Energy ministry begins exercise to update LNG policy

LAHORE: The ministry of energy has sought proposals from stakeholders to bring the existing liquefied natural gas (LNG) policy on a par with the local and international market trends, it was learnt on Friday.

Directorate General Liquefied Gases, Petroleum Division of the ministry of energy initiated a process to revise the LNG Policy 2011 to make it in conformity with the latest developments in the LNG sector (locally and globally), according to an official document.

“The stakeholders are requested for their detailed and comprehensive comments on LNG Policy 2011. The input/ comments are requested to be furnished within three weeks,” it said. The letter was primarily addressed to director general of petroleum concessions and gas, Pakistan State Oil Limited, Sui Northern Gas Pipelines Limited, Sui Southern Gas Company Limited, Pakistan LNG Limited, and Oil and Gas Regulatory Authority.

The petroleum division also sought proposals from private sector representatives, including heads of Engro Elengy Terminal Limited, Pakistan Gasport Consortium Limited, Universal Gas Distribution Company Limited, Trafigura Pakistan Limited, Gaseous Distribution Company, Tabeer Energy, Energas Marketing Private Limited, LNG Easy and Daewoo Gas Pakistan Limited with a view to furnishing the detailed and comprehensive comments on LNG Policy 2011.

In July, the Economic Coordination Committee of the cabinet discussed and approved a proposal submitted by the ministry of energy for third-party access to LNG terminals to use excess capacity or government contracted-unutilised capacity.

Pakistan hasresumed spot buying of liquefied natural gas (LNG) from the international market after six-month pause as energy demand is ramping up with easing lockdown. The lockdown was imposed in late March following coronavirus outbreak. Consumer demand slackened and industrial production was brought to halt. Oil ban was justified to help oil marketing companies and refineries whose storages could go full to the brim.

Declining spot rates of LNG opened a huge opportunity to reap benefits of cheap imported fuel. Permission to buy LNG by private buyers will help in importing LNG at competitive rates by utilising idle capacity of terminals.

LNG imports have saved Pakistan over $5 billion during the last five years by substituting the expensive oil imports. Since start of LNG import in 2015, its use has increased tremendously. Currently, LNG contributes 22 percent in the country’s energy mix, while its share in energy imports stands at 24 percent.

LNG played a significant role in meeting the local demand of power sector as domestic gas resources are depleting fast and there bleak projections about any discovery in near future at least keeping in view past track record.

About 20 million tons of LNG has been imported since 2015 through two re-gasification LNG terminals. In 2019, Pakistan imported 7.57 million tons of LNG through 123 LNG cargo ships against 108 cargos in 2018. The gas supply-demand gap widened to 3.7 billion cubic feet/day (bcfd) in 2017/18. Imported gas bridged the gap by 2.5 bcfd. Without the alternate source, the gap could reach 4.6 bcfd by 2022/23 and then to 6.7 bcfd by 2027/28.