ISLAMABAD: After constitution of a committee on construction of new Liquefied Natural Gas (LNG) terminals, the gas utilities are said to have expressed concerns over supply issues in the existing pipeline network based on the government’s plan for providing gas to new domestic consumers and other sectors.

Last week, a meeting at the Ministry of Maritime Affairs constituted a six-member committee, comprising directors general of the petroleum division and managing directors of the Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL), to address challenges faced by the two upcoming terminals.

A top official in the petroleum division said the two gas utilities, particularly the SNGPL, had continuously been protesting over allocation of 150 million cubic feet per day (mmcfd) to private power utility K-Electric on ‘take or pay’ basis while depriving it of an existing, similar arrangement with three public sector LNG-based power plants in Punjab through a decision of the cabinet committee on energy.

The official said the SNGPL had put on record that while it was obligated under the orders of federal government and determinations of the Oil and Gas Regulatory Authority to provide about 3.7 million new gas connections in three years, its gas supplies and terminal and transmission pipeline capacities were being curtailed again by the government itself.

Records showed that some attempts were made to build a direct pipeline from one of the existing LNG terminals to the KE’s upcoming power plant of 900MW at Bin Qasim so that Pakistan LNG Limited (PLL) could deliver 150mmcfd gas to the power utility.

However, SSGCL had to intervene to secure its rights and act as a buffer through its distribution system. The SSGCL had explained to the top authorities in Islamabad that a direct connection from the terminal would have operational issues and heavy demurrage would accrue as the power utility would not be consuming the total allocated volume at all times.

The officials said the SSGCL and SNGPL had also initialled the gas transportation agreement for 1,200mmcfd of RLNG which meant that the entire existing transmission pipeline capacity between the two utilities stood confirmed.

At the same time, the SNGPL and PLL had finalised a gas sale-purchase agreement for 600mmcfd capacity from second terminal as the Lahore-based gas company had firm commitments of 1,100-1,200mmcfd for up to eight months a year with power, fertiliser, CNG sectors besides the growing demand in the residential sector. This is happening at a time when the domestic gas production is declining by about 100mmcfd per year.

The petroleum division official said the gas utilities’ voice could not reach the prime minister, the federal cabinet or even the planning minister, adding that the previous hierarchy of the division was unable to defend the rights of gas utilities.

Published in Dawn, April 5th, 2021