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September 22, 2019

Petroleum Division clarifies news item

National

September 22, 2019

ISLAMABAD: The Petroleum Division Saturday said baseless news were spreading in the media related to third party access to use of LNG terminals for capacity operationalisation and regasification of imported LNG.

Spokesperson for Petroleum Division says currently two LNG Regasification Terminals are operational in the country. At Terminal-1, Engro Elengy Terminal Private Ltd (EETPL) is the operator whereas Sui Southern Gas Company (SSGCL) is the customer while on Terminal-II, Pakistan Gas Port Consortium Limited (PGPCL) is the operator whereas Pakistan LNG Terminal Limited (PLTL) is a customer.

The total peak physical capacity of Terminal-1 is 690 million cubic feet of gas per day (MMCFD), while the SSGCL has contracted Regasification Capacity of 630 mmcfd with a peak capacity of 690 mmcfd. Total physical capacity of Terminal-II is 750 mmcfd out of which PLTL has a contractual capacity of 600 mmcfd with a Peak Capacity of 690 mmcfd.

There is uncontracted regasification capacity available at PGPCL LNG Terminal for which the private sector is negotiating with PLTL for access to this available capacity.

The contract expressly provides for third party access and PGPCL is not obligated to sell such excess capacity to PLTL. The capacity that will be offered to private sector will be over and above the capacity contracted by the government.

This process is in accordance with the ECC’s decision dated 31st July, 2019 which was arrived at after consultation with the Law Division and other stakeholders.

Regarding the procurement of additional available regasification capacity of the LNG Terminal, it was decided by the ECC that LNG terminal operator(s) may allocate their additional regasification capacity of Terminal(s) to third party (ies) on purely commercial basis, but always subject to priority of PLTL on berthing, storage and re-gasification for its contracted capacity.

Regarding the perception that the government is selling its own contracted capacity, it is clarified that the ECC in the said decision had stated that if the government is not fully utilizing its contracted capacity of 600 MMCFD at any time, any sale to private company will first reduce the Take or Pay obligation of the government for the unused capacity. Sale of government capacity can only be undertaken through a competitive bidding process in a transparent manner in accordance with PPRA rules and cannot be sold to a single party (operator).

As an alternative, PLTL as capacity holder can allocate the idle capacity through competitive bidding for the benefit of Government and to reduce the financial burden on Government in terms of capacity payments.

The spokesperson says all the processes and procedures undertaken in this exercise involved extensive stakeholder consultations especially with the Ogra for devising a fair and transparent Third Party Access procedure and mechanism for terminals and transmission pipelines. The Petroleum Division is fully cognizant of and committed to implementing its mandate of ensuring transparent, efficient transportation of energy in an effective manner for sustainable socio-economic development of Pakistan.

This decision does not dilute any rights of the government and in fact provide a mechanism for the Take or Pay of the Government to be reduced, while keeping the priority of storage and use with the government all the time.

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