Engro LNG terminals paid Rs35 bn as capacity charges, Senate body told

ISLAMABAD: Senate standing committee was informed on Thursday that consumers have been burdened with Rs35 billion for paying capacity charges to the Engro LNG terminals over the past three years.

Officials of the petroleum division told the Senate Standing Committee on Petroleum that met here with Senator Mohsin Aziz in the chair that in last three years, Rs35 billion has been paid to the LNG terminal in the form of capacity charges.

Managing Director of the Sui Southern Gas Company (SSGC) Amin Rajput informed the committee that Interstate Gas Company (ISGC) conducted the bidding process for setting up of LNG terminal in which Engro was selected for this project. He also informed that SSGC was not part of this process. After selection of the company, SSGC, Pakistan State Oil (PSO) and Engro signed the contract after the approval by the federal government.

Managing Director of the PSO Sheikh Imranul Haq while briefing the committee said that so far 161 LNG cargoes have been imported and the monthly average is five cargos.

“We have 15-year contract with the Qatar Gas and Pakistan can ask for revision in prices after ten years. For setting up the terminal, the bidding process was carried out by Inter State Gas System (ISGC) and Public Procurement Regulatory Authority (PPRA) rules were followed,” he said. He said that the companies which participated in the bidding were been scrutinized and after the Executive Committee (ECC) of the cabinet approval, the process was carried out. He said that this

Imranul Haq further said that LNG price was finalised at 13.37 percent of Brent on a government to government (G to G) basis and without bidding process. Mohsin Aziz asked PSO chief that since you had agreed on this 13.37 pc figure, then what was the LNG price in international market during making this agreement? Chief of the PSO replied that right now, he has no information however; in next meeting he will explain it.

Aziz asked him that in next meeting, explain to the committee regarding the companies who had taken part in the bidding process and also tell the committee that what was the price of LNG in international market in 2015 and what the pricing trend. Besides, PSO chief was asked to tell the committee that why the government made the agreement of the LNG deal only with the Qatar.

ISGC Manading Director Mobin Solat while giving his stance on the deal said that ISGC was directed by the federal government for carrying out this bidding for LNG terminal. The bids were been evaluated and on completion of process, SSGC board approved it and contract was assigned to Engro. It was very much transparent process.

Adnan Gillani of the Pakistan LNG company said that the Engro terminal never been underutilized since March 2015. However, he said that due low demand by the power sector, terminal of Pakistan Gasport established since January 2018 remained underutilized by 50-60percent.

Petroleum Division officials told the committee that for oil and gas exploration, 0.83 million square kilometres of area has been allocated, of which exploration is underway in 0.34 million square kilometres area. It was informed that 1055 wells have been drilled while developed wells number is 1386. Success rate on Oil and Gas exploration is 34pc. So far, 174 licenses have been issued while 180 leases have been awarded. The officials informed the committee around 57 trillion cubic feet (TCF) of gas has been explored of which, 36 TCF gas of productions has been achieved while remaining 21 TCF is remaining which could last for 13 years. In Pakistan Oil reserves are 1.197 billion barrels, of which 865 million barrels have been exploited while 332 million barrels are still there which could last for ten years.

In 2016/17, 26.4 million tons of petroleum products were consumed in Pakistan. Of country’s total demand, 85pc of crude oil is imported while remaining is produced locally. These are refined through six bid and two small refineries.

Officials informed the committee that one of the country biggest oil refinery is being built in Baluchistan with a cost of $5 million and having the refining capacity of 0.25 million barrels of crude oil. This project would complete in 2023. Sui Southern Gas Company (SSGC) has 8.8 million customers in Sindh and Baluchistan and its length of transmission lines is 12794 kilometres.