Next ECC set to approve LNG deal with Qatar

ISLAMABAD: In a major development, the Nawaz government has succeeded to carve out the sustainable payment mechanism on behalf of power sector that was the biggest hurdle in the much awaited 15 years LNG deal with Qatar under government-to-government arrangement.
“Now we have resolved the issue under which the power sector will first arrange advance payments of Rs5 billion for two LNG cargoes. Under the payment mechanism, power sector will pay the required amount in every 10 days’ time after the LNG is delivered at the port,” Federal Minister for Petroleum and Natural Resources told The News.
The agreement on payment mechanism between Petroleum and Natural Resources and Water and Power Ministries, the minister said, have enabled us to send the summary to ECC pertaining to the sales purchase agreement (SPA) with Qatar on LNG for approval and after that both countries would formally sign the much touched agreement. “After the approval by ECC, we will be able to import LNG from Qatargas Company under government-to-government arrangement in two weeks’ time.”
According to the top official, Pakistan has already completed negotiations with Qatar on LNG deal at just below 14 percent of the three months’ average price of Brent in slope form for 15 years with price opener clause after 10 years’ time. Qatar will supply 200 million cubic feet per day (mmcfd), which is to be increased up to 400 mmcfd and in case the government does not increase, then after three years the supply will automatically increase to 400 mmcfd. He said the LNG price deal had been finalised at 13.70 percent of three months average price of Brent in slope form for 14 years. However, the officials dealing with the LNG project said the price of LNG from Qatar would be hovering somewhere between 13.70 percent and 14 percent of the three months’ average price of the Brent.
The minister said that Pakistan would be importing 52 LNG ships of 3 million tons of LNG in 12 months from Qatargas. When asked as if Qatargas Company has agreed to send its LNG ships in water channel of Port Qasim which is having 13 meters draft knowing the fact the said company is insisting for further dredging of navigational channel by 1 meter more so that its Q Flex could easily move, the minister said that it is the duty of Qatargas company to provide the gas either through its big LNG carrier or medium size of ships.
However, one of the top officials in the PSO has told The News that there is no more issue of dredging left, as Qatargas Company has no more objections in sending its LNG carriers to Port Qasim navigation channel. He claimed that in the weeks to come, Qatargas Company would even send LNG on Q-Flex that is the biggest LNG carrier.
Meanwhile a meeting between authorities of Ministry of Petroleum and Natural Resources, Port Qasim Authorty and PSO held here on Tuesday on the issue of existing charges of Port Qasim Authority on handling the LNG carrier in navigation channel. The official said that the Ministry of Petroleum and Natural Resources has asked PQA to charge the real expenses incurred on navigation of LNG ships not more than that and PQA has agreed to rationalise its charges which are at the higher side.
The PQA will charge the real expenses amounting to $15 million in handling the 52 ships in one year.