Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi on Wednesday said that imported LNG was the only cheaper source to meet the country’s energy needs.
Addressing a seminar on LNG import, the minister said that previous governments made five attempts over the 10 years to import LNG but they failed for adopting integrated approach where LNG terminal developer was also LNG supplier.
He said the PML-N government resorted to pragmatic approach and the LNG terminal development was separated from LNG procurement, thus succeeding to provide the country with its first LNG-based gas within 20 months of its tenure.
He said LNG was game changer and the 400 mmcfd terminal would add five percent to the country’s primary energy mix. The government pursued a transparent process for developing a terminal and the Engro Elengy built the SSGC LNG regasification terminal in a record time as the contract was signed on April 2014 and the first gas flow was ensured in March this year.
He said the average regasification tolling fee was charged at $0.66 per MMBTU which was the lowest in the world, adding that most of the LNG contracts in the world were priced at direct linkage to oil. Pakistan LNG imports would also be linked to oil, he opined.
Shahid said since the country’s natural gas production was stagnant at 4,000 mmcfd per day for 10 years and constrained demand stood at 6000 mmcfd with hydrocarbon resources fast depleting, the government ventured into LNG import. He was of the view that had Pakistan committed to LNG 10 years back, the country would not have suffered energy crisis today.
He said Pakistan needed to import natural gas through pipelines or LNG, but in fact Iran-Pakistan Pipeline of 750 mmcfd project was delayed due to international sanctions and the first gas could not be available before the end of 2017. In addition, Turkeminstation-Afghanistan-Pakistan-India(TAPI) pipeline with 1325mmcfd also got delayed due to Afghanistan instability and structural issues with the project transaction and first gas was not available before end 2019.
In such situation, the government venture into the LNG import through long-term and medium-term contracts, and sport purchases, adding that LNG Supply Contract (SPA) between Pakistan State Oil (PSO) was finalised.
The minister said that cost calculations proved that RLNG was cheaper than all imported fuels and the OGRA had determined RLNG price at 8.64 per MMBTU. He said so far 14 LNG cargoes had been regasified at the LNG terminal, adding the one year contractual commitment was 24 cargoes, but the number could go up in one year to 26 cargoes.
He said six cargoes were procured on spot basis from Qatar gas FOB basis and eight cargoes were procured through competitive bid process, adding that average price of LNG cargoes procured was less than 14 percent of Brent. He said power generation based on 4000 mmcfd of regasified RLNG would generate additional annual generation of 9 billion KWH.
Similarly, with under-construction of 3600 MW RLNG based power plants would generate 30 billion KWH saying over$ 2billion annually. Replying to a question, the minister said the government needed to sign five more contracts to import LNG, as currently, the minister added, LNG cater to the 20 percent of the country’s energy needs. Answering another question, he said the ground-breaking of TAPI project was expected in December this year which would go a long way in improving energy situation. He said the government was open to all questions with regard to its efforts for mitigating energy crisis, adding that all parliamentarians were invited to forward their suggestions to ensure LNG in the country.
He said the government had allowed the private sector to import and use LNG, testifying its sincere efforts to further improve economic indicators. He said each consumer would have to afford its own burden while consuming LNG and burden would not be shifted to any other sector.
Speaking on the occasion, Minister for Water and Power Khawja Asif said his ministry would also follow the suit and hold a seminar to give answers to people on power sector projects.
