SSGCL, Engro reach deal to re-gasify 600mmcfd LNG a day

ISLAMABAD: The Sui Southern Gas Company Limited (SSGCL) and Engro Terminal Company have in principle entered into an agreement for re-gasification of additional 200 mmcfd LNG enabling the country to have 600 mmcfd LNG re-gasified at the average tolling fee of 47.9 cents per mmbtu, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi told The News.

“There is some documentation that still needs fine tuning for becoming quite ready for signing of the agreement between the two entities. Once the finalisation of documents takes place by both sides, the agreement will be signed,” the minister said. He said that additional 200 mmcfd LNG is being imported from January 27, 2017 through Engro LNG terminal.

Earlier, Engro terminal was charging re-gasification charges of 400 mmcfd LNG at 66 cents per mmbtu for first two years under 15 years deal which tumbled to 63 cents per mmbtu for next 13 years. Nevertheless, for re-gasification of another 200 mmcfd LNG, which is being imported from January 27, 2017, both the entities have reached an agreement in principle owing to which the average re-gasification cost has gone down from 66 cents for 400 mmcfd LNG to 47.9 cents LNG for 600 mmcfd LNG. 

The new re-gasification price, however, that turned out to be at 47.9 cents per mmbtu in result of new deal between SSGCL and Engro company for 600 mmcfd LNG with the intake of additional 200 mmcfd LNG is still higher by 6.2 cents per mmbtu if compared with the re-gasification price of 41.77 cents per mmbtu given by the Pakistan Gas Port Limited (PGPL) LNG Terminal which will come on stream from July 1, 2017. The PGPL Terminal will re-gasify 600 mmcfd LNG. 

The Engro terminal is charging the re-gasification cost at 47.9 cents per mmbtu against 600 mmcfd LNG from January 27, 2016 whereas the PGPL terminal will charge 41.77 cents per mmbtu against the same volume of 600 mmcfd LNG. “This will breed controversy as the first LNG terminal will continue to charge 6.2 cents more per mmbtu than the second terminal for 13 years time,” a top official said. However, the said the first ever company that took the risk in the LNG terminal business gets some advantage.

The official said that the second LNG floating storage and re-gasification unit (FSRU) to be deployed in Pakistan at PGPL LNG terminal will arrive in June, 2017. Constructed by Samsung Heavy Industries, this brand new FSRU is part of the fast-track LNG terminal being established by Pakistan GasPort Consortium Limited (PGPC) at Mazhar Point, Port Qasim. It will provide 600 mmcfd of re-gasification capacity to state-owned Pakistan LNG Terminals Limited (PLTL) under a 15-year contract at a tariff of $0.4177 per mmbtu. The FSRU, owned by the BW Group, is scheduled to reach Karachi in June.

The official told The News that FRSU is the brand new that has been leased for 15 years. The second LNG terminal’s construction work is underway and it is being built from scratches with the cost of $150 million. He said that LNG terminal is to come on stream on June 30, 2016 and will re-gasify 600 mmcfd LNG per day at the most competitive price of $0.4177 per mmbtu which is the lowest one in Pakistan’s history so far.