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A welcome offer: LNG import cost


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QATAR’S offer to annually supply two million tons of liquefied natural gas at a discounted price raises hopes of Pakistan overcoming its gas shortages — albeit only to some extent — in the near term. Islamabad had signed an MoU with Doha some time ago for importing LNG, but the plan did not materialise due to pricing issues. Now, says the government, the Gulf state has agreed to substantially cut its earlier price demand of $18 per mmbtu. The government has not disclosed the new price, but some reports suggest it is in the range of $14 to $15 per mmbtu, 16 to 22 per cent lower than the previously quoted rate. The gas will be supplied on a government-to-government contract basis in line with the recommendations of a private sector-led energy committee last year. The exclusion of private contractors from the deal should help the government move more quickly towards the early implementation of the project.

The rapid completion of the LNG import project is important not only to keep gas shortages for the power and industrial sectors to a minimum in the summer but also in view of the delays in the implementation of the two LNG import projects of 400mmcfd a day, each through the award of contracts to the private sector. The first project has been stalled because of minor violations of public procurement rules. Any further action on this project has been stopped by the Supreme Court, which took suo motu notice on the basis of some media reports. In the past, the government had to scrap a similar project because of the intervention of the court. It is hoped that the court will decide the matter at the earliest in the larger interest of the country’s sliding economy. The materialisation of Doha’s offer will add only about 300mmcfd gas a day to the network of the two public utilities facing shortages of over 1000mmcfd, and the country will be resigned to gas scarcity unless the stalled private- sector LNG import projects are also implemented.

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Comments (3) Closed

Syed Ahmed Mar 14, 2013 02:28pm
The fine print of the offer must be read and evaluated carefully - there must be some strings attached to it such as scraping the gas pipeline deal with Iran.
Keti Zilgish Mar 14, 2013 05:01pm
Any deal is better than committing mass slow suicide by burning more hydrocarbons. As the Arabs and Iranians have already cut their nose they are persistently encouraging their Pakistani 'brothers' to do likewise and such is the result of worshipping mammon. It was warned against by even the 'founding fathers' of all monotheistic religions.
amit (India) Mar 15, 2013 03:25am
Rather than build a multi-billion dollar terminal for LNG imports, Pakistan should explore the possibility of connecting to the gas grid in India, particularly the western state of Gujarat. Gujarat currently has 12.5 million tons/year of LNG import capacity, which should possibly go up to 18-20 million tons in 3-4 years time. There are other import terminals being planned as well. Pakistan could lease capacity on these terminals - putting up new terminals for small volumes can be financially crippling given Pakistan's current state. Even in India, all new LNG terminals planned are at least 5 million tons in size. This will be positive for both the countries - Pakistan will save money at a time when she is in financial trouble. Also, Pakistan saves the 4-5 years it will take to build a fresh terminal - instead, 1.5-2 years to build some pipelines. India would gain as we can hope that major Pakistani stakeholders see how our destinies are linked, and how hurting India also harms them.