LNG import to be more than doubled by 2017: minister

LAHORE: The monthly import of liquefied natural gas (LNG) will be more than doubled in the coming months in the wake of growing energy demand in the country, a minister said on Friday.   

Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said the country will import four LNG cargoes of 13 million metric British thermal unit (MMBtu) a month from September to December. 

Afterwards, Abbasi added that six cargoes of 17 MMBtu a month would be arriving in the country. As LNG-based power plants start coming online, the LNG import volumes will further be doubled from July next year.

“There has been a tremendous demand for this efficient fuel from industrial, power, fertiliser and CNG (compressed natural gas) sectors,” said the minister. Before the start of LNG imports around one and a half year back, there was a demand and supply gap of natural gas of more than three billion cubic feet per day during the winter season. 

After chronic shortages of natural gas supplies that crippled the economy, the first LNG import was made possible through the establishment of the country’s first Engro Elengy Terminal Private Limited, which was commissioned to transfer 400 million metric standard cubic feet per day (mmscfd) of regasified LNG into the system. The terminal has a capacity to handle up to 600 mmscfd. 

The terminal alone is helping the country save up to $600 million through the oil import substitution and generating fuel for up to 2,000 megawatts of electricity. Previously, several thermal power plants, industrial units and CNG filling stations became nonoperational due to the gas shortage. The government even had to pay capacity charge to the power plants, which increases the electricity tariffs. Unavailability of gas to fertiliser plants also resulted in the urea imports to meet the local demand, which caused an outflow of valuable foreign exchange.

Over the past 10 years, different governments made several attempts to import LNG, but all in vain.  When the Supreme Court scrapped the government ‘Mashal LNG Project 2007’ in 2011, the head of Dutch company 4Gas, which was allowed to set up a LNG terminal, said Pakistan lost $3.6 billion because of the delays in LNG import as there was a price difference between LNG and furnace oil.

Currently, liquefied petroleum gas (LPG) price stands at $15.13/MMBtu, high sulfur furnace oil ($8.05/MMBtu) and high speed diesel ($17.7/MMBtu), while RLNG price comes at about $6.74/MMBtu. 

LNG-run power plants have a much lower operational and management costs, thereby turning up lower electricity tariffs. It is more efficient in power generation (60 percent efficiency on RLNG versus 45 percent on alternate fuels). It is also a cleaner fuel substitute to the expensive diesel, furnace oil, LPG and kerosene, which are also unsafe for the domestic use.