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January 15, 2019

Qatar may be requested to revise LNG prices

Top Story

January 15, 2019

ISLAMABAD: Pakistan would request the Qatari government for revision in Liquefied Natural Gas (LNG) prices and credit facility for this super-cooled gas imports to get a cushion for coping with the ‘Godzilla-like’ current account deficit burden.

Prime Minister Imran Khan is likely to visit Qatar on 22 January 2019. Pakistan’s annual imports of LNG are around $4 billion.

“Prime Minister Imran Khan may also request to provide credit facility for LNG imports and revision in LNG prices during upcoming visit to Qatar,” Petroleum Minister Ghulam Sarwar Khan said.

Under the 15-year LNG import deal with Qatar, Pakistan is importing mostly of its LNG from this gas-rich gulf country. Islamabad would request Doha to provide it with credit facility up to a year interval and also give concession in its price, which would be a major support from this Islamic country.

It is worth mentioning that Saudi Arabia and United Arab Emirates (UAE) have committed $6 billion [half by each] to be deposited in State Bank of Pakistan (SBP) as Forex reserves, of which Riyadh has deposited $2 billion so far. Besides, both have also agreed to give Pakistan annual oil facility on credit to the tune of $3.2 billion each for three years.

Regarding the recent visit of Saudi Arabia’s Energy Minister, Sarwar Khan said that Saudi Arabia has offered Pakistan sale of LNG to Pakistan and also expressed interest to invest in four key areas which include petro-chemical complex, minerals exploration, industry, especially phosphate fertilizers and renewable energy.

The Minister said that Japanese Mitsubishi Company is also keen to come in LNG business in Pakistan. “So, competition in LNG supply will increase resulting in low prices”, he said.

Initially, Saudi Arabia has committed to invest $10 billion in Pakistani economy, by establishing oil refinery with capacity of 0.2 to 0.3 million tons of oil per day and petro chemical complex at Gwadar, Balochistan. Riyadh has also expressed interest in investing in LNG-based power plants.

Pakistan and Saudi Arabia would sign MoU by next month for setting up this refinery at Gwadar and Saudi Crown prince would visit Pakistan for this purpose.

UAE would also set up oil refinery in Pakistan, that would also have the capacity up to 0.2 million tons/day with the provision of enhancing its capacity. As these refineries have provision to enhance its capacities, so it would not only help Pakistan meet its finished petroleum products demand, but could be also re-exported.

Pakistan has recently given incentives including tax exemptions to oil and gas drilling in offshore sector. The government is mulling over a plan to give incentives to oil and gas exploration companies for onshore drilling.

“We are considering extending these tax incentives to companies engaged in onshore drilling,” Ghulam Sarwar Khan said. The government is also in process of devising energy policy and he had held meetings with chief ministers of Balochistan, KP and Sindh to take them on board. Offshore drilling had started in the country. “The process of forming new energy policy would be finalised in March,” he said adding that the government would take all stakeholders on board to fine-tune the draft of new energy policy. The government wanted the exploration companies to start exploration work on two blocks in Balochistan.

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