ISLAMABAD: Price of liquefied natural gas (LNG) to be imported from Qatar will be finalised within two days, Petroleum Minister Shahid Khaqan Abbassi said on Wednesday, assailing the oil importing lobby for “spreading rumours”.
“We hope to hit the bargain of 14.5 per cent of Brent crude price which will be the best price of LNG that Qatar has offered to anyone,” he said, briefing the National Assembly Standing Committee on Petroleum and Natural Resources, chaired by Chaudhary Bilal Ahmed Virk.
Abbasi said a team of experts from Qatar has already arrived in Pakistan and is negotiating the rates along with the terms and conditions at which Pakistan is set to import the super-chilled fuel.
“The price setting is a very complicated matter, but unfortunately many groups have been feeding wrong information to the media that Pakistan has already finalised prices with Qatar,” he said.
“Transparency International and some NGOs took position that the agreed price was not fair. We had to tell them that the prices were still under negotiations.”
Qatari officials will soon be meeting the Price Negotiation Committee constituted by the government, he said.
He said that due to certain clauses in the pricing mechanism, India was currently buying LNG from Qatar at around $13 per tonne, whereas the cargo that arrived in Pakistan on April 27 was priced at $8 per tonne.
“All this misinformation regarding LNG was being floated by the oil importers as Pakistan imports furnace oil and diesel worth $2.5 billion annually,” he said.
“Who will buy furnace oil if the LNG import becomes successful?”
The minister said that the last rate offered to Qatar was 14.9pc of Brent Crude during the previous Pakistan government. “But we have kept the benchmark at 14.5pc and hope to drag it further down.”
The National Assembly’s body was informed that if the LNG price is finalised at 14.5pc of Brent crude, it would be around 10pc cheaper than the price of High Sulphur Furnace Oil (HSFO), 20pc cheaper than Low Sulphur Furnace Oil (LSFO) and 50pc of diesel.
All these three kinds of fossil fuels are used to produce electricity, and the committee was informed that Pakistan was the second largest importer of these fuels after China.
The committee was informed that if the same amount is spent on producing electricity from LNG instead of oil, there will be an increase of 10pc in the efficiency of the power plants.
“This is mainly because there are regular cases of furnace oil thefts whereas gas cannot be stolen this way,” the petroleum minister said. “Besides there will be a saving of around $1 billion if all the existing power plants consume LNG instead of furnace oil.”
However, at the same time the minister also cited certain official hurdles for the project in the country. “The Port Qasim charges $1 million per ship whereas the maximum charges all over the world are $180,000.”
Published in Dawn, May 7th, 2015