Islamabad Mulling Setting Up The ‘Pakistan LNG Limited’

ISLAMABAD: Islamabad is mulling the establishment of a company to import fuel, including liquefied natural gas, local media reported Wednesday.

The company would be called Pakistan LNG Limited, according to The Express Tribune newspaper, and would receive a mandate to import LNG from Pakistan State Oil (PSO), which is the only company to have a mandate at the moment.

Pakistan is currently facing a severe shortage of gas, both for electricity generation plants and for general use by all sectors.

Domestic gas production of 4 billion cubic feet per day is unable to meet the country’s demand as supply-demand gap stands at 2 bcfd and is continuously rising. The shortage of energy is not only causing hardships to the common man, but inhibiting the economic growth of the country.

The Ministry of Petroleum is seeking the approval of the Economic Coordination Committee (ECC) to set up the new company, said an official familiar with the development.

The Petroleum Ministry had proposed to the economic decision making body to form a subsidiary under the name of Pakistan LNG Limited, under Government Holding (Private) Limited (GHPL).

They also proposed the company to be mandated immediately to start the import process of LNG on a multiple-options basis to overcome the shortfall in gas supply.

The company would make arrangements for the procurement of LNG through the ‘open competitive bidding process’ or ‘government-to-government’ basis, under applicable rules including rules of the Public Procurement Regulatory Authority (PPRA).

At present, a long-term contract between PSO and Qatargas has been finalised and is expected to be executed shortly. In addition, PSO is also arranging spot cargoes on DES/FOB basis as per the approval given by the ECC in its meeting held on June 6, 2015.

The ECC has authorised the Ministry of Petroleum to engage in negotiations with Qatargas on a government-to-government basis for importing LNG up to 500 mmcfd.

Accordingly, Pakistan State Oil (PSO) and Qatargas Operating Company Limited (QOCL) have been nominated by respective governments to negotiate the LNG Sales Purchase Agreement, which is expected to be signed shortly.

In the first year, it is expected that Qatargas would supply 1.5 million tons of LNG, which would later increase to 3 million tons per year from the second year onward.

In April, Pakistan launched its first LNG import terminal in the southern seaport of Karachi in a bid to counter power shortages in the country.

Earlier this month Russia’s Energy Minister Alexander Novak said that Moscow and Islamabad were considering the possibility of supplying Russian liquefied natural gas to Pakistan.

In December 2014, Russia and Pakistan announced the construction of gas pipelines and LNG regasification terminals in the South Asian country.

 

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