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LNG agreement sent to ministry for approval

The Sui Southern Gas Company Limited''s (SSGC) Board of Directors (BoD) while approving 500 Million Cubic Feet per Day (MMCFD) of LNG Supply Agreement (LSA) has forwarded it to the Ministry of Petroleum and Natural Resources (MP&NR) for final government approval.

According to sources in the Ministry of Petroleum and Natural Resources, SSGC''s BoD after negotiating a $2 billion service tolling contract with Engro Vopak Terminal Limited (EVTL) for the import of Liquefied Natural Gas (LNG) for 15 years has sent it to the federal government. The federal government in the first phase will get approval from Public Procurement Regulatory Authority Pakistan (PPRA) and finally from Economic Co-ordination Committee (ECC) of the Cabinet.

A senior SSGC official, who participated in the negotiations between SSGC and Engro told Business Recorder said, "The SSGC has a terminal to be used for LNG storage and delivery, which currently is being used for the storage of Liquefied Petroleum Gas (LPG). We need to construct a jetty at the current terminal with an estimated cost of $160 million with a view to using the terminal for imported LNG. The cost will be paid by the EVTL, while the SSGC will pay only 0.80 cents as tolling fee to the EVTL for imported LNG. The capacity of the terminal is 500 MMCFD and the SSGC''s LNG imports would begin within two years."

The board of directors of the Inter State Gas System (ISGS) on November 21, 2013 recommended to the SSGC to accord a formal approval to the award of $2 billion services contract to the EVTL.

The federal government is also negotiating an LNG supply agreement with Qatar. Federal Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi has said Pakistan wanted to import up to two Billion Cubic Feet (BCF) of LNG and under the fast track project, 200-400 MMCFD of LNG will be imported.

"200 MMCFD of gas would be available in the market from December 2014, the import of LNG will cost $15 per MMBTU and it will cost consumers $17 per MMBTU," he said.

The minister said if all power generating plants that were operating on gas function optimally, loadshedding would reduce significantly; however it was not possible because the gas production is hovering around 4.2 BCFD, while the demand stood at 8 BCFD.

Sources said $1.4 billion 1,250-kilometers long pipeline from Karachi to Lahore would be laid do to transport two billion cubic feet per day LNG after it was converted into gas to Punjab and other upper parts of the country.

Punjab is facing the acute gas deficit during this winter. Since December 10, 2013 the government has suspended gas supply to fertilizer, CNG, industry; it has reduced gas supply to power sector that is on the SNGPL network, which as per the government''s plan will continue to March 1, 2014.

Copyright Business Recorder, 2014


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ICT 2014

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