$15 billion LNG deal with Qatar finalized

Society Pakistan & World Affairs
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Re: $15 billion LNG deal with Qatar finalized

Five more LNG deals likely

THE NEWSPAPER’S STAFF REPORTER — PUBLISHED A DAY AGO

ISLAMABAD: As opposition accuses the government of signing dubious agreements for import of Liquefied Natural Gas (LNG) from Qatar, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi revealed on Friday that five more such agreements are in the pipeline.

Winding up debate in the Senate on levy of Rs101 billion additional tax on gas consumers to meet the cost of pipeline for transportation of LNG from Qatar, the minister said that he was ready to face a reference for entering into an agreement for import of LNG.

“I will not hire a lawyer, but will argue the case myself,” he remarked.

He termed the LNG agreement a game-changer and said it would help save a billion dollars annually. He said that gas crisis must be addressed to overcome energy crisis.

He claimed that the previous PPP government had tried to purchase LNG at higher rates, but fortunately the deal could not be finalised.

He said that it was a fact that petroleum prices fell from $120 per barrel to $30 in the international market, but the ratio of government’s earnings per litre remained the same.

He said that prices of petrol were lowest in Pakistan among oil importing countries.
He pointed out that petrol in India was available at Rs100 a litre while in Bangladesh it was priced at Rs130.

He alleged that the PPP government devoured a big chunk of gas infrastructure development surcharge which existed in papers only.

Earlier, leader of the opposition in Senate, Aitzaz Ahsan, raised questions over transparency in the deal.

He said a reference may be prepared for signing of the dubious deal.

He asked as to why no international tenders were called and why a long-term agreement was signed with Qatar.

He was of the view that a deal with Iran or Russia could have been made at cheaper rates.

“How can government ink a deal for 15 years,” he questioned.

He said the government had bound the future governments to continue with the import of gas on the same terms, adding that the future governments might find it difficult.

He also questioned the decision to construct the proposed pipeline — an asset of a foreign company from the money collected from people of Pakistan.

Aitzaz said it was surprising that the prime minister himself attended the signing ceremony.

He said Qatar was in pro-Saudi Arabia camp and may ask Pakistan to forget about gas pipeline with Iran.
*
Published in Dawn, February 13th, 2016*

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Re: $15 billion LNG deal with Qatar finalized

What about apprehensions of your minister regarding sanctions? Let’s see if this project is even started during PML(N) tenure what to talk about six months?

Iran-Pakistan gas pipeline to be completed by Dec 2017: Abbasi | Pakistan Today

“Sanctions are still in place and investors are worried that even after removal of sanctions, still there is possibility of sanctions coming back because of different legal issues,” he said.
“But we are working on it. There is no serious problem and we are going ahead with the pipeline from Gwader to Nawabshah,” he remarked.
As soon as the sanctions are lifted, he said construction of Iran-Gwader portion of the pipeline would start by Pakistani companies. He added that “the design is ready and we just need to order the equipment to complete the project”.

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Re: $15 billion LNG deal with Qatar finalized

World gas price is crashing faster than oil price. Reason is that, huge gas deposit is found in Mauritanian sea, near Israel, Cyprus and Lebanon. Secondly, development of shale oil is producing huge quantity of gas too as by product, that has hit gas price all over the world.

A huge gas pipe is also proposed from Iran to Europe, brining Iranian gas into world market in big way. New gas fields are also found in Europe, and demand of gas has decreased substantially. Hence … world LNG price has tumbled to below $3 per MMBTU in open market. I am pretty sure that if Pakistan wanted to, Pakistan could have got Gas from Iran at rate ~ $ 2 per MMBTU. Pakistan could have imported huge quantity of electricity from Iran too, at very competitive price … as Iran can produces ~ 80 G watts.

Pakistan installed capacity is ~22 MW (though that could not be produced due to various reasons). Total requirement at most is ~21 G Watts. Normally, Pakistan produces 12 G Watts to 15 G Watts. So, Pakistan can easily import electricity from Iran too, something that many central Asian countries are already doing. Anyhow, here is world gas price in open market … that I believe is actually LNG price, as gas is normally exported/imported from one country to another through pipes, or in the form of LNG.

