LAHORE: The first-ever liquefied natural gas (LNG) floating terminal has so far imported around one million tons of gas in 17 voyages and utilised 88 percent of the Engro Elengy Terminal Pakistan Limited’s (ETPL) handling and re-gasification facility, the company’s official said on Wednesday.
Chief executive officer Syed Mohammad Ali at ETPL, talking to a select group of journalists, said the government was supposed to import around 1.5 million tons of LNG for the first year as per the contractual obligation.
“ETPL made a world record by building a $135-million state-of-the-art LNG terminal in just 318 days at the Port Qasim, that too with 100 percent private investment,” Ali said. Independent power producers and fertiliser, textile and compressed natural gas sectors have used the LNG imported during the first nine months, or by the end of December 2015.
This gas import will help the resource-constrained Pakistan save more than a billion dollars/year in cost-to-energy terms.
Ali said the country needs another three to four LNG import terminals to bridge the gap in demand and supply of natural gas.
Talking about cost of imported LNG, he also said the LNG import cost is expected to remain below 14 percent of Brent's three-month average price in slop form.
He claimed that the capacity and utilisation charges at Elengy Terminal stand at $0.66/million metric British thermal unit (MMBtu), which is lowest in the world compared to other regional terminals, such as Arun LNG Terminal of Indonesia, which charges importers $2.5/MMBtu, Kochi Terminal of India $1, Adriatic and LNG Toscana terminals of Italy $1.47 and $1.2, Klaipedos Nafta Terminal of Lithuania $0.88 and those in China, Korea and Japan charge $0.8 to $1/MMBtu.
"The numbers, widely quoted of $272,000/day charges to LNG terminal by government, is misleading,” Ali said.
“This is just the first year rate and daily levelised capacity charge for the whole 15 years stood at $219,589/day.”
These charges include all the costs, such as floating storage and regasification unit lease rate, taxes, royalties, manpower, insurance, operations and utilities, maintenance and capital expenditure of $135 million the terminal has spent. All of these are recoverable under the terminal's re-gasification. Ali said LNG is by far the cheapest fuel for energy generation in the country.
A MMBtu cost of imported fuel alternates at $10.62 for furnace oil, $20.03 for high speed diesel, $17.6 for liquefied petroleum gas and $9.37 for re-gasified LNG.
LNG, as a fuel for power generation in comparison with furnace oil, is more efficient in power generation (60 percent efficiency on RLNG versus 45 percent on alternate fuel). It has much a lower operation and maintenance cost and thus friendlier on the economy in the form of much lower electricity tariff for the masses (nine cents/kilowatt-hour for RLNG versus 20 cents/kWh for diesel).
“The cost of electricity generation from furnace oil is expensive if compared with LNG-based power generation plants while taking efficiency factor into consideration,” Ali said.
He claimed that the economic cost of the gas shortage is rendering around one billion dollars in annual losses to Pakistan. Ali said the federal government is planning to establish 2,400-megawatt LNG-based power plants while Punjab government is to set up a 1,200MW LNG-based power plant.