Setting up of 3rd LNG terminal ordered

Updated 06 Mar 2019


ISLAMABAD: Without a scientific study, the government on Tuesday ordered setting up of a third LNG processing terminal on a fast-track basis for completion before next winter at a new location – Jharri Creek/Chann Wadoo – and approved about Rs1.63 billion supplementary grants for security improvement and facilities for paramilitary forces.

The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Asad Umar.

The meeting was informed that the Ministry of Interior had demanded about Rs2.9bn supplementary grants repaid; replacement of security cameras and payment of rentals for hired vehicles; raising of five additional wings of Pakistan Rangers and their other facilities; and development of e-passport project in Islamabad, but the finance ministry agreed to only Rs1.8bn.

The ECC, however, allowed Rs683 million in view of some other demands in the given regional environment. The meeting also approved Rs769m in technical supplementary grant against four projects funded by International Narcotics and Law Enforcement-Pakistan (INL-P), US Embassy Islamabad for upgradation of Frontier Constabulary of Khyber Pakhtunkhwa Training Centre Warsak, construction of Federally Administrated Tribal Areas Levies Training Centre at Shakas, construction of 10 Fata Levies checkposts and extension of some offices of the Federal Investigation Agency, Islamabad.

The meeting also approved another Rs180m supplementary grant for hiring of commercial banks for marketing of Pakistan Banao Certificates abroad.

The ECC was given a detailed briefing by Ministry of Maritime Affairs on challenges being faced in the movement of LNG ships in the existing channel at Port Qasim that repeatedly hampered normal cargo traffic sometimes for weeks. It was reported that serious traffic congestion was being witnessed at Port Qasim, due to issues arising out of incoming LNG vessels.

According to the briefing, maritime affairs ministry decided in December last year to undertake a scientific study, through a third party consultant, and PQA had initiated the process by inviting applications last month to hire a consultant to undertake LNG Zone study, now expected to be completed in six months.

The ECC was informed that ideally the process of setting up of an additional LNG terminal should begin after the scientific study but given the projected growth in LNG demand in the future, the committee had ordered last month to expeditiously finalise the proposal for establishing an additional terminal on fast-track basis.

The maritime affairs minister said because of the urgency, Jharri Creek/Chann Wadoo appeared to be the most appropriate area for setting up the new terminal as it will have no adverse impact on normal port traffic, since the site was on an alternate channel, away from the main port, which would be connected through pipeline network of about 25km.

Also, the drought/depth at the location was feasible to accommodate large LNG carriers (Q-Flex vessels), thus reducing some charges. Moreover, the proposed site should be developed as a future LNG zone and PQA should be authorised to invite applications for development of one LNG Terminal within twenty months of award of contract. PQA board should also be advised to work out the modalities to ensure safeguarding the interest and with proposed terms and conditions.

The meeting was also explained that existing two LNG terminals at PQA were contracted on take-or-leave basis costing the government more than $0.5m per day, having additional undue financial burden. There was also the need to ensure that the supply of LNG was not interrupted due to war or any other contingency and this should be in the contract that FSRU is not withdrawn by the owner on any pretext whatsoever.

The ECC directed PQA and the Oil and Gas Regulatory Authority to expedite the process of granting licence to ensure that at least one LNG terminal is available by next winter given the available experience in existing terminals. Also, the future terminals would await result of the scientific study of PQA and be contracted without any guaranteed payment by the government, on build-own-and-transfer basis.

The committee approved a request of the Ministry of Energy to allocate up to nine mmcfd gas from Fazl X-1 field, Matiari of Pakistan Petroleum Ltd to SSGCL.

Published in Dawn, March 6th, 2019