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ISLAMABAD: Ministry of Maritime Affairs (MoMA) has proposed to the government to import LNG itself as per available extra capacity in the existing pipeline network, till new terminals are commissioned, well informed sources told Business Recorder.

Sharing the details, sources said, the Cabinet Division, in its meeting held on August 2, 2019, decided that all five terminal operators may be issued provisional LoI, who have conducted QRA on the sites assigned to them, consequently Port Qasim Authority (PQA) issued LoI to all five terminal operators. Subsequently, two terminals operators' M/s Energas Terminal (Pvt) Limited and M/s Tabeer Energy (Private) Limited accepted the terms & conditions and deposited $2 million each as part of concession fee (out of total $10 million concession fee each) with remaining $8 million to be deposited upon signing of Implementation Agreement (IA).

The sources said, Ministry of Maritime Affairs in collaboration with Petroleum Division has facilitated the new LNG terminal developers in securing NOCs' from various Ministries/Departments, for expeditious completion of new LNG terminals, however, following two issues have impeded the implementation of the project: (i) allocation of capacity in the existing as well as planned gas pipeline to transmit LNG from new terminals and; (ii) grant of NOC by M/o Defence to establish LNG terminals at Port Qasim.

In this regard, a summary for the approval of the Cabinet was submitted proposing that Ministry of Defence issues NOC within thirty days for the establishment of two new LNG terminals at Port Qasim Karachi as there are precedents available on record and Petroleum Division undertakes and commits to the new terminal operators for allocation of LNG gas in the existing pipeline on first come first serve basis and providing capacity to both the terminal operators in a new planned gas pipeline within 30 days, so that formalities could be completed by the terminal operators for establishing the terminals.

Ministry of Defence has issued NOCs to both the new terminal developers on October 16, 2020. However, response from Petroleum Division has not been forthcoming. Therefore, on October 21, 2020, an inter-ministerial meeting was held in Ministry of Maritime Affairs to resolve the issue. During the meeting, M/s ENERGAS and M/s Tabeer Energy expressed their concern that the Ministry of Energy (Petroleum Division) may issue the existing pipeline capacity to the terminal operators on first come first serve basis, which was in favour of the two already existing terminals.

Both the new terminal developers vowed to complete the project at the earliest and had requested to allocate them the existing pipeline capacity to complete the projects i.e. 24 months after signing the IA.

According to the Ministry of Maritime Affairs, the allocation of pipeline capacity entails signing a gas transportation agreement with gas transmission companies, however, transportation agreement is contingent upon gas transmission licence by OGRA. OGRA had received requests / documents from both the new terminal developers for grant of gas transmission licence, construction and gas sale / marketing licence.

To provide capacity in existing pipeline to the new LNG developers and to attract foreign investment, Ministry of Maritime Affairs, has recommended: (i) if there is any pipeline capacity in the existing pipeline network, it may be used by the Government importing LNG itself, till the time new terminals are commissioned and Government used existing pipeline capacity can be transferred to new terminals. (ii) any capacity, whether ‘unutilised’ or ‘excess’, is offered to private parties only on a short term 3-month forward visibility basis, after approval from all relevant stakeholders. As highlighted by MoE based on the ECC decisions gas transmission companies may be directed to share draft Gas Transmission Agreement (GTA) with both the new LNG terminal developers.

OGRA recently granted provisional licences of virtual Liquefied Natural Gas (LNG) pipelines to the two companies: Daewoo Gas and LNG Easy.

Copyright Business Recorder, 2021