Construction of Pakistan’s first private sector LNG terminal to start in Jan 2021

[Azure]

Construction of Pakistan’s first private sector LNG terminal to start in Jan
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ISLAMABAD: After the government opened up the energy sector under its ‘ease of doing business’ strategy, a multinational company will start construction on the first merchant Liquefied Natural Gas (LNG) terminal in the country by end of January 2021.

“A vibrant structural framework is very much in place under which construction work on the first private sector LNG terminal will start by end of the January, whereas physical work on another merchant terminal will commence in second half of the year,” a senior official privy to the development told APP.

According to the officials, the Oil and Gas Regulatory Authority (OGRA) will issue the construction licence within a day or two, while all other agreements, permissions and arrangements have almost been finalised.

After setting up the terminals, the companies would import and sell the commodity on their own without any involvement of the government except in regulation matters.

It may be noted that the country’s existing natural gas reservoirs are depleting fast at a rate of 9.5 per cent per annum. LNG is the only available instant remedy to bridge the increased gap between demand and supply.

Currently, Pakistan’s indigenous gas production is around 3.7 Billion Cubic Feet per day (BCFD) against the demand of 6 BCFD.

According to a recent report by OGRA, the gap between demand and supply of gas could increase by 5,389 Million Cubic Feet per day (MMCFD) by 2029-30.

Construction of Pakistan’s first private sector LNG terminal to start in Jan

ISLAMABAD: After the government opened up the energy sector under its ‘ease of doing business’ strategy, a multinational company will start construction on the first merchant Liquefied Natural Gas

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Private LNG Terminal Developers Demand Waiver of Certain Regulatory Requirements

Posted 38 mins ago by Syeda Masooma

Private sector entities engaged in setting up liquefied natural gas (LNG) terminals have sought guarantees and waivers from certain obligations and regulatory approvals.

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The government has allowed five parties in the private sector to set up more LNG terminals. However, it has been made clear that the government will not bear any financial risk, which exists with the already existing public sector LNG terminals.

Simultaneously, the existing LNG terminals also have plans to replace the Floating Storage and Regasification Unit (FSRU) without financial risk for the government.

The setting up of new LNG terminals has been delayed as the developers seek to win a waiver from the commitments, included in the implementation agreement (IA). They have reached out to the Port Qasim Authority (PQA) and the government for this purpose.

The PQA has already waived the fee for the inland dumping site, in a similar move to the exemption given to the existing LNG terminals set up with state guarantees.

One of the private developers, Tabeer Energy Private Limited (TEPL), has said that it will not make the remaining payment of $8 million if its demands are not met. The company has written a letter to PQA saying that it is the engineering, procurement, and construction (EPC) contractor’s ability to meet the 24-month construction timeline, which was contingent on how the pandemic evolved.

Since the pandemic was not prevalent at the time of issuance of the provisional letter of intent (LOI) and/or PQA 2019 guidelines, the company has requested PQA to allow up to a 30-month timeline.
Another company, Energas, has refused to pay a royalty to PQA.

Energas said the provisional LOI specified a 25 percent increase in royalty after every five years. However, PQA has unilaterally amended the structure of royalty. Energas has called for reverting it in a letter written to PQA.
The company has also asked for deferring the application of certain regulatory conditions.

Private LNG Terminal Developers Demand Waiver of Certain Regulatory Requirements

Private sector entities engaged in setting up liquefied natural gas (LNG) terminals have sought guarantees and waivers from certain obligations

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