SSGC BoD likely to retain FSRU Sequoia today

ISLAMABAD: The crucial meeting of the Board of Directors of Sui Southern Gas Company Limited (SSGCL), scheduled today (Wednesday), will finally decide if it is going to retain the new FSRU (Floating Storage Regasification Unit), Sequoia at the Engro LNG terminal or not.

Chances are bright that the SSGC’s Board of Directors will decide to retain the FSRU as the federal government wants to utilise the excess capacity of the said FSRU. Prime Minister Imran Khan and the top management of Engro and US company Excelerate Energy are in touch with each other on the issue. The managing director of Sui Southern has been asked to sign the agreement for retention of the FSRU, top officials told The News on late night Tuesday. Legal and commercial teams of SSGC, Engro and US company Excelerate, owner of FSRUs Sequoia and Exquisite, are hectically engaged in back-to-back meetings for the last two to three days to shape up some amendments required in the LSA (LNG Services Agreement) between the SSGC and Engro. Likewise, Engro and the US company are also engaged in talks.

Earlier, the US company Excelerates Energy refused to extend for a few weeks its deadline of August 31 for the government to take the final decision, but keeping in view the progress in talks between the legal teams of SSGCL, Engro and Excelerate Energy, the deadline has been extended by some days and to this effect the SSGC board will today (Wednesday) take the final decision.

Top sources in the Petroleum Division said the BoD of SSGC will decide, based on the input of legal and commercial teams of SSGC and Engro Elengy Terminal Private Limited (EETPL), keeping in view the direction of the federal government. However, the sources said that the board will also keep in view the NAB’s response that is still awaited. Many officials of the SSGC, including ex-managing directors, are facing NAB cases with regard to the Engro LNG terminal and increasing regasification from 400 to 600mmcfd.

However, the sources in SSGC, Engro and Excelerate Energy are optimistic, saying the talks are heading towards a positive direction. All the stakeholders are making sincere efforts to secure unutilised excess capacity for the country to mitigate gas shortages, while safeguarding common interest and commercial and legal obligations.

Insiders said the Petroleum Division, a few days back, sent a letter to the NAB seeking a green signal for utilisation of the excess capacity of 330mmcfd of the existing two FSRUs functional at the Engro and PGPCL LNG terminals.

The NAB responded with some questions in response to the letter from the Petroleum Division. The SSGC and the ministry responded to the questions raised by the anti-graft body. The sources said that for the NAB, the answers are not up to the mark. However, the PTI government wants to utilise the excess capacity available in both LNG terminals to ward off the intensity of gas shortage in the coming winter season When contacted, one of the directors of SSGC confirmed: “Yes, the board is going to meet today but in the agenda, there is no mention of the retention of FSRU Sequoia.” He said maybe the government wants to keep the issue secret. However, there is one item on the agenda that is about KPMG study.

The secretary petroleum, when contacted, said that the SSGC was supposed to take the decision as it was in agreement with Engro. The LSA permits the substitute FSRU but it needs to be worked out if it suits the SSGC or not. He said that the economy is growing and the demand for gas is also on the rise. Both the terminals have the additional capacity of 300-330mmcfd and the government wants to utilise it without any sovereign guarantee at affordable prices. He said for the worst scenario, the government has also prepared itself to deal with gas load management.