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Tuesday October 26, 2021

Govt to enter into long-term GtG LPG supply contracts

October 14, 2021
Govt to enter into long-term GtG LPG supply contracts

ISLAMABAD: In a major development, the government has decided to enter into long-term government-to-government agreements for LPG supply and to this effect, the gas companies, Sui Southern and Sui Northern, have been asked to develop their stakes in the LPG cylinders market.

“Yes, we have decided to have sustainable LPG supply in the country knowing the fact that the load gas production has dwindled to 2.8 billion cubic feet per day from 4.2 bcfd over the years. We have planned to enter into long-term GtG contracts with various countries for LPG supply. To this effect, Sui Southern and Sui Northern have also been asked to ensure their footprint in the LPG cylinder market by procuring 500,000 cylinders each at an earlier stage,” senior officials at the Petroleum Division told The News.

They said the government will initiate talks soon with Oman for LPG supply under GtG long-term contracts. Saudi Arabia and Qatar are also the biggest LPG producing countries in the Middle East.

The government would also contact the authorities in Saudi Arabia and Qatar for long-term LPG supply agreements. In case the US sanctions are removed, the government would also prefer to import LPG from Iran. Right now, private importers import LPG both through sea and onshore routes. Importers also import LPG from Iran through Taftan, which is substandard.

“The government wants to discourage the piped gas supply and encourage the masses to utilize LPG the maximum. In India, there is no piped gas facility available and all dwellers there use the LPG.

Likewise in China, the government possesses 40 percent of LPG market to ensure sustainable supply of LPG to the masses.” Total annualized demand of LPG in Pakistan is estimated at around 1.4m tons, of which around 876,000 MT is produced locally, and the balance needs to be imported from neighboring countries. While the local demand of LPG is on the increase constantly, its local production is stagnant. So, with every increase in local demand, import would tend to increase. Demand in the winter rises by around 25pc due to its use as heating gas in Punjab, NWFP and Gilgit Baltistan. Therefore, its import is increased in winter and is on a lower side during summer months of March to September.