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Pakistan, Algeria moving towards LNG deal

The Ministry of Petroleum and Natural Resources has started negotiating import of Liquefied Natural Gas (LNG) from Algeria at lower than the international market price following refusal by Qatar to scale down the price to $16 mmbtu instead of the international market price of $18 mmbtu.

Sources in the Petroleum Ministry told Business Recorder here on Monday that relevant officials from Algeria and Pakistan have recently held meetings in Islamabad and negotiated the possibility of LNG import. Since 2006 Pakistan has been toying with the idea of import of LNG to meet its escalating energy crisis that compelled the government to suspend gas supply to industry (including textiles and fertiliser) but has not succeeded in convincing major LNG exporters including Qatar to supply at below market price.

Sources said that Mustafa Bin Bada, Algerian Minister for Trade and Dr Asim Hussain, Federal Minister for Petroleum discussed the possibilities of LNG import, adding that both sides would hopefully settle all formalities soon. Last year the government issued three conditional and one provisional licenses to the LNG project proponents.

The conditional licenses were issued to ''Pakistan Gasport Limited'', Engro Corporation Limited, and Global Energy Infrastructure Limited while the provisional license was issued to DSME ENR Limited, but due to no government guarantee and lack of buyer interest these companies refused to begin importing LNG.

The government assured the potential LNG importers that it would encourage participation of Multi-Lateral Development Banks (MDBs) in LNG import projects to facilitate the financing of such projects inter alia through equity participation by MDBs and MDB instruments such as political risk guarantees and partial credit guarantees.

According to Petroleum Ministry officials at present Pakistan is facing a gas shortage of 1.5 to 2 Billion Cubic Feet (BCF) which within next two to three years would reach 3 BCF. To cope with the energy crisis the government wanted to complete LNG project by the end of 2012 and for this purpose the government has also engaged public sector gas utilities - SNGPL and SSGC - to build required infrastructure, he added.

Copyright Business Recorder, 2012


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