Pakistani consortium, Qatar Petroleum to build LNG terminal

KARACHI: A trio of Pakistan-based firms has struck an agreement with Qatar Petroleum (QP) to establish a "merchant model" imported LNG (liquefied natural gas) terminal in the country, officials said on Friday.

“Yes, this is true that a consortium of Pakistani companies and QP will install imported LNG terminal, which will be the first such terminal without government guarantee,” said Muhammad Ali Tabba, Chief Executive of Lucky Cement, while talking to The News International.

“The other two companies are Sapphire and Halmore Group.”

The latest development in the local LNG sector came from an international wire Service earlier Friday morning, which was confirmed by Tabba when The News approached him.

Pakistan has already two imported LNG terminals i.e., Engro and Gasport with guarantee from government side that it would buy a fixed gas from these terminals.

“Our venture with QP will be without government guarantee and will be first of its kind in LNG sector of the country,” Tabba said.

When asked about the execution of the project, Tabba replied the government had been approached for regulatory approval and once done, the execution of the project would commence.

The QP and Pakistani companies’ consortium would have 49 percent and 51 percent stake in this terminal respectively.

On the other side, experts of gas sector said the terminal would take three to four years to function once the regularly approvals was given.

Project cost is estimated at $500 million with $200 million for the terminal and $250-300 million for Floating Storage Regasification Unit (FSRU).

Tahir Abbas, Head of Research at Arif Habib Limited said the project was a “merchant model” for which the government won’t extend any guarantee.

On other hand, sector officials pointed out the new terminal would only function properly once the South-North Pipeline was in place as the gas would have to be supplied to the demand center i.e., North.

Another industry official said currently the pipeline system of Sui Southern Gas Company and Sui Northern Gas Company didn’t have the additional capacity to supply gas from the new terminal.

Asif Arsalan Soomro, Managing Director KASB Securities, said for supplying imported LNG through this new terminal would require a new pipeline.

He, however, highlighted Pakistan and Russia were currently in talks over laying a new pipeline connecting the North to the South.

He said that in case, no development took place on this project, then country can itself construct this pipeline project. Soomro said that the LNG import would be consumed easily in the local market as there is a huge demand for gas in industry, fertilizer, CNG as well as from the domestic consumers.

He said that venture between QP and Pakistani consortium is also based on this model in which Pakistani consortium would concentrate on demand side and QP would be supplying the gas as per the demand.