Second GtoG LNG deal with Qatar comes under NAB radar

ISLAMABAD: In a major development, the country’s second GtoG LNG deal with Qatar done in February, 2021 by the PTI government has also come under the radar of National Accountability Bureau (NAB).

The NAB Islamabad on April 20 wrote a letter to the Petroleum Division under Section 19 of the National Accountability Ordinance, seeking all the details, paperwork and the second LNG agreement with Qatar done by the PTI government in February 2021, when Nadeem Babar was Special Assistant to Prime Minister on Petroleum. NAB, in the same letter, also asked for the FIA report on the petrol crisis that hit the country in June 2020. Nadeem Babar played a pivotal role in getting the deal done at 10.20 percent of the Brent for 10 years with provision of opening the price after four years time. He spearheaded Pakistan during two and a half year time while negotiating 10-year agreement with Qatari authorities. Nadeem Babar is no more part of the PTI government as he stepped down on the direction of Prime Minister Imran Khan after a presser by four ministers, headed by Asad Umar, Federal Minister for Development and Special Initiatives, apparently for 90 days till the completion of forensic audit in the light of the FIA report to exactly fix those responsible for petrol crisis that severely hit the country in June 2020.

The News contacted Nadeem Babar seeking his views over the development but he responded just saying he is not in the government, so he is not aware of the development. However, a spokesman for the Petroleum Division, when contacted, confirmed that NAB has written a letter asking for details of the second LNG deal done with Qatar in 2021. He also confirmed that the anti-graft body also sought the FIA commission’s report on the petrol availability crisis in June 2020.

However, the sources said that senior officials of the Petroleum Division and state-owned Pakistan State Oil (PSO) who were part of negotiations with QatarGas authorities for the deal are reported to have been found under stress after knowing that the NAB has swung into action to probe the latest deal.

The sources said that the secretary Petroleum Division and MD PSO prior to finalising and inking the LNG deal with Qatar had visited NAB headquarters and briefed about the 10 years LNG deal to the NAB high command sitting there with its chairman in the chair and answered all the questions that NAB’s senior officials raised. Now after the best-ever LNG deal Pakistan has clinched, the Petroleum Division officials are feeling embarrassed and depressed after getting a letter from NAB. The PML-N government in 2015 inked the first-ever LNG supply agreement with Qatar at 13.37 percent of Brent for 15 years period with price opening provision after 10 years time. The official sources confided to The News that NAB may probe as to which LNG deal, one is done in 2015 and other in 2021, is better for Pakistan and if any of the two is found not better with any ‘wrongdoing’, then required action will be taken.

“Apparently the second deal with Qatar seems better which is inked with price at 10.20 percent of the Brent,” independent experts said and raised the question, saying that the PTI government functionaries have done nothing for ‘price discovery’ through tenders as no one knows whether this price is high or low. They identified the fact, saying when the deal with Qatar at a price of 10.20 percent of the Brent was done, the spot cargoes were available in the international market at 10.04 percent of Brent.

They said the PML-N government in 2015 negotiated with Qatar at 14 percent of the Brent, but later on it floated the tender seeking bids for LNG supply for five years for price discovery. The then government got the lowest bid from GUNVOR at 13.37 percent, so it requested Qatar to match the price of GUNVOR which it did and this is how the PML-government managed to get the lowest price at that time when spot cargoes were available at over 14 percent of Brent. Independent experts say GUNVOR is LNG trading company which manages the product from any of the LNG producing countries and after keeping its margin, it came up with 13.37 percent of Bent. So the PML-government should not have asked Qatar — an LNG producing country to match the price of GUNVOR — an LNG trading company, rather the government should have asked QatarGas to match the price offered by GUNVOR after deduction of its margin when it lifts the product from LNG producing country. However, after the second LNG deal was done, Nadeem Babar, the then SAPM on Petroleum, told The News in an interview published on March 5,2021 and responded to all the questions, saying that under the second LNG deal done with Qatar, Pakistan will import 450 cargoes in 10 years from Qatar with effective rate of 10.13 percent from January 1, 2022 though the deal is done at 10.20 percent of the Brent.

The port charges per LNG cargo at Port Qasim stands at $620,000-$750,000, but QatarGas would pay the port charges of $320,000 on its one cargo while the remaining is paid by PSO. However, now under the new LNG deal, the Qatargas will now pay $400,000 and the remaining will be paid by the PSO and this is how the state-owned entity will have a relief of $80,000 per cargo, which will help reduce the tariff of LNG with an effective rate of 10.13 percent of the Brent. And just under the head of port charges relief from Qatar, Pakistan will be able to enjoy relief of $38 million in 10 years.