Ogra turns down GEIP request

The Oil and Gas Regulatory Authority (Ogra) rejected the request of the Global Energy Infrastructure Pakistan (GEIP), a Turkish company, to amend third party access rules. Ogra on October 27 allocated capacity allocation to GEIP and two other companies. Under the capacity allocations GEIP is to import 500 million cubic per day (MMFCD) Liquefied Natural Gas (LNG).
According to officials documents obtained from the Ministry of Petroleum and Natural Resources GEIP approached the Authority to amend third party access rules for importing LNG. The GEIP was expected to start importing LNG by June 2012, followed by Engro by December this year and Pakistan Gasport by early 2013.
According to sources in the Petroleum Ministry the GEIP also desires to sell imported LNG directly to SNGPL and SSGC, but Ogra has stated that as per third party access rules GEIP is bound to arrange the end consumer itself. The rules also require GEIP to provide the details of LNG buyers as mentioned in clause (C) of the capacity allocation letter, which states provisional list of buyers along with quantity be furnished within 15 days.
GEIP is seeking the involvement of the state-owned Sui-Southern Gas Company (SSGC) and Sui-Northern Gas Pipelines (SNGPL) to guarantee that they will buy and pay for imported LNG. GEIP specifically wants to avoid having the power companies as its end-clients since that would involve GEIP becoming entangled in the inter-corporate circular debt issue, which has financially paralysed the power sector owing to the government''s inability to pay its promised subsidies. The Authority has stated that it is not be possible to meet GEIP''s demands and that they diverge from the expression of interest and construction licence that GEIP filed. It added that meeting GEIP''s demand would require the entire bidding process to be scrapped and restarted.
As per LNG Policy 2011, LNG supply to SSGC and SNGPL, the LNG price will be an input for determining the weighted average cost of gas in Pakistan, determined by Ogra, for GoP specified consumers and industry. The LNG Developer/ LNG Buyer will have the right to sell LNG to end users directly based on a negotiated price. The Authority has advised the companies including GEIP, Engro and Pakistan Gas Port to submit performance bank guarantees of $10 million each to meet their LNG delivery deadlines.