(http://www.eia.gov/naturalgas/weekly/)

So … question is, when Pakistan could have got gas from open market (not even Iran, rather from open market) at below $3 per MMBTU, than why import LNG (gas) from Qatar at over $5.63 per MMBTU? … Plus, when most country make commitment of 3 to 5 years, why 15 years deal?

Who took the commission and who made money on this deal … any idea?

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Re: $15 billion LNG deal with Qatar finalized

While it is expected that Iran gas pipeline would be a cheaper option but it is politically not feasible (for any government in Pakistan). You can make a case for it without resorting to this kind of ‘analysis’ and bad assumption.

While India is importing LNG from Qatar at $6- $7, this deal doesn’t sound TOO bad for Pakistan.*

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Re: $15 billion LNG deal with Qatar finalized

^^^ I do not know why you are trying to defend PMLN wrong practice and corruption, like Pasha defends PPP wrong practices and corruption on forum, or Sharmeela Farooqi uses ayean, bayeen, shayeen on TV when corruption of PPP is mentioned to her. :)

It is really funny that when I write using word 'If' or 'assuming', than without reading, taking into account the context, and using some sense, you complain that what I wrote is 'if' and 'assumption', but that is not the case. Reason is simple, that is, even NS, Khaqan Abbasi, Saif-ur-rahman or Qatar energy minister cannot say what price Pakistan would pay for importing LNG, as price of LNG is linked to crude oil and price of crude oil in world market changes every minute.

If anyone says that, Pakistan is importing LNG @ 'X' dollars per MMBTU, than technically they are lying. They have to use the word, 'if' or 'assuming', because that is how one can take price of oil to calculate LNG price.

Hence, only liars of PMLN can say that Pakistan is going to import LNG at 'X' dollar per MMBTU, taking it as absolute price.

A truthful person like me have to say that, if average Oil price would be 'Z' dollars per barrel ... or assuming that average oil price would be 'Z' dollars per barrel, than price of LNG would be 'X' dollars per MMBTU.

Similarly, only an idiot can say that Iranian gas would be 'Y' dollar per MMBTU, as price is not negotiated yet. In this situation, one can only mention price of Iranian gas taking into account gas price in world market, and assuming price that can be negotiated.

It is just like, when one goes out to buy potato, one cannot say what price one would get potato, but would mention assumed price of potato according to market condition for price of Potato. Similarly, when buying a kg of potato, one would assume that a kg of potato would be 'X' rupee, and that is the amount person would take to market, plus some extra rupee ... but obviously, not unlimited (or millions of) rupees to buy a kg of potato.

Now coming to Iranian gas, oil, electricity or LNG I do not see any reason Pakistan could not import them from Iran, when India, Turkey, China, Japan, south Korea, and many other countries are already importing energy from Iran.

Even, Pakistan imports electricity from Iran (for western Baluchistan, including Gwadar). Only thing is that, it is not sanction alone that stops Pakistan from importing energy cheaply from Iran, but there is no will (or possibly, due to corruption of Pakistani decision makers).

As for India going to get LNG from Qatar at $6 to $7 per MMBTU, than comparing that with Pakistan deal, you are comparing Apple with Banana and trying to fool others. Reason is that ... India made a long term deal and commitment with Qatar when LNG price was high. Legally, India has to import 7.5 million tonnes of LNG from Qatar at $12 to $13 per MMBTU, and that also until 2028. Since they did not import required amount (7.5 million tonnes of LNG), they were to pay Rs 12,000 crore (~ $175 million) as penalty.

So, Qatar forgo the penalty and gave them new deal at $6 and $7 per MMBTU. That is good deal for India, not Qatar who can enforce the deal India already made in past.

As for Pakistan, it is new deal at much higher price then market price per MMBTU, when LNG world market price is crashing.

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Re: $15 billion LNG deal with Qatar finalized

You can continue saying that without backing up your words with any reliable sources.

And no, domestic natural gas prices in North America are not same as LNG prices in Asia.

Criticism for the sake of criticism is not healthy, nor does it make you a 'truthful person'.

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Re: $15 billion LNG deal with Qatar finalized

US hasn't given the 'ok' for financial companies to invest in the pakistan section of the project and the govt is too corrupt to self-finance. But hey, it is democracy, so Pakistanis deserve it all.