Pakistan likely to scrap LNG import pact with Qatar
Friday, 11 May 2012 | 11:00
Pakistan is near to scrap plans to import 500mmcfd Liquefied Natural Gas (LNG) from Qatar as a short-term measure to meet country’s critical shortages apparently for high price of per unit of imported gas, sources said.
It is also learnt that very soon Islamabad will formally convey Doha about the cancellation of import of 500 mmcfd of LNG annually, which was to materialise during one year in accordance with a Memorandum of Understanding (MoU) inked during February on the visit of Prime Minister Syed Yousuf Raza Gilani to Qatar. However, the Ministry of Petroleum and Natural Resources is likely to abandon the multi billion-dollar plan to import 500mmcfd Liquefied Natural Gas (LNG) from Qatar apparently for high price of the imported gas. Sources also informed that the annulment of the LNG import from Qatar would be due to high price of gas as Qatar has so far declined to export LNG below the price of $18 per mmbtu to Pakistan.
They also told that under this agreement Pakistan was to import 50 crore cubic feet of liquefied natural gas per day to the country while Sui Northern Gas Company Limited (SNGPL) and Sui Southern gas Company Limited (SSGCL) were to purchase Qatari gas to meet the growing requirements of the energy starved country.
They said the ministry has declared the agreement null and void ostensibly to maintain transparency in the gas import project as the Qatar government was found not ready to decrease the price of per unit of liquefied natural gas (LNG) from $18 with Pakistan. They told that Pakistan was bound to purchase LNG at government level with Qatar.
Ijaz Chaudry Secretary Petroleum when contacted declared that so far no progress achieved in bringing LNG from Qatar to the country as all attempts to convince Qatar in this regards had bore no fruit. Over a question of price settlement with Qatar regarding per mmbtu of LNG, he, however, said that the economic coordination committee (ECC) of the cabinet has yet to decide the pricing of imported gas to the country despite the fact that ministry had tabled a summary two times before ECC but so far no final approval in this regard made from the ECC. But the ministry is third time set to table a summary pertaining the price of imported gas to the country in the ECC in its upcoming meeting. Secretary Petroleum also made it clear that Pakistan is mulling other options including import of LNG from Qatar to meet growing energy requirements and to end the gas shortages of the country.
It is however testimony of the fact that Islamabad while setting aside the LNG policy remained found ready to provide even the governmental guarantee on the import of multi-billion dollar LNG from Qatar to Pakistan to meet its worsening energy requirements. But Qatar government had even turned down the ministry of petroleum and natural resources repeated requests to relax some terms and conditions of the agreement pertaining the import of 500mmcfd LNG to country. Further, in the LNG policy 2011, the government has given special fiscal incentives to all LNG importers in an effort to deal with looming energy crisis in the country and to promote the use of LNG.
It is to be noted here that at present Pakistan is facing a gas shortage of 1.5 to 2 Billion Cubic Feet (BCF) which during upcoming winter would reach 3 BCF. However, Pakistan in a bid to cope with worsening energy crisis clinched a Memorandum of Understanding (MoU) in February with Qatar under which Pakistan was to import 500 million cubic feet of LNG per day (mmcfd), which was planned to be utilised to generate 2,500 megawatts of electricity. However, following the fate of multi-billion dollar Mashal liquefied natural gas (LNG) import project and further the import of 1.4cubic feet per day LNG with the private sectors to the country, this is the third attempt of the government of Pakistan to import LNG which has failed so far and, as a result, Pakistan’s image in the international LNG market is badly affected with international fuel suppliers no longer considering Pakistan a serious LNG buyer since the import of 500mmcfd LNG from Qatar has met with the same fate of failure, resultantly the country remained failed third time to import LNG to meet growing energy requirements of the country.
It is also worth mentioning that earlier in a meeting of Pak-Qatar Joint Ministerial Commission held in the last week of February in Islamabad, Qatar sought a price of $18 per mmbtu, but Pakistani authorities believed that Doha would show flexibility in its stance later. Qatar also sent a term sheet seeking $18 per mmbtu for LNG.
In the meeting, the two sides decided to finalise the price of LNG within three months. As follow-up, Pakistani officials visited Qatar and held meetings there, which ostensibly bore no fruits to decrease the woes of the energy starved country.
Source: The Nation
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