Thursday March 30, 2023

Pakistan finalises LNG deal with Qatar, NA told

January 12, 2016

ISLAMABAD: The National Assembly (NA) was informed on Monday that Pakistan has finalised a sale and purchase agreement with Qatar for the import of LNG and it has been submitted to the Economic Coordination Committee (ECC).

Parliamentary Secretary for Petroleum and Natural Resources Shahzadi Umarzadi Tiwana told the NA during the Question-Hour that the Pakistan State Oil (PSO) is importing LNG under spot arrangements through competitive tendering to keep the terminal operational. So far, 17 cargoes have been imported.

The parliamentary secretary said that there was a vast gap between the demand and supply of natural gas which is bridged through load-management in power, industry, CNG and fertilizer sectors in order to cater for high priority domestic and commercial sectors.

She said the gas utility companies are undertaking system augmentation, looping of line and establishment of emergency teams to resolve low pressure complaints. Umarzadi said the Sui Southern Gas Company (SSGC) has identified 22 towns in Balochistan for installation of LPG-air mix plants. The plants will be established in phases and installation process has started at Awaran and Bella.

To another question, she said gas reserves worth one trillion cubic feet have been discovered during the tenure of the present government. She said 227,000 barrels of oil per day has also been added during this period.

In written reply to a question, the house was informed that per litre prices of petrol and high speed diesel are Rs51.94 and Rs41.54. The prices of petrol and diesel including taxes are Rs76.26 and Rs80.79.

Minister of State for Parliamentary Affairs Shaikh Aftab Ahmad told the House that the Western route of China-Pakistan Economic Corridor was being implemented which will bring prosperity in backward areas of Balochistan.

To a supplementary question regarding the possibility of convening another All Parties Conference on CPEC, he said it was the policy of the prime minister to take all people along on important issues.

Meanwhile, the Qatar authorities have agreed to trim down the LNG price from 13.9 percent to 13.37 percent of the Brent as was demanded by Pakistan, one of the cabinet members who is privy to this development, told The News Monday.

“The most salient feature of the new LNG deal is that Qatar will also provide the LNG to Pakistan on 15-day defer payment against the earlier settlement of defer payment for 10 days,” he said, “On top of that, Qatar will also provide three LNG ships a month against the earlier arrangement under which it was bound to supply two LNG ships a month.”

With the reduction in the LNG price by Qatar, the price of delivered LNG at Qasim Port will be close to $5 per MMBTU whereas India has renegotiated its LNG deal with Qatar under which landed cost of LNG in India’s port is hovering at $6-7 per MMBTU which is still 20 percent higher than the price that Pakistan has managed from Qatar. India has also faced the penalty of $500 for violating its deal earlier signed with Qatar.

That’s the great achievement of the Nawaz government that successfully managed to convince the authorities in Qatar to reduce the LNG price by matching it to 13.37 percent of the Brent --- the price that PSO managed through tender for five years. Soon after approval, Pakistan will formally sign the LNG deal with Qatar.

Federal Minister Shahid Kahaqan Abbasi confirmed the development by saying: “Yes.”
Qatar had earlier offered the LNG price at 13.9 percent of three months average price of the Brent which the ECC (Economic Coordination Committee) headed by Finance Minister Senator Ishaq Dar refused to accept, arguing that Pakistan State Oil has managed the LNG at 13.37 percent of the Brent through tenders, which is why the authorities concerned should ask the Qatargas company to match the price that PSO managed at 13.37 percent of the Brent.

The ECC was of the view, if LNG price at 13.9 percent of the Brent is approved in the presence of the 13.37 percent of the Brent LNG price, the government will certainly be exposed to the unending backlash from the opposition and vibrant media.

The ECC wanted to keep itself from any move that can trigger the controversy inviting the wrath of NAB, vibrant media and opposition parties.

However, Qatar that had earlier shown its displeasure over non-approval of its offer by the ECC, has now surprisingly accommodated Pakistan’s demand of slicing down the LNG price and to this effect all the credit goes to Abbasi who tactfully persuaded the Qatargas company knowing the fact that Qatar always sells its product at somewhat higher prices being a reliable LNG supplier.

PSO has refused to award the tender to Shell for providing 60 LNG ships also in five years against the price of 13.83 percent of the Brent. ECC had also asked PSO to persuade Shell company to match the 13.37 percent of the Brent price given by Gunvor. However, Shell company refused to match the price which is why it was not awarded the tender and now Qatar will provide three LNG consignments a month instead of two LNG ships.

Abbasi said Pakistan needed four LNG ships every month from April 2016 and under the plan Qatar was supposed to provide one LNG ship in first, second and third week of every month. Now Qatar will, under new deal, provide third LNG ship in fourth week of every month also.

The minister said Pakistan’s LNG needs will swell to over 4 million tons per annum in March 2017. The LNG price has been decided on SLOPE shape. “The LNG price was not decided in ‘S’ shape fearing the wrath of NAB,” the minister said.