ISLAMABAD: The agreement signed with Qatar for the import of liquefied natural gas is silent on the price of LNG, the quantity to be supplied, as well as the date of expiry.

According to a copy of the agreement, available with DawnNews, Qatar can cancel the agreement any time after serving a 90-day notice.

The agreement has laid down no uniform price for LNG consignments to be shipped from Qatar to Pakistan. The prices will vary for different consignments and are to be specified through a confirmation notice.

Surprisingly, this agreement is similar to spot purchasing instead of a state-to-state deal. The deal will become ineffective in case of a war that lasts 30 days, floods, civil disobedience or natural calamity faced by either country.

The Managing Director of Pakistan State Oil, Shahid Islam, and the CEO of Qatar Gas Operating Company, Khalid bin Khalifa al Thani, signed the agreement.

A senior official of the petroleum ministry said the accord comprised strict conditions ostensibly due to the poor financial health of PSO.

The “master agreement” shall become effective upon the date of its execution by the parties and shall remain in full force and effect until terminated by either party. Either party may terminate the deal by giving to the other party no less than 90 days notice. If a confirmation notice has been executed by the parties and not fully performed, termination shall only be effective once all obligations set forth in such confirmation notice and in the master agreement are met.

“The parties may from time to time, by executing a confirmation notice in the form set forth, agree upon the sale and purchase of LNG upon the terms and condition set out in this Master Agreement and the further terms set out in such confirmation notice,” the agreement reads.

Pakistan shall make payment for LNG before the tenth day after completion of the loading process.

If either party fails to pay an amount due under any invoice, default interest shall be paid at a rate of two per cent per annum above the base interest rate.

The contract price (in US$/MMBTU) of LNG sold and purchased under this agreement shall be the price specified in or determined in accordance with the confirmation notice.

Any disputes, controversy or claim arising out of or in relation to the deal, or the breach, which cannot be resolved by discussion in good faith between the parties within 60 days of the party giving notice of such disputes shall be settled by arbitration under the UNCITRAL (United Nations Commission on International Trade Law) Rules of arbitration in force on the date of the dispute.

Published in Dawn, March 29th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play