Pak-Qatar LNG accord to be affected only if sanctions imposed on Doha

Islamabad

In the backdrop of the prevailing situation in Gulf States, the Pakistan’s agreement with Qatar for import of LNG will not get affected, however if any ‘force majeure’ event occurs or sanctions imposed on Doha relating to gas export, then the agreement could get disrupt, however as other major countries are importing from Qatar including China, Japan, Korea and India, its disruption is far from happening.

Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi while deliberating on the country’s past months’ performance in oil and gas discoveries, told media persons, “Pakistan has 15-year commercial contract with the Qatari government for LNG supply, Qatar and Saudi Arabia’s severing diplomatic ties would have no impact on this deal.” He further said that Pakistan is importing 2.7 million tons of gas per annum from Qatar, our neighbor [India] 9 million tons/annum, and Korea, Japan and China are importing 60 million tons /annum. As these big countries are also importing from Doha, so disruption of the deals looks not possible.

The minister also said that various private sector international companies are interested in setting up LNG terminals projects in Pakistan and also supply chain. Islamabad is in negotiations with various companies of different countries and in next few weeks the country will reach into an agreement with them.

The minister while explaining about the discoveries of the oil and gas said that during last four months five discoveries were made in different parts of Sindh. These discoveries initially flow 70 million cubic feet of gas per day (mmcfd) and 636 barrels oil per day (BOPD).

These discoveries are at Chhutto-I by OGDCL in Hyderabad with crude oil of 285 BOPD and gas of 8.66mmcfd; Chabaro-I by OGDCL in Khirpur with 20 BOPD and 15.1mmcfd of gas. PPL’s discovery is Zafir X-I at Sanghar with 310 BOPD of oil and 29.2 mmcfd of gas; Mari Petroleum Company Limited (MPCL) made discovery of Aqeeq-I at Sujawal having 21 BOPD of oil and 5mmcfd of gas. The Austria’s company OMV has also made discovery Khanan-I having production of gas of 11.65 mmcfd.

The minister said that over the last four years of this government [since June 2013] 98 discoveries have been made out of 179 wells drilled having success rate of 55 percent. During previous government of the PPP, 100 wells were drilled of which only 39 discoveries were made with a success rate of 39 percent.

He said that during the incumbent government’s tenure 944 mmcfd additional gas has been injected in the system [466mmcfd from new discoveries and 478mmcfd from existing ones] and almost same volume of gas had been depleted from the existing gas fields.

Similarly, 32,343 barrels of crude oil per day has been added [11,149 BOPD from new discoveries and 21,194 BOPD from existing fields]. For the first time, Pakistan’s domestic oil production has touched 100,698 barrels per day.

Regarding Iran-Pakistan (IP) gas pipeline, Pakistan was committed to this project but it was still facing an issue of sanctions. “The transaction of dollars has not been allowed and investors are not willing to finance due to ‘snap back’ clause which may lead to sanctions again on the project.” For the time being in such a situation, Pakistan cannot start work on this $2 billion project. “Snap back” is the provision of re-imposing the sanctions, if Iran was in non-compliance.

While challenging the chief minister Sindh’s statement regarding the gas supply to Sindh said, “I am ready to contest at any forum if it is CCI, Senate or National Assembly or media forums; we are distributing gas in line with spirit of 18th amendment.” He said that CM Sindh should think what Sindh province was getting gas when his party was in power.

Negating the notion that the government was not implementing article-158 of the Constitution, he said that in 2010 at the time of passage of 18th constitutional amendment, SNGPL share of gas was 1665 mmcfd and now it has reduced by 33 percent to 1120 mmcfd this decline was due to that amendment. The SSGCL share was 1174 mmcfd in 2010 and now it is 1207mmcfd with 3pc increase. We have submitted these facts to the CCI and also written statement to the council. He further said that the new discoveries of 70 mmcfd will also add to the SSGCL.

Responding to question about allocation of LNG import, he said that allocation policy was not applicable on LNG imports as it was open and any company or province could import it. He said that LNG imports had no allocation system.

He said that two million gas connection applications were pending with SNGPL when present government came into power. He said the government had formulated merit based policy and those applying first were getting connections. He said that 1.5 million gas connection applications were pending now with SNPGL. He said that present government had lifted ban on commercial gas connection.

The government had no plan to increase gas prices from July 1. OGRA recommends gas prices but government and gas utilities would manage not to increase gas prices. The government had planned gas supply in coming winter season and despite increase in gas connection, situation would be normal in coming winter season.

Pakistan State Oil (PSO) was now importing 600 million per day LNG which was being supplied to industry, captive power plants, IPPs and CNG. He said that country was importing one million tons fertilizer before import of LNG, but now it would be exporting 0.6 million tons fertilizer this year due to supply of LNG to fertilizer industry.