Govt pushes for Qatari LNG project amid pipeline bottleneck

Khalid Mustafa
Friday, Sep 22, 2023

ISLAMABAD: Pakistan is seeking to revive a stalled $200 million Qatari investment in a liquefied natural gas (LNG) terminal project that has faced bureaucratic hurdles for five years over the allocation of pipeline capacity, officials said on Thursday.

The Energas terminal, which is to be operated on a business-to-business (BtB) model with no government guarantee on RLNG takeoff, will have the capacity to re-gasify up to 1,000 million cubic feet per day (mmcfd) of LNG.

In addition, Pakistan Port Gas Limited's LNG terminal-2 and Tabeer LNG terminal owned by Japan's Mitsubishi are also in the pipeline for a long time, which were to be operational in 2021 on a BtB model, but the said two terminal projects are still dormant because of red tape.

According to top officials of the Energy Ministry, with local gas production that has dwindled from 4.2 bcfd to 3.19 bcfd, the country's reliance on imported gas (RLNG) has increased. They said that the petroleum division has wasted five years by failing to install LNG terminals based on the BtB model, and more importantly, it could not lay another RLNG pipeline from Karachi to Lahore (North-South or Pakistan Gas Stream Pipeline). The PTI and PDM governments have virtually failed to develop more infrastructure to import more RLNG.

However, under the existing scenario, the government has signed contracts with the existing two LNG terminals -- Pakistan Gas Port Limited Terminal (PGPL) and Engro Elengy Terminal (Private) Limited (EETL) with sovereign guarantees against the import of 1.2 bcfd at the maximum, not more than that. For more RLNG imports, the country needs more LNG terminals and a pipeline line.

"Yes, Energas LNG terminal management and officials of the petroleum division held a meeting some days back to resolve the long-standing issues, and more meetings to this effect would be held. And we want more installation of LNG terminals in the country based on a private-to-private business model," Energy Minister Muhammad Ali told The News. "Qatar will be having a 49 percent share in the Energas LNG terminal."

When asked if the petroleum division will take this project to the forum of the Special Investment Facilitation Council (SIFC) to do away with the hurdles with fast speed, the minister said it could be taken to SIFC, but he would first try to understand the issues and resolve them at the petroleum division level.

The sources claimed that Qatar had approached the PTI and PDM governments at the highest level, but after high-level discussion and promises by Pakistan, no formal feedback was given to Qatar. It is a source of embarrassment that despite promises from the highest level of Pakistan, nothing has happened on the ground.

The Sui Southern Gas Company (SSGC) board has allocated pipeline capacity to the Energas terminal, the official said, but the approval for pipeline capacity from the Sui Northern Gas Pipelines Limited (SNGPL) board is still pending.

The official said incomplete documentation related to the Third Party Access (TPA) associated with the Oil and Gas Regulatory Authority (OGRA) is another issue causing delays. Interim pipeline capacity has become necessary due to the incomplete OGRA TPA documents. "The network code, which is crucial for operationalizing the network, remains incomplete, with no progress made towards its finalization."

However, Sui Northern says that the ECC in its meeting held on 27.10.2021 allocated pipeline capacity to Energas on the SNGPL network. SNGPL's Board of Directors (BOD) during December, 2021 accorded approval, in principle, for the execution of the Access Agreement with Energas. It is incorrect that the matter is pending with the BOD.

SNGPL, upon its BOD approval, shared the final draft of the Access Agreement with Energas in January, 2022 and again in August, 2022 for their signatures. However, Energas did not sign/initial the same and insisted on signing the Allocation Agreement only.

Sui Northern also says that the Petroleum Division in a meeting held on November 24, 2022, had finalized all key pending issues in the Allocation Agreement after reviewing the SNGPL and Energas viewpoint, which is on record. SNGPL had shared the finalized Allocation Agreement with Energas for initialing on 10.01.2023 in line with the Cabinet's latest decisions in the field and the Petroleum Division's direction. However, Energas has refused to do the same to date.