Gas supplies jump as critical project finally starts

26 Dec 2017


The second LNG terminal at Port Qasim is critical to the government’s strategy for curtailing loadshedding in the winter months.
The second LNG terminal at Port Qasim is critical to the government’s strategy for curtailing loadshedding in the winter months.

ISLAMABAD: Officials at the Prime Minister Office (PMO) had another reason to celebrate on Monday as a critical project for the import of natural gas finally began operations after a long period of delays and technical difficulties.

Pakistan started receiving about 1200 million cubic feet per day (mmcfd) of imported liquefied natural gas (LNG) into the system, just as the prospect of severe shortages loomed over the country during the crucial winter months. The gas started flowing on Monday into the second LNG re-gasification terminal at Port Qasim.

“We started receiving about 400mmcfd of RLNG from the second terminal on Sunday and were able to boost supplies to 600mmcfd by now,” a senior official at the PMO told Dawn. This marked a long awaited ramp up in the country’s depleting domestic gas resources and accounted for almost 30 per cent of the total gas supplies ahead of peak winter demand.

Pakistan is currently producing about 4 billion cubic feet (bcf) of natural gas against a constrained demand of more than 6bcf. The domestic gas is priced at about slightly more than half of what import LNG is costs.

The official said the second LNG terminal completed by Pakistan Gas Port Ltd (PGPL) originally started injecting gas into the national grid on Friday but the key junction operated by Sui Southern Gas Company (SSGC) at Port Qasim to receive imported gas collapsed and caused disruption not only from PGPL terminal but also from Engro terminal.

After almost eight hours of disruption in imported gas supply, the RLNG from both terminals was finally restored, gradually reaching to a peak 1.2bcf on Monday, helping to plug a crucial deficit at a critical time.

“It was the most opportune time to have additional gas supplies flowing to the system in the last week of December when winter demand was peaking and hydropower generation ebbed to a low because of annual canal closures”, said an upbeat official of the PMO.

He said the Engro terminal was currently injecting about 600mmcfd of LNG from Qatargas and PGPL processing 600mmcfd supplied by ENI.

The official confirmed that managing director of the Pakistan LNG Terminals Limited – a government-owned company – Azam Soofi was called to the PMO and asked to resign two weeks ago. He, however, said the botched removal of Mr Soofi by PLTL board of director was not for posting penalties on PGPL for delayed terminal commissioning but his inability to see through the delay despite repeated explanations sought by the PMO.

Mr Soofi was sacked about 10 days back but stayed by the Islamabad High Court. The official said Mr Soofi had first agreed to resign but backtracked until removed by the board of directors (BoD) and stayed by the court.

He said Mr Soofi had secured a Rs4 million monthly salary through the BoD, but had failed to arrange LNG commissioning cargo for the PGPL terminal and never committed a commissioning date and instead always reported work in progress at the terminal in terms of percentages. The commissioning cargo was ultimately arranged by the PMO.

On top of that, Mr Soofi also failed to get wet calibration tests of the terminal and the pipeline network and could not arrange LNG buyers for the first cargo. In fact, the official said Mr Soofi prevailed upon top PGPL management to request the government not to remove him.

Responding to a question, the official confirmed that PGPL had been facing commissioning delays from the very beginning but the company blamed the PLTL for delaying Standby Letter of Credit (SBLC) required under the contract. He said the dispute with a local company over $300,000 per day of penalty could have attracted $100 million in international penalties from the LNG suppliers.

The official said government priority was to secure LNG into the system by December 30th to meet surging gas demand and avoid higher international penalties. Disputes with local companies for penalties could be fought any time given time consuming court processes, he said while answering another question.

Published in Dawn, December 26th, 2017