Gas companies to lay down 2nd RLNG pipeline from Karachi to Lahore

In a major development, the government has tasked the gas companies -- Sui Northern and Sui Southern to lay down second RLNG dedicated pipeline from Karachi to Lahore that is to be completed by October 2018 and to this effect a business plan is being carved out with the input of the federal government.

The government will start importing 1.2 billion cubic feet of LNG per day from April 2017 heralding the end to gas load shedding. The central government will extend sovereign guarantee for raising financing required for building and laying down the second RLNG pipeline from Karachi to Lahore. However, the first RLNG dedicated pipeline with diameter of 42 inches, which is being laid down by Sui Southern Gas Company from Port Qasim to Sawan gas field with the length of 356 kilometres, will complete by March 2017.

From Sawan, the laying down of RLNG pipeline to its own system is the responsibility of Sui Northern and by March, Sui Northern will also complete the laying down of the part of the pipeline in its vicinity enabling the country to take in the RLNG in the dedicated pipeline, Managing Director Sui Southern Amin Rajput and top officials told The News here in the headquarters of the company in a special briefing on LNG import and erecting of related infrastructure.

Originally, the laying down of first RLNG pipeline up to Sawan gas field from Port Qasim was to complete by December 31, 2016 but because of delay in acquisition of land required for the some portion of the pipeline, it was delayed by three months and now the said pipeline will be operational by March 2017. Currently re-gasified LNG is not being consumed in Punjab rather it is using the system gas under swap arrangement against the import of quantity of the RLNG in the system of Sui Southern.

From January 27, Pakistan has started importing 600 mmcfd LNG under LNG Services Agreement (LSA) between Sui Southern and Engro Terminal Company. “Earlier the country was importing 400 mmcfd gas, but it has started importing from January 2017 the additional 200 mmcfd gas which means that the import of total LNG has increased up to 600 mmcfd, Mr Rajput said.

To a question, he said the concerned officials of both the Sui Southern and Engro LNG Terminal Company are in the final stage of negotiations for the toll fee for handling in the terminal the additional 200 mmcfd LNG and both will sign the contract for 200 mmcfd LNG’s re-gasification charges once all the issues pertaining to the agreement are resolved.

Till now, Sui Southern has injected a huge quantum of RLNG of 66 LNG cargoes in its gas network system and under the new scenario, Engro RLNG terminal will now handle 72 LNG cargoes in every year from now onwards.

When asked if Engro RLNG terminal, the only available facility in the country, will now charge 47 cents per mmbtu for re-gasifying 600 mmcfd LNG for 13 years under the expected agreement between Terminal Company and Sui Southern, Rajput with smile on his face avoided the question, saying, “Let’s wait for the final outcome of the talks with Engro RLNG terminal company.” For handling 400 mmcfd LNG, RLNG terminal was charging 66 cents per mmbtu.

Once the first dedicated RLNG pipeline with the capacity to carry 1.2 billion cubic feet gas per day is completed as per new schedule, then it will start transporting 600 mmcfd RLNG from March 2017 to Punjab and the province will start consuming RLNG not only in power projects, industrial activities but also in CNG outlets.

And as soon as the second RLNG terminal is completed by June 30, 2017, with capacity to handle 600 mmcfd RLNG, the first RLNG dedicated pipeline will be able from April 1, 2017 to carry full flow of 1.2 bcfd re-gasified LNG up to various destinations both in Punjab and Sindh. However, the major portion of the 1.2 bcfd RLNG will be consumed in Punjab. It means that Pakistan will emerge as one of the biggest players in the LNG club as it will start importing mammoth 1.2 billion cubic feet per day LNG from April 1, 2017.

Rajput said the Sui Southern will now become owner of the huge new infrastructure by end 2018 including two new RLNG dedicated pipelines with mammoth facility of gas compressors at Daur near Nawabshah in Sindh. He said that Sui Southern will get 17 percent guaranteed rates of return on its new assets.

To a question about the financing of the laying down of first RLNG pipeline, the top man of the gas company told that the central government had arranged Rs100 billion loan from commercial banks for the said project out of which the share of Sui Northern stood at Rs60 billion and Sui Southern Rs40 billion. For the portion of 356 kilometres RLNG pipeline being laid down in the vicinity of Sui Southern, the budgeted amount of Rs58 billion had been earmarked with Rs40 billion loan arranged by the federal government.