LPG pipeline from Karachi to north of country proposed

ISLAMABAD: Top functionaries of the Petroleum Division have proposed an LPG pipeline having capacity 12,000 tonnes per day from Karachi to the north of the country, terminating at Lahore in the first phase and Rawalpindi in the second phase with offtakes at various load centres such Bahawalpur, Multan and Lahore, a senior official at Energy Ministry told The News. “At each offtake point, storages are to also be constructed to minimise the requirement of storages at import terminals.”

The Petroleum Division to this effect will soon move a summary to the ECC seeking permission for the project initiation. The LPG pipeline is proposed to follow the route of the White Oil Pipeline and utilise its Right of Way (ROW), where it will be available.

The supply of imported LPG for the port city of Karachi and various local refineries and gas-producing fields is done completely through tank lorries, which cause road congestion and safety threats. Furthermore, the supply through tank lorries is a major bottleneck in increasing the supply of LPG corresponding to increasing demand.

According to the working paper prepared by the Petroleum Division and available with The News, the project will be implemented under a Public-Private-Partnership (PPP) model with the support of the Government of Pakistan. Inter-State Gas System (ISGS) as government representative will contribute its share of equity while the remaining shareholding will be floated in the market for participation. Financing for the project will preferably be raised from the local market in the standard project financing ratios.

In winters, considering the 500 mmcfd domestic shortfall in the SNGPL network, LPG can be an alternative to fulfil this shortfall. And to cater to this, an estimated 11,000 tons per day of LPG will be required.

The existing import capacity allows additional imports of only 800 tons per day as explained above while a fleet of 200 tankers will be required to transport this quantity of LPG. Nonetheless, transport of the required 11,000 tons per day will require around 2,700 additional tankers. Correspondingly, the storage and cylinders requirement will also increase manifold requiring huge investment.

So, there is a dire need to augment the LPG infrastructure in the country keeping in view increasing import capacity from the existing 500,000 tons per annum to around 4 million tons per annum. And to this effect, a detailed assessment is to be undertaken by LPG Import Terminal Owners and LPG marketing companies.

The proposed LPG pipeline project will offer to the nation multiple benefits that include improving the availability of LPG by addressing infrastructure constraints, minimising the storage requirement at import terminals which is estimated to be expensive as compared to storage along the pipeline, minimising the transportation cost of LPG, improving the environment by reducing energy consumption and exhaust emission, enabling the private sector importers and traders of LPG to access infrastructure and opening the job opportunities along with pipeline route.

It is worth mentioning that the supply of LPG in FY2020-21 stood at 1.7 million tons as compared to 1.2 million tons in FY2020-21, reflecting a substantial increase in one year. Moreover, the share of local LPG has not changed substantially, showing that the entire increase in the annual consumption and supply is attributed to imported LPG.

Currently, the cumulative optimum capacity of two import terminals (EVTL & SSGC) is around 500,000 tons per annum of which around 300,000 tons (800 tons per day) is unutilised. The combined storage capacity at these two terminals is around 13,000 tons. Moreover, there are more than 1,800 LPG tankers in operation with haulage capacity of around 150,000 tons per month.