SINGAPORE, Feb 28: Pakistan is likely to push ahead with construction of its first liquefied natural gas (LNG) terminal early next year, though it has yet to source supplies in a tight global market, an industry official said on Tuesday.

“It will go ahead, it’s just a question of which options to use,” Commodore Pervez Khan, general manager of the Fauji Oil Terminal, told Reuters on the sidelines of an LNG conference. “The government is looking at approval next month.”

Fauji Oil Terminal, which handles fuel oil and diesel imports into the Port Qasim, is a possible site for the LNG terminal, with other spots in the Port Qasim also under consideration and more likely than congested Karachi, Mr Khan told the conference.

He said the project’s co-ordinator Sui Southern Gas Co Ltd has shortlisted consultants and chosen Dutch bank ABN AMRO as financial adviser, with a tender for a joint-venture consortium to be issued in the second quarter.

The terminal would have a capacity of 2.5-3.5 million tons of LNG per year and would be completed in 2009-10, with an extension of 3.5 million tons on the cards by 2014, assuming LNG supplies are sourced from producers, Mr Khan said.

“LNG supply is not decided yet,” he said. “We are behind schedule (on LNG buying) by two or three years — there are discussions with Qatar. By 2009 or 2010 some (long-term LNG) contracts are maturing and there might be an opportunity.”

LNG prices surged this winter as South Korean and Japanese importers battled with European consumers for limited short-term supplies, straining global availability, with most supplies locked into long-term contracts.

Pakistan’s gas demand is set to outstrip supply and the government is trying to promote the use of cheaper gas and coal in industry to cut its oil import bill. It is also considering pipelines for natural gas from Iran, Turkmenistan and Qatar.

“The political situation is such that we don’t know when these are going to materialize,” Mr Khan said. “A gas shortfall is expected in the next year or so, or a more moderate view would be that 2010 will be the crunch time.”—Reuters