LNG refill from Qatar in limbo as ministry, customs lock horns

Published April 18, 2015
The injection of regasified LNG into the national transmission system had come to an end on April 14 and was scheduled to leave Port Qasim on April 15 for Ras Laffan, Qatar, but had to wait for a long time due to heavy traffic, informed sources told Dawn. - Reuters/File
The injection of regasified LNG into the national transmission system had come to an end on April 14 and was scheduled to leave Port Qasim on April 15 for Ras Laffan, Qatar, but had to wait for a long time due to heavy traffic, informed sources told Dawn. - Reuters/File

ISLAMABAD: In a fresh setback, the petroleum ministry’s move to dispatch Floating Storage and Regasifica­tion Unit (FSRU) for a second refill of liquefied natural gas (LNG) from Qatar was stopped by customs authorities over tax payment issues.

The injection of regasified LNG into the national transmission system had come to an end on April 14 and was scheduled to leave Port Qasim on April 15 for Ras Laffan, Qatar, but had to wait for a long time due to heavy traffic, informed sources told Dawn.

Later, the customs authorities raised demand for payment of customs duty and declined to allow the FSRU to leave the port without duty payments. The petroleum sector authorities had previously anticipated about seven days of suspension of RLNG supply into the system while considering the FSRU to come back with second cargo, but the gap was now increasing, an official said.

This means the government will have to keep paying $272,000 capacity charges/penalties daily to the terminal operator — Engro Elengy Terminal Limited — without getting any gas quantities into the system.

The Ministry of Petroleum and Pakistan State Oil (PSO) had decided, as a stopgap arrangement, to send FSRU for the second LNG cargo after Qatargas declined to dispatch its Q-Flex vessels due to its concerns over navigational issues.

The sources said the original owners of the FSRU — Excelerate Energy — had also raised its objections over movement of the floating unit to leave Port Qasim on the ground that it was meant to be berthed for entire 15-year contract period and could not be allowed to be used as an LNG carrier.

The sources said there were also some payment issues between the PakArab Fertiliser which had originally opened letter of credit (LC) for the first cargo and the PSO and no other party had yet ready to open LCs for the second cargo.

Meanwhile, three government sector players of the LNG chain — PSO and the two Sui gas companies — have not yet entered into tripartite agreement to provide legal cover to the entire supply-chain arrangements, including pricing.

The authorities have also not been able to put in place the transportation arrangements, capacity allocations, profit margins and LNG import mechanism.

Published in Dawn, April 18th, 2015

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