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Amid surging gas demand, LNG to dominate next ECC meeting

Updated March 22, 2019


The government has called a meeting of the Economic Coordination Committee of Cabinet next week for dedicated discussions on the gas sector. ─ Online/File
The government has called a meeting of the Economic Coordination Committee of Cabinet next week for dedicated discussions on the gas sector. ─ Online/File

ISLAMABAD: Expecting an additional gas demand of over 1.2 billion cubic feet per day (bcfd) by 2020 winters, the government has called a meeting of the Economic Coordination Committee (ECC) of Cabinet next week for dedicated discussions on the gas sector.

This comes in the aftermath of positive signals from Qatar for additional LNG supply of about 200 million cubic feet per day (mmcfd) to Pakistan at relatively lower rates than those charged under the existing long-term agreement of 15 years.

Pakistan currently imports about 600mmcfd LNG from Doha. The term of fresh agreement would, however, be very short — from one to three years, informed sources told Dawn.

They said Qatar was ready to supply short-term LNG quantities at rates closer to spot rates without affecting the long-term agreement and its prices. The details of the agreement and prices are yet to be finalised. Therefore, the Petroleum Division had sought formal permission from ECC to make arrangements for additional 200mmcfd LNG from Qatar.

According to them, the meeting was originally scheduled for March 22 but was postponed at the last moment due to engagements of key ministers relating to the visit of Malaysian PM and accompanying delegation.

Sources said four critical aspects of the gas sector would be on the meeting’s agenda. On top of it is the short and long-term gas demand projections, besides a related item regarding the New LNG Terminal. Under the short-term projections, the authorities are anticipating an additional gas demand of about 1200mmcfd by 2020 winter that also takes into account the operationalisation of 4th LNG-based mega power project of 1320MW near Jhang.

There comes the government’s compulsion to ensure a third LNG terminal before the 2020 winters to avoid a repeat of the acute gas shortage that used to force closure of industries, fertiliser plants and power units a couple of years ago.

The government is, however, still unclear if it should allow two LNG terminals at Port Qasim’s main channel given that Pakistan Gasport is already reported to have secured legal rights for its second terminal adjacent to its existing terminal while Engro also claims to have rights for a second terminal. The government has also been holding bidding for another LNG terminal but could not advance a clear roadmap because of internal conflicts of interest.

Despite having developed legal and regulatory mechanism and third party access rules in place, the government has not yet practically permitted private entities to import LNG at their own risk nor has it allowed them to set up LNG terminals even though five to six major investors have been lobbying in this regard along with LNG imports for private sector clients. Some market players believe such a move could reduce LNG prices and regasification charges through competition among private parties.

At least five major international and local firms are lobbying for government’s permission to set up next private sector terminal. Some of them include Shell, Engro, ExxonMobil, Energas, Gasport, Trifugura, Mitsubi­shi and Global. At present, two terminals are functional at sub-optimal capacity even though consumers continued to face shortages until last week when demand significantly fell and the government and the gas utilities struggled to find consumers as pipeline pressure touched dangerous levels.

The Ministry of Maritime Affairs had also been directed to “take all necessary steps for establishment and operationalisation of third LNG terminal by winter 2020.” It also ordered the ministry to expedite scientific study to identify a suitable exclusive LNG zone at Karachi ports for establishment of LNG terminals.

The said study will also look into all aspects of land based LNG terminals viz-a-viz floating storage regasified unit (FSRU). PQA had identified in 2011 Jharri Creek/ChannWadoo as potential LNG Zone for future LNG terminals while Chara Creek was also a potential site.

Published in Dawn, March 22nd, 2019