billion then it would be more appropriate to spend half of that amount on LNG import and half on developing and exploring local shale/tight gas reservoirs; this would mean we will have an additional 3 Billion Cubic Feet per Day (BCFD) cheap local gas within the next 10 years," the official maintained.
"Due to economies of scale the US has started producing gas in abundance and begun exporting the surplus in the form of LNG after gasification. We have talked about importing LNG from the US where natural gas price is in the range of $4-5 per mmbtu, which after gasification is $7.5 per mmbtu, but transporting it to Pakistan and delivering it to the terminal would cost another $7 per mmbtu. Final consumer would have to pay $16-17 per mmbtu for LNG," the official said.