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Thursday March 28, 2024

Pakistan to sign Qatar LNG deal in April

KARACHI: Pakistan will sign an agreement with Qatar to import liquefied natural gas (LNG) in the first week of April, petroleum minister said on Saturday, as the country desperately seeks new sources of oil and gas in the face of persistent energy shortages.Federal Minister for Petroleum Shahid Khaqan Abbasi said

By Javed Mirza
March 29, 2015
KARACHI: Pakistan will sign an agreement with Qatar to import liquefied natural gas (LNG) in the first week of April, petroleum minister said on Saturday, as the country desperately seeks new sources of oil and gas in the face of persistent energy shortages.
Federal Minister for Petroleum Shahid Khaqan Abbasi said the government is all set to ink the sale purchase agreement with the Qatar government for the supply of LNG on ‘favorable terms.
“We will sign the agreement with the Qatar government in the first week of April, and this would be a favorable and market competitive deal,” Abbasi told reporters at Engro’s LNG terminal at Port Qasim.
The minister confirmed that the first shipment of LNG was imported by private sector at $8.0/million metric British thermal unit, which indicates that Pakistan could be able to get a better rate, as the deal with Qatar will be a government-to-government long-term agreement.
Recently, two private companies, Universal Gas Distribution Company Private Limited and Pak-Arab Fertilizer, had imported the first LNG consignment of 147,800 cubic meters.
Abbasi said arrival of LNG will save the government an estimated $300 million annually spent on costly oil imports.
He said import of LNG will also pave the way for the compressed natural gas (CNG) sector to procure gas through a market-based system.
The minister was paying a visit to observe the commissioning of floating storage re-gasification unit. He said the imported gas will mainly be supplied to power and fertiliser sectors.
LNG will lessen the volume of lingering circular debt in energy sector as the fuel is relatively cheaper.
Abbasi said CNG sector will have to make imports. The government will not levy gas infrastructure development cess on LNG imported by the CNG stakeholders.
“The price of CNG will still remain 28 to 30 percent lower than that of petroleum. The consumer will have a choice to buy petrol or the cheaper gas,” he added.
The usage of LNG by power plants will help bring down the power generation cost from Rs14 to Rs9/unit.
The said reduction in power generation will ease doing of business in Pakistan.
Pakistan is currently facing a shortage of 2,000 million metric cubic feet/day (mmcfd) as the country’s total production is around 4,000 mmcfd, while demand is closer to 6,000 mmcfd.
Currently, Sui Northern Gas Pipelines Limited is providing 275 mmcfd from its system for power generation, while Sui Southern Gas Company is providing 195 mmfcd to the power sector, which is also getting 497 mmcfd directly from the petroleum exploration companies.
In total, 975 mmcfd natural gas is being utilised by power sector and the import of LNG will raise this to 1,175 mmcfd.
Experts believe Pakistan urgently needs to fully utilise its existing power generation capacity, while reducing its reliance on costly imported diesel fuel for electricity generation; and the regasification of LNG will allow generation facilities to reach their maximum potential whilst using a cleaner, cheaper and more efficient fuel for greater energy security and diversification.
It is estimated that the converted fuel will help the government make an estimated savings of about $1.0 billion/annum on its current fuel import bill of nearly $15 billion.
Abbasi said in future LNG deal, which will be the government-to-government with Qatar, the Pakistan State Oil will get 1.5 to 2 percent margin as being a facilitator, while SSGC will a management fee to distribute gas to its customers.