Extension in wheat export also given a nod
ISLAMABAD: The Economic Coordination Committee (EEC) on Wednesday approved the much-touted $16 billion LNG deal with Qatar under the government-to-government mode for 15 years at 13.37 percent of three months’ average price of the Brent and extension in wheat export.
Prime Minister Nawaz Sharif will visit Qatar on February 11-12 wherein both the sides (Pakistan State Oil and Qatargas Company) will formally sign the 15-year deal and the contract will become operational. Pakistan will import two LNG ships in the month of February from Qatar under the government-to-government deal and from March onwards, three LNG consignments from Qatar will be imported each month.
Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi told ‘The News’ that with the approval of LNG deal with Qatar by the Economic Coordination Committee (ECC), Pakistan was also set to finalise by September 2016 another LNG deal to import 4 million tons per annum under government-to-government mode with another country. The countries with which negotiations to this effect are underway include Russia, Oman, Malaysia and Algeria.
The ECC meeting that was held here on Wednesday with Finance Minister Senator Ishaq Dar in the chair accorded approval to the LNG deal which is under the SLOP form. SLOP means that in case the Brent price increases, the LNG price for Pakistan will also increase accordingly and if Brent’s price goes down, LNG price will also tumble as per the formal of 13.37 percent of the Brent.
The ECC approved the deal after the Qatari authorities agreed to trim down the LNG price from 13.9 percent to 13.37 percent of the Brent as was demanded by Pakistan.
According to experts, the crude oil price tends to remain in the lower side by 2018 to 2020 and Pakistan will get LNG delivered at Port Qasim with price close to $5 per MMBTU. Under the deal, Pakistan will import from Qatar 2.2 million tons LNG every year in the first two years and from third year onwards LNG of 3.7 million tons per annum will be imported for a 13-year period.
The salient feature of the new LNG deal is that Qatar will also provide LNG to Pakistan on 15-day defer payment against the earlier settlement of defer payment for 10 days.
With the reduction in LNG price by Qatar, the price of delivered LNG at Qasim Port will be close to $5 per MMBTU whereas India has renegotiated its LNG deal with Qatar under which the landed cost of LNG at Indian port is hovering at $6-7 per MMBTU which is still 20 percent higher than the price that Pakistan has managed from Qatar. India has also faced the penalty of $500 for violating its deal earlier signed with Qatar.
That’s a great achievement of the Nawaz government that successfully managed to convince the authorities in Qatar to reduce the LNG price by matching it to 13.37 percent of the Brent—- the price that PSO had managed through tenders for five years.
Qatar had earlier offered the LNG price at 13.9 percent of three months average price of the Brent which ECC refused to accept, arguing that Pakistan State Oil has managed the LNG at 13.37 percent of the Brent through tenders, which is why the authorities concerned should ask Qatargas Company to match the price that PSO managed at 13.37 percent of the Brent.
The ECC approved the deal after Qatar authorities have agreed to trim down LNG price from 13.9 percent to 13.37 percent of the Brent as was demanded by Pakistan.
Qatar had earlier offered the LNG price at 13.9 percent of three months average price of the Brent which the ECC (Economic Coordination Committee) headed by Finance Minister Senator Ishaq Dar refused to accept, arguing that Pakistan State Oil has managed the LNG at 13.37 percent of the Brent through tenders, which is why the authorities concerned should ask Qatargas company to match the price that PSO managed at 13.37 percent of the Brent.