ISLAMABAD: Pakistan has removed a condition that required companies interested in supplying LNG to enter into long-term deals and have a minimum reserve natural gas capacity of 20 years, officials said on Wednesday, in a move that will help the country meet its growing energy needs.
Pakistan desperately needs energy, mainly to feed its stumbling power sector which consumes 43 per cent of the total domestic natural gas supplies. The country faces a shortfall that often peaks at more than 5,000 megawatts per day in summer.
The Economic Coordination Committee of the cabinet approved a draft of LNG Policy, 2011 on Tuesday, doing away with the conditions of having long-term supply agreement with buyers and availability of sufficient natural gas reserves for a minimum of 20 years.“These conditions have been abolished to fast-track the supply and make the policy more liberal,” an Oil and Gas Regulatory Authority (Ogra) official said, speaking on condition of anonymity as he is not authorised to speak to the media.
The state-run Ogra is currently evaluating 17 domestic and foreign companies, which have shown interest in supplying Pakistan with 500 million cubic feet per day liquefied natural gas (LNG). The government aims to secure the gas supply by mid-2012.
“It is now up to the company and consumers to enter an agreement for whatever time period they want,” the official told Reuters. The winning companies will identify their own customers and set up a terminal in Pakistan for re-gasification of LNG, while the government will determine the price through Ogra.
The government will provide its system to pipe the re-gasified LNG to the companies' customers and charge a transport tariff. The evaluation of companies, which submitted their expression of interest earlier this year to supply LNG, does not involve a short-listing process and all those meeting government regulations and policy requirements will be issued licences, another official said.But the company will have to submit guarantees against its delivery commitment, failing which it will lose its first right to use the government system for transporting gas.
Pakistan is also working on several projects to meet its rising gas demands, including a multi-billion dollar gas pipeline project that will pump natural gas from Iran. Under the deal finalised in March last year, Iran will supply 750 million cubic feet of gas daily to Pakistan by 2014.
Current gas production is around 4.5 billion cubic feet per day while consumption as of June 30 was estimated at 6.5 billion cubic feet per day, a shortfall of 2.0 billion cubic feet. Pakistan's balance of recoverable natural gas reserves stood at 28.33 trillion cubic feet, official figures show.
