Re: ECC gives go-ahead for Gawadar-Nawabshah LNG Terminal
New plan to import LNG from Qatar under two-year accord
Official says consultants’ advice being followed in view of likely cut in prices in futu
Khalid MustafaSunday, October 26, 2014
From Print Edition
**ISLAMABAD: Facing a mammoth deficit of 2 billion cubic feet gas per day, Pakistan has abandoned the talks’ process with Qatargas company for the LNG import deal under Heads of Agreement (HoA). Rather, it has made up its mind to pitch the Sales Purchase Agreement (SPA) before the Qatar authorities under which the LNG import deal will be done for two years with a price re-opener clause.
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The new strategy might irk the Qatari authorities, but top officials are of the firm view that if Prime Minister Nawaz Sharif himself visits Qatar and has a meeting with the ruling class there, then the LNG import deal is possible. The prime minister is a personality that enjoys unmatchable relations with the rulers of Qatar and the authorities are totally relying on the PM for the LNG import deal with Qatar.
Pakistan’s top mandarins have become active to ink the LNG deal at the earliest as the LNG handling facility at Port Qasim, being built by the ETPL company of Engro, is going to be completed by January 26, according to the internal target of the government. However, ETPL as per the LNG Sales Agreement (LSA) is bound to complete the LNG terminal by March 31, but on account of the prime minister’s pressure about the earlier import of LNG, it has been decided that LNG must be imported from February 1, 2015 and not from April 1, 2015.
Earlier, both the countries were in talks under the Heads of Agreement floated by the Qatari authorities, but under the new scenario Pakistan’s authorities are in the process of finalising the draft of the SPA that requires vetting by the Law Division, and in case of a green signal by the top functionaries of the Nawaz government, will formally be pitched before the authorities of the Qatar gas company soon.
“We have included the price re-opener clause in the SPA with the desire to import LNG for two years, as under the earlier plan Pakistan wanted to import LNG from Qatar for five years,” a senior official of the Ministry of Petroleum and Natural Resources told The News.
According to the chairman of Board of Directors of Sui Southern and chairman of Board of Investment (BoI),
Dr Miftah Ismail, Pakistan has decided to import
LNG from Qatar for two years only keeping in view the advice of the consultant that says the LNG prices in the years to come will reasonably plummet and it will not be wise to cease the LNG deal with Qatar for longer period.
The top official also confided that keeping in view the foreign exchange reserves position, Pakistan may seek the continuation of LNG import on defer payment during the hard times so the LNG deal with Qatar may be done in the range of over $15-17 per mmbtu. “We are looking for other avenues to explore best LNG deal and to this effect, the authorities have contacted Petronas, the state-owned company of Malaysia, for LNG import and got the positive response.”
The gas reserves in gas fields of Sui, Zamzama and Qadirpur are fast depleting and keeping in view this alarming situation, the Nawaz government plans to import at least 1.2 billion cubic feet LNG per day in phases and to materialise this target, second LNG terminal will be established at Port Qasim for which ads in Khaleej Times have been given.
Dr Miftah said the government is expecting huge response from the parties seeking the contract of the second terminal project. When asked if the ETPL that has already clinched the first LNG terminal is to be allowed to participate in the bidding process to get the contract of the second terminal at Port Qasim, he said if ETPL gets the contract of 2nd terminal through transparent bidding, then there should be no objection to it.
When approached, the top man of Sui Southern said that Sui Southern will get the view point of the Competition Commission of Pakistan as to whether the award of the contract of second terminal to ETPL through bidding process will negate the competitiveness or not.