ISLAMABAD: In a new twist, the Port Qasim Authority (PQA) has also raised operational, technical and regulatory constraints over planned liquefied natural gas (LNG) imports due in a few days.

The transport sector, too, expressed difficulties in purchasing imported LNG for CNG stations due to commercial reasons.

The Port Qasim authorities have informed the government that unless required dredging was not undertaken, “other shipping traffic will be hampered and delayed by nine to 10 hours which will result in heavy financial claims on PQA by other port terminal operators”.

A leader of CNG sector Ghiyas Abdullah Paracha told Dawn that his Universal Gas Company, set up to facilitate LNG supply to CNG stations, was finding it difficult to purchase imported LNG because of exorbitant charges being demanded by PQA, terminal operator Engro and gas companies.

He said the LNG price, after all other costs put together, reached around $5 per million British thermal units (mmBtu), which made the imported commodity unviable for the CNG sector.

In addition to freight and capacity charges being demanded by the two gas companies, the PQA charges worked at about $0.80 per mmBtu while tolling charges of Engro Elengy were around $1.35 per mmBtu.

On the other hand, the PQA has asked the government to ensure that Qatargas gives up utilising Q-Flex — a larger ship — and instead use smaller ships for the time being. But that would entail higher transportation cost per mmBtu.

In a series of letters to the federal government, the PQA has pointed out that “substantial dredging is required in PQA navigational channel because of the requirement of Qatargas for anchorage area, provision of passing bays for shipping traffic and widening of two related buoys (8a/9 and 12/12a)”.

Besides, a depth of 14 metres is required throughout the channel in the long term, it said, adding that the cost of dredging shall have to be borne by Qatargas as it is their requirement for large size LNG carrier. “Dredging in front of EETPL (Engro Elengy Terminal Pvt Ltd) is also required and the cost of the same will be borne by EETPL. As per implementation agreement, PQA is only required to allow vessels which can safely operate within the existing port parameters.”

The EETPL, however, said the “operational constraints” due to lower channel depth was not the responsibility of the terminal operator as per the request for proposal (RFP) or per the Implementation Agreement signed with the PQA.

It contested PQA’s claim that the tender conditions required the successful bidder to ensure that the Q-Flex carriers are able to navigate through the channel.

A senior EETPL official, however, confirmed that first LNG cargo with 200 million cubic feet per day of supply could work out somewhere between $1.3 or so because tolling tariff for first year and subsequent years was required to be quoted differently by the government, coming to a levelised tariff of 0.66 cents per mmBtu over the life of the contract.

An official said the creation of entire liability for government companies had been finalised by Intergas State Company chief Mobin Solat including the responsibility of the gas companies — (SSGCL and SNGPL) — to open letters of credit for Engro. At the last moment, however, the SSGCL has refused to take gas and has absolved itself of the liability for the time being while SNGPL was also still resisting opening $50 million letter of credit.

The PQA has also pointed out that decisions for hiring Q-Flex LNG carriers, the PQA navigational channel and turning basins will not be in compliance with the requirements of government’s LNG Policy 2011 which is mandatory for all LNG terminals developed in Pakistan, even the floating storage and regasification unit (FSRU) as well. It said the non-compliance could be avoided by employing small capacity LNG carriers conforming to existing PQA channel parameters for importing LNG cargoes destined for this terminal.

Published in Dawn, March 21st, 2015

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