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September 17, 2018

Petroleum Division finds something fishy in Qatar LNG deal: Sarwar

Top Story

September 17, 2018

ISLAMABAD: The Petroleum Division lawyers reviewing the liquefied natural gas (LNG) supply deal signed with Qatar by the previous government in February 2016 have pinpointed a confidentiality clause which prevents the disclosure of some of its terms for three years after the completion of its 15-year term, Petroleum Minister Ghulam Sarwar Khan told The News.

This finding could be key to the success of his efforts to find grounds to re-negotiate the deal, he said. “This shows that there is something so wrong in it that it had to be kept secret for 18 years,” Sarwar said. "This shocking disclosure has forced us to look into the deal from every angle."

The Federal Investigation Agency (FIA)and National Accountability Bureau (NAB) are currently examining the LNG deal with the help of experts. If flaws in the agreement are uncovered, then they would be provide grounds for its re-negotiation with the Qatari authorities, he said.

The government would also conduct a comparative analysis between Qatar's LNG supply deals with Pakistan, India and Japan. The minister said the NAB is also probing the award of a contract to Engro Corp for the construction of Pakistan's first LNG receiving terminal at Port Qasim, allegedly in violation of Public Procurement Regulatory Authority rules.

He also hinted at a probe into the affairs of the second LNG terminal, operated by the Pakistan Gas Port Consortium.

However, a top manager at the Petroleum Division has a contrary tale to tell The News. Despite what the minister said, the official said he had personally studied the Qatar LNG agreement carefully and found it contained nothing harmful to the interests of Pakistan. Speaking on condition of anonymity, the official said he had shared his findings with Senator Mohsin Aziz, Chairman of the Senate committee on Petroleum Division, which has already sent the LNG agreement to the FIA and NAB to be probed. He said that Pakistan could re-negotiate the price of LNG once 10 years of the agreement have transpired. Before that, it is not possible for the government to seek a review of the LNG price.

Former prime minister Shahid Khaqan Abbasi, who piloted the Qatar LNG deal while serving as the minister for petroleum and natural resources, told The News that there is nothing against the interests of the country in the agreement. Rather, it was the most competitively priced deal struck at the time with Qatar by any importer. Abbasi said neither the NAB or the FIA contacted him as part of their probe into the 15-year LNG import contract or the award of the receiving terminal concession to Engro. He said he would cooperate in any kind of investigation.

Abbasi said there is no harm in the newly installed Pakistani government contacting their Qatari counterparts to seek a review of the pricing formula of the 15-year contract. If the Qatari authorities respond to complaints about pricing by offering to scrap the deal, they would be able to find alternative customers because of strong demand in the international energy market, he said. Under the take-or-pay terms of the 15-year long LNG sales and purchase agreement with Qatar, Pakistan State Oil (PSO) is bound to purchase 3.75 million tons a year, worth some $2 billion. The price of the LNG has been worked out at 13.37 percent of the average price of benchmark Brent crude oil over the preceding three months.

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