KARACHI: Pakistan’s private sector is about to debut the import of liquefied natural gas (LNG) with the first cargo equivalent to 150 million metric cubic feet per day (mmcfd) expected to arrive by the end of this month, it was learnt on Friday.
The United Gas Distribution Company (UGDC) will become the first from the private sector as the government notified a framework for the import of LNG by private parties and sanctioned excess capacity available at LNG terminals to private importers, the company’s head told The News.
“We have finalised the deal with the suppliers, and our first cargo equivalent of 150 mmcfd will arrive by the end of October,” said Ghayas Paracha, CEO of UGDC. “Private importers, gas companies, terminal operators and regulatory authority need to be on the same page to make this enterprise a success.”
Currently, two state-owned companies, Pakistan State Oil and Pakistan and Pakistan LNG Terminals Limited, are engaged in LNG imports. Sui Southern Gas Company (SSGC) has already predicted a shortage of around 300mmcfd gas in the coming winters.
Paracha said the existing terminals have 300 mmcfd excess capacity. Private importers must be facilitated in importing the commodity to utilize it and meet the shortfall.
“We have completed our work, but there are still some bottlenecks at the government level,” he said. “If we are unable to import due to these issues, only the government would be responsible for the crisis.”
UGDC chief said import by private companies will bridge the demand and supply gap and save Rs97 billion of capacity payments being paid to the terminal operators.
Shabbir Sulemanji, chairman of All Pakistan CNG Forum said SSGC said there would be no indigenous gas available to the CNG stations from October onwards until the gas crisis is over.
“SSGC said CNG stations should shift onto RLNG in order to get a seven-day supply of gas,” said Sulemanji. “SSGC has categorically clarified that there will be no gas load shedding on RLNG since SSGC has approached the federal government to acquire additional capacity of RLNG.”
Meanwhile, analysts believe that Pakistan is unable to benefit from declining prices of LNG in the international market because of fixed contracts.
“RLNG prices have witnessed a turnaround globally from the start of 2019, due to the increasing RLNG liquefaction capacity,” said analyst Nabeel Dochki at Taurus Securities. “However, Pakistan was not able to benefit from it, as Pakistan is in a fixed contract with Qatar Gas, Gunvor and Eni at a slope of 13.37 percent to crude oil prices.” Nevertheless, benefits of lower RLNG prices have now started to accrue for Pakistan after decline in international oil prices during the pandemic.
The imported RLNG rate notified by Oil and Gas Regulatory Authority now varies around $5 to $6.5 per million metric British thermal unit, which is expected to be at $7.8/mmbtu for September 2020.
“Government has increased the reliance towards RLNG due to its lower prices which are far cheaper than that of furnace oil prices, especially for power generation,” said Dochki. “Consequently, average slope declined to 11.67 percent in July 2020.”
