Govt asked to buy floating storage vessel to ensure LNG availability
Friday, 27 July 2012 | 00:00
Private sector has suggested the government to buy or rent in the short-term floating storage vessel (FSV) to ensure that liquefied natural gas (LNG) is available in the natural gas pipelines before winter, while the planners execute medium- and long-term measures to ensure sustained gas supplies, sources said on Wednesday.
The prime minister has given the task of formulating short-, medium- and long-term strategies to increase the supplies of natural gas for all types of consumers, they said.
The committee headed by Gohar Ejaz of APTMA has federal petroleum and finance secretaries as members, while Minister for Petroleum Dr Asim Hussain and Minister for Textiles Makhdoom Shahabuddin have also joined in as members of the committee.
Gohar said that if all goes according to the plan, 500mmcfd LNG would be in the distribution system within next six months. Progas, a company jointly owned by Sui Southern Gas Company and Sui Northern Pipeline Company, has the capacity to store 100,000 tons of liquid petroleum gas (LPG), he said, adding that this LPG terminal could be converted into LNG storage tank with some investment as LNG has to be stored below minus 180 degrees centigrade. This conversion, he said, would take time and resources.
The country needs LNG immediately and the fastest way to achieve this is to buy or rent a FSV, said Gohar, adding that the oil tankers that have attained their sailing age and are not fit for sail are being converted into FSV.
The FSV has all the facilities, including the facility to stock the goods at minus 180 degrees centigrade and converting it from liquid to natural gas.
Gohar said the FSV would have to be anchored near the Progas terminal through dredging. The SSGC pipeline is located 5km from the Progas terminal. The government would have to lay this pipeline so that gas could be injected in the main distribution system, he added.
The gas development surcharge levied by the federal government on industrial sectors would provide resources for hiring or procuring a FSV and other expenses required to operate this process.
“This is the money provided by the private sector,” he said, adding that the government would not be investing anything from its own resources in this project.
The price of LNG has declined to $13 per mmcfd, he said, adding that this price is still much higher than the current industrial gas rate of around $7 per mmcfd.
Initially, 500mmcfd LNG would be imported daily and injected in the pipeline distribution system. The higher cost of LNG would be recovered from industrial and commercial consumers, he said, adding that even after increase in gas tariff the power generation from this gas would be much lower than the power generated from the furnace oil.
In the medium-term, the private sector has suggested the government to equip the present Progas LPG terminal with the gadgets needed to convert it to LNG terminal, said Gohar, adding that again the resources would come from the gas development surcharge.
The gas development surcharge would also finance long-term gas pipeline projects such as Pak-Iran gas pipeline and pipeline from Turkmenistan.
In the earlier arrangement, the government wasted four years expecting the private sector to invest in LNG terminal, costing $300-400 million. Moreover, the investor was to import LNG and export on its own, he said, adding that the private investors could not market pure LNG that was very expensive. LNG import, he said, is only feasible if it is mixed in the main gas supply system and the price is averaged out.
Source: The News International