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January 15, 2021

Private firms licenced to supply LNG through bowzers

Business

January 15, 2021

ISLAMABAD: The government on Thursday granted licences to two private firms to supply liquefied natural gas (LNG) through cryogenic bowzers to consumers living off the grid.

Oil and Gas Regulatory Authority (Ogra) granted provisional licences to two virtual pipeline companies LNG Easy (Private) Limited and Daewoo Gas Private limited.

They will pursue LNG virtual pipeline project for supply of LNG through cryogenic bowzers and are planning to use berth at Karachi Port Trust and berth at Gwadar Port for import of LNG cargos, fill, transport, market and distribute LNG.

“This is another step towards gas market liberalisation, promotion of competition in the gas market, promote country’s economic growth and to ensure reliable supply of energy to the consumers of natural gas,” Ogra said in a statement. “These shall be first of its kind projects in Pakistan and shall facilitate the supply of natural gas mainly to off grid consumers hence facilitating growth.”

Earlier this month, Ogra allowed K-Electric to lay a gas pipeline to fuel its upcoming RLNG-based power project of 900 megawatts. KE was licenced to lay the pipeline which will handle RLNG supply of up to 250 million metric cubic feet per day.

The gas pipeline with 14-inch diameter is expected to cost $4 million, an insignificant amount compared to $641 million that is an estimated cost of building two power plants of 450 megawatts each by KE.

“The government is encouraging the private sector to develop small-scale LNG supplies to meet off-grid gas demands through LNG trucking commonly known as a virtual pipeline,” said the Ogra. “Small scale LNG would offer significant investment opportunities for the private sector.”

Government has allowed the private sector to participate in utilising the gas network of Sui Companies via third party access dispensation whereby the private sector could import LNG, holding title of the commodity whereas state-entities will provide regasification services at a tariff determined by the regulator.

Government has increased the reliance on re-gasified liquefied natural gas due to its lower prices which are far cheaper than that of furnace oil prices, especially for power generation.

Currently, two state-owned companies, Pakistan State Oil and Pakistan and Pakistan LNG Terminals Limited, are engaged in LNG imports, while the government notified a framework for the import of LNG by private parties and sanctioned excess capacity available at LNG terminals to private importers.