Immediate steps needed to avoid gas crisis during peak winter

KARACHI: Pakistan will face gas shortages of around 300mmcfd in peak winter if the relevant officials in Petroleum Ministry do not conclude the commercial framework and operational agreement with private sector for import of additional LNG.

And equally critical is Sindh government permission for the right of way to allow Sui Southern Gas Company (SSGC) to lay down a new 17km pipeline from Port Qasim Karachi to transport additional LNG.

It will take 60 days for SSGC to lay down the pipeline and it has to make it operational by Dec 15th to handle the peak winter load. SSGC officials shared that material procurement is done and they will start work as soon NOC is received.

Nadeem Babar, Prime Minister Special Assistant on Petroleum told The News that the 17km pipeline is the biggest hurdle to handle gas shortages and the permission for right of way by Sindh government is awaited. Babar added arrangements will be made for additional LNG through public or private sector provided the pipeline is in place.

Relevant officials at Sindh Board of Revenue told The News that DC Malir office Price Fixation Committee has forwarded its report and the case is likely to be put up before Sindh Cabinet for approval. The officials added that whole process is likely to be concluded within one to two weeks. The officials also shared that Sindh chief minister had directed to process the case at highest priority.

Anticipating the gas shortages, federal cabinet ratified ECC decision on Aug 11th, 2020 to allow private sector to use unutilised capacity at the two LNG terminals and also allowed terminals to use excess capacity at the terminals. These were good decisions by the Cabinet although at least a year late as ECC had issued a similar approval in 2019 as well.

As per Aug 11th, 2020 decision, Federal Cabinet directed to form a Planning Commission committee to settle commercial framework within 15 days with all stakeholders to use unutilised or excess capacity at LNG terminals. The Planning Commission has reportedly concluded its recommendations and ECC is likely to review them in its upcoming meeting. In parallel, a new 17km pipeline is to be built from Port Qasim to SSGC Network to handle additional LNG which will be imported in light of cabinet decision to use excess capacity of LNG terminals.

Pakistan’s two LNG terminals can import up to 1200mmcfd and arrangements are in place to use the full capacity of both terminals with help of LNG shipments already contracted and new shipments via private sector. The challenge is the shortfall of 300mmcfd over and above the full capacity of LNG terminals which is need to meet peak winter demand from Dec 2020 to Feb 2021. This shortfall can be met only if the excess capacity of both LNG terminals is used and there is new pipeline from Port Qasim to SSGC available to use this capacity. The new 17km pipeline can handle up to 600mmcfd and can easily handle the requirement of Karachi industrial and other users. Intelligent management of Pakistan North South Gas transmission network can enable to transport more than prescribed 1200mmcfd.

It’s a day to day battle now in relevant ministries to overcome this huge challenge to avoid gas shortages. SAPM Nadeem Babar has called a meeting on Wednesday with both terminal operators and gas utility companies to settle issues. The commercial framework to use excess capacity of terminals in light of recommendations of Planning Commission committee, its ratification by ECC and operational agreements between two terminals and gas companies are issues which need to be settled at earliest.

Industrial units in Punjab has already been using LNG for last few years and additional LNG through the new pipeline at Port Qasim will enable industrial units and other utilities use LNG in Sindh during peak winter season from Dec 2020 to Feb 2021.

The long term solution to overcome gas shortages is the construction of two LNG terminals and the new North South gas transmission pipeline. Mitsubishi Corp wrote to Prime Minister on Sept 24th, 2020.