The harder the government tries to expedite the Liquefied Natural Gas (LNG) imports the more it faces opposition from its own ranks as at a recently convened meeting of the ministerial committee serious difference of opinion emerged between the members over the use of Port Qasim for importing LNG with suggestion of shifting it to the Gwadar port.
An official source said that a meeting convened on May 21 to discuss sovereign guarantee for LNG imports ended abruptly when the Special Advisor to Prime Minister on Water and Agriculture Kamal Majeed Ullah and Petroleum Minister Dr. Asim Hussain had a heated argument over which port to be used for LNG imports. The Advisor left the meeting in protest. The meeting was held without its convener Minister for IT Raja Pervez Ashraf and it was decided that the meeting would be held again on May 25.
Advisor’s point of view was that the Port Qasim channel was narrow and under heavy use, incase of any incident the channel could be blocked causing disruption in all kind of supplies. He suggested using Gwadar Port for LNG imports. However, the Petroleum Minister termed Port Qasim ideal for importing LNG and its supply into the national natural gas transmission network. The Advisor struck to his argument terming Gwadar port more viable for LNG imports and required infrastructure could be developed on urgent basis.
The Ministry of Finance, the source said, is reluctant to provide any kind of sovereign guarantee for LNG imports, which the Petroleum Ministry argues is not possible as all the seller states want a long term agreement backed by sovereign guarantee for a government to government (G2G) basis deal.
Pakistan is faced with a severe gas shortage exceeding 2 billion cubic feet per day (bcfd) as the local production is unable to keep pace with the requirements of the country. Petroleum Ministry is stressing importing LNG to mitigate the crisis. The imported LNG would be received, stored and re-gasified in LNG terminals and delivered through connecting pipelines to the existing transmission pipeline network as Re-gasified LNG (RLNG).
Algeria and Qatar are both interested to supply LNG to Pakistan provided a deal is signed on a government to government basis for long term supply contract. A MoU has been signed with Qatar and they have provided a term sheet subject to negotiation. Qatar has also required guarantees by a satisfactory credit support and an acceptable performance guarantee. The RLNG price will be factored in the Weighted Average Cost of Gas (WACOG).
Provinces have expressed concerns over the federal government’s plans to import LNG. Provincial government of Khyber Phaktunkhwa has already asked the centre to keep them in loop on natural gas import projects as the WACOG would be affecting the consumers.
In May 2011, the government invited expression of interest from private sector companies interested in capacity allocation and willing to develop their own LNG FSRU, arranging their own supply of LNG and having their own buyers of re-gasified LNG (RLNG) which also may include the Sui Companies under third parties access regime. Three companies were given construction licenses by OGRA for setting up LNG terminals and allocated them capacities in the pipeline network.
