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January 26, 2021

Private LNG importers seek long-term gas terminal, pipeline capacities

National

January 26, 2021

ISLAMABAD: Private LNG importers have asked the government to ensure long-term gas terminal and pipeline capacities for attracting investors to the country's booming LNG market.

Currently, state-owned companies, including Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL), are importing the LNG. Financial risk is attached with the LNG import as the government in some cases faces litigation. Recently, Gunvor filed a case against PSO in an international court. Universal Gas Distribution Company (UGDC), a private Pakistani company, has written a letter to the relevant ministries requesting long-term capacity awards to attract investors for competitive rates.

The private sector is always blaming the state-run SNGPL and SSGCL for discouraging the private sector to import LNG. These companies feel it a threat to their monopoly, whereas the government wants to gradually hand over the LNG business to private sector.

"We want to import the LNG at cheaper rate of 30 percent price difference than petrol. But, due to lack of import by the private sector, the CNG sector is being forced to consume PLL’s spot-based imported gas," sources said.

It has been pointed out that CNG has a reliable consistent demand throughout the year. The PLL floated a tender to utilize the idle capacity of the LNG terminal for three months. But this short term allocation cannot sustain the CNG sector. The private investors will also shy away from it. The Universal Gas Distribution Company (UGDC) has said that it cannot secure viable LNG supply in short term unless it secures long term terminal and pipeline capacities.

The UGDC will bring in its cargo and PLL /SSGC will only provide regasification services at a cost that does not include components pertaining to investment risk and all other financial obligations shall be the responsibility of UGDC. It has requested for grant of regasification services by PLL/SSGC to UGDC to service the CNG sector on private gas in terminal-2/ terminal-1 on a long term basis (till commissioning of both private terminals or at least three years), so that the UGDC is able to take on the challenge of importing LNG initially, UGDC said. This will not be possible with the capacity holding of merely three months. Ad hoc offerings will not enable the private sector to contribute to the LNG supply chain till the both LNG terminals are in play.