KARACHI: Engro Corporation is setting up a gas marketing business in Pakistan along with the New York Stock Exchange–listed Excelerate Energy, a company official told Dawn in a recent interview.

Engro Eximp FZE, which is a subsidiary of Engro Corporation and serves as the Dubai-based trading arm for the Pakistani conglomerate, will lead the joint effort to establish a re-gasified liquefied natural gas (RLNG) marketing business to open up new fuel supply avenues for private businesses, said company CEO Kaleem Asghar.

Pakistan’s domestic gas reserves have been in decline for many years. Natural gas production has also gone down at an annualised rate of 2.2 per cent for five years. The gas sector regulator believes the shortfall will soon be close to two billion cubic feet per day (bcfd). The average winter demand is 6.5-7bcfd.

“The government has already approved third-party access, which opens possibilities for making (existing) terminal capacity available through expansions by bringing bigger floating storage re-gasification units (FSRU) as well as the sale of booked but unused capacity,” said Mr Asghar.

Pakistan began importing RLNG in 2015 by installing two purpose-built terminals on Port Qasim. Pakistan State Oil Company Ltd uses Engro Elengy Terminal to import gas under long-term contracts while Pakistan LNG Ltd brings spot purchases through GasPort LNG Terminal.

“In the long run, when a new terminal — either FSRU or land-based — is developed, (it) will also make available capacities for utilisation by multiple private parties,” he added.

The upcoming LNG terminals — Qatar-backed Energas LNG and Mitsubishi-backed Tabeer LNG — will have capacities of 750-1,000mmcfd each. Given the capacities of already operational Engro Elengy (690mmcfd) and GasPort LNG (750mmcfd), the addition of the two “merchant” terminals will more than double the country’s re-gasification capacity.

But how will the new trading business get access to the pipeline capacity currently controlled by the Sui gas companies? According to Mr Asghar, the partners will “engage the Sui companies” to access pipeline capacity. “There’s also an option to further explore gas marketing through virtual pipelines to help develop a private gas market,” he said.

Virtual pipelines refer to the transportation of LNG from the port to industrial consumers or retail fuel stations through specialised trucks.

Contrary to the popular belief, Mr Asghar says, using virtual pipelines to transport gas isn’t prohibitively expensive. “It’s costly only if you bring LNG from other countries in small containers. But if you import the fuel in large volumes and distribute it onwards through trucks, pipeline tolling charges almost equal the freight cost,” he said, adding that countries like India, Turkey, and China are already using virtual pipelines.

New industrial units being set up in dedicated industrial parks are getting gas connections at RLNG rates. These industrial units along with CNG pumps will constitute a large part of the clientele for the new venture of Engro Corporation, Mr Asghar said.

“Private parties have been attempting to arrange RLNG for themselves. People from the industrial sector want to expand but can’t because of a lack of gas,” he said.

Published in Dawn, August 9th, 2022