Secret clauses of LNG deal not to be made public

ISLAMABAD: Contrary to its previous claims, the PTI government will not divulge the secret clauses of the 15-year LNG deal with Qatar to avoid serious consequences, a well-placed top official confided to The News.

“The Qatar authorities have conveyed the message to the government of Pakistan at the highest level in polite words saying that it would be unfair on part of Pakistan if it makes the deal public as many negotiations on LNG agreements between Qatar and other countries and trading companies are underway all the time and Pakistan will face the consequences if it unilaterally unveils the agreement.”

In recent interaction, Qatar also wanted to know what the matter actually is with the government of Pakistan. Under agreement, after 10 years, if both sides agree, LNG prices can be reviewed. However, the official while quoting Qatari authorities said Qatar is ready to accommodate if Pakistan government comes up with any justified concern, but making the deal public is simply not acceptable.

It is pertinent to mention that Saad Sherida Al-Kaabi, the President and Chief Executive Officer of Qatar Petroleum met Prime Minister Imran Khan on September 28 and highlighted the importance of the LNG deal other than the issues pertaining to investments in Pakistan’ energy sector.

The official said prior to signing the 15-year LNG supply deal with Qatar, both the countries had signed the non-disclosure agreement under which either party cannot disclose the commercial terms of the agreement.

“Under worst scenario, Qatar may cancel the deal unilaterally and Pakistan may not be able to make LNG deal with any country knowing the fact that it has already disclosed the deal done with Qatar,” the official said that Qatar controls the 70 percent LNG market of the world and its influence cannot be ignored.

However, Federal Minister for Petroleum Division Ghulam Sarwar Khan when contacted said that raising the grave concern by Qatar is not in his knowledge, but at the same breath, he said Qatari authorities may have raised their concerns at the highest level.

Qatar Embassy has not responded to the email of this correspondent seeking the reply on the question as to whether Qatar has raised its concern over government’s intention of unfolding the LNG agreement or not.

Two years back, Pakistan State Oil had also written a letter to Qatargas company informing that many members of Parliament in Pakistan have piled up the pressure to disclose the LNG deal and in response to the letter, the authorities in Qatar at that particular time had also disallowed PSO to make it public arguing that if the secret clauses of the deal are divulged publically, it would injure economic interest of the seller (Qatar) and buyer countries in the market.

However, the top notch of the government insists that under the latest scenario, the PTI government announced on September 24 to make all LNG deals including with Qatar public after the meeting of Council of Common Interests (CCI) chaired by Prime Minister Imran Khan. “This irked the Qatar government.”

According to the official, Qatar has argued that international commercial agreement cannot be unfolded publically saying that it not only controls the 70 percent of the LNG world market, but also sells its product to many buyer countries and if the secret clauses of agreement are made public, the buyer countries may ask for concessions and flexibility which have been extended to Pakistan. “More importantly no government in the world will be ready to ink LNG deals fearing that Pakistan may make it public.”

The sitting government’s initiative to send Qatar LNG deal to NAB has also annoyed Qatar authorities as they are of the view that it has stigmatised Qatar all over the world, the official said while quoting the Qatar’s concern shared with Pakistan’s top man.

If the deal is made public, the official said, Qatar has the right to cancel the deal and resultantly Pakistan will be exposed to the darkness as the 7000-8000MW of electricity being generated on LNG will be no more in the system. And on top of it, fertilizer and CNG sectors which are mainly thriving on RLNG will also collapse.

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 nor 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.

Mr Abbasi said this is very much part of the agreement that the commercial terms will not be publically disclosed. He said that the LNG deal agreement with secret clauses has been approved by the then cabinet and now the incumbent government of Pakistan Tehreek-e-Insaf cannot make it public.

However, Mr Abbasi said that 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.