LNG deal: Nothing kept under wraps

ISLAMABAD: Every detail of the sale-purchase agreement between Pakistan and Qatar on Liquefied Natural Gas (LNG) is out and nothing has been kept under wraps.

It ought to be disclosed for transparency and to allay all sorts of suspicions and doubts, tossed by different elements as the talks between Pakistan and Qatar were being held. For Pakistan, the contract is landmark as it has kick-started a process in practical terms to partially take care of its grave energy deficit.

Those, who have been severely hammering the government for months, alleging concealment of the impending agreement apprehending fishy dealing, have the contract before them and are required to dissect it thoroughly. They need to come out with sincere opinion for the interest and benefit of Pakistan.

The agreement under which the LNG will be available much cheaper compared to the oil will hopefully spur business and growth, finally leading to resolution of different economic problems including unemployment.

For a long time, some opposition elements kept accusing the government of favouring different parties in signing the LNG deal. At the end of the day, every allegation has fallen flat. However, the government will be held accountable if still something objectionable, hurting Pakistan’s interests, is solidly pointed out and established.

Although the Nawaz Sharif government has ultimately succeeded in sealing the deal, it took a considerably long time in negotiations. The talk of this agreement was going on for the past two years. It was proved that despite all the push and urgency at the highest level to get LNG deal sealed in view of the grave energy shortfall, a lot of paper work including approvals from different government forums was required to ensure transparency.

However, the successive governments committed criminal negligence for years for not paying attention to such massive contracts while the energy crisis kept intensifying, paralyzing Pakistan and tormenting the citizens.

There is no doubt that Pakistan is currently facing a severe shortage of natural gas, both for its electricity generation and industrial use. The supply-demand gap is approximately 2-4 BCFD (Billion Cubic Feet Per Day). The government pursued import of LNG to minimize the gap.

Fortunately, the rejection of the Economic Coordination Council (ECC) headed by Finance Minister Ishaq Dar of the proposed price, 13.9% of Brent, also worked to hold further negotiations to bring it down. It sought reduction of the price, which was finally fixed at 13.37% of Brent and is considered much better and viable. If Petroleum Minister Shahid Khaqan Abbasi is to be believed, he was successful to get the cheapest deal compared to the price of LNG anywhere in the world.

When he was being slammed by the critics, he kept saying in his usual cool-minded tone that he was ready to face any inquiry by the National Accountability Bureau (NAB), Federal Investigation Agency (FIA) or any other organization and was willing to face the music if any hanky-panky was ever discovered.

Under the agreement, the price review can take place once after the 10th anniversary of the start date and if it fails either party may terminate the agreement with effect from the end of the contract year in which the termination notice was served in which case the supply period can be as short as 11 years.

For import of LNG, the ECC in July 2013 authorized the petroleum ministry to negotiate with Qatargas on government to government basis import of LNG up to 500 MMCFD (Million Cubic Feet Per Day) on DES (Deliver Ex-Ship) basis. Subsequently the ministry nominated the Pakistan State Oil (PSO) and the Qatar government appointed the Qatargas to work out the long-term LNG sale and purchase agreement. For this purpose, an Agreement in Cooperation in Energy Sector between the governments of Qatar and Pakistan was signed.