Oil, Gas and Refinery Projects update

[ghazi52]

KARACHI: Pakistan Petroleum Limited (PPL) plans to export up to 400,000 barrels of crude condensate produced from its Gambat South Block, as the company explores opportunities to grow internationally and become a regional leader in exploration and production, The News has learnt.

According to a company document, the PPL aims to export as much as 32,500 barrels/month through a third party contractor.

Gambat South is located in District Sanghar, Sindh. The block was granted to PPL in December 2009. Later, the company farmed out 10 percent of its working interest in the block to Asia Resources Oil Limited and 25 percent to Government Holdings (Private) Limited in June and July 2010, respectively.

So far, nine discoveries, Wafiq, Shahdad, Sharf, Kinza, Faiz (two formations), Kabir, Hatim, and Zafir have been made in the block with the latest in April 2017. Last year Gambat South Block produced 830 barrels of condensate/day.

An industry official said country’s oil production had increased but this increase was coming in the shape of condensate and other light crudes, which the local refineries could convert primarily into furnace oil (FO). “Since furnace oil demand has declined to zero and a local refinery is already exporting its produce, the crude condensate exports will increase going forward,” the official added.

The PPL, the pioneer of the natural gas industry in the country, exported crude condensate worth Rs1.24 billion for the year ended June 30, 2019. According to Pakistan Bureau of Statistics (PBS), country’s overall crude/condensate exports were $110.319 million in the first half of current fiscal year.

Pakistan is an energy deficient country and relies heavily on hydrocarbons imports. The country produces around 85,000 barrels of oil/day which constitutes around 15 percent of the oil consumption, with the rest being imported.

The news

 

[ghazi52]

Shale gas updates...........

ISLAMABAD - Brisk drilling was in progress at the first shale gas and oil well near Hyderabad city of the Sindh province to acquire geological and engineering data for further planning of the pilot project. “The drilling, started on December 14, 2019 at the Shale gas well, KUC-01 (Kunar Unconventional-1), is in progress. As of January 30, 2020 the well was drilled to depth of 2,487 meters that will be taken to 3,910 meters in Chiltan formation,” according to an official document available with APP. Currently, the Oil and Gas Development Company Limited (OGDCL) and United Energy Petroleum Limited (UEPL) are undertaking shale gas & oil exploration projects in Sindh Province. A study, completed in collaboration with United States Agency for International Development in 2015, had identified massive deposits of shale gas and oil, which needed further evaluation to determine the cost of extraction. According to the EIA Shale Gas Assessment Report 2015 (USA); Pakistan has around 105 Trillion Cubic Feet of recoverable shale gas and 9.1 Billion Barrels of recoverable shale oil resources. The successful exploitation of shale gas could provide Pakistan with a sustainable supply of natural gas and oil (against EIA estimated recoverable gas resources), the OGDCL observed before initiating the drilling work. Pakistan’s estimated natural gas demand stood at about 7-8 Billion Cubic Feet per Day (BCFD), out of which less than 4 BCFD was being produced locally. “There is 50 percent of gas shortfall in the energy mix needs of the country.” The OGDCL had clarified that the identified resources were not booked as “reserves” and needed to be further rationalized through additional technical information regarding the Shale Reservoir.

The Nation

 

[ghazi52]

South Korea’s Posco Offers its Lowest Bid to Supply LNG to Pakistan

For the very first time, South Korea’s Posco International Corp is set to supply liquefied natural gas (LNG) supplier to Pakistan LNG.

Posco has offered the lowest bid of 7.9673% slope to Brent for the supply of LNG cargo on September 12-13, with Socar Trading submitting the lowest bid of 6.9511% for September 25-26 LNG import tender.

It is very unusual for Posco to participate in Pakistan LNG’s import tender, reported Reuters. This could mean that the South Korean company is trying to expand its third-party trading activities.

According to a notice on the company’s website, six companies were technically qualified for an import tender by Pakistan LNG to buy two cargoes of liquefied natural gas (LNG) for delivery in September

 

[ghazi52]

Pakistan’s First Ever Euro 5 Fuel

Today marks the arrival of Pakistan's First Ever Euro 5 Hi-Octane Fuel by PSO!

Coming soon to PSO outlets............

 

[ghazi52]

A glimmer of hope

Khaleeq Kiani

04 Aug 2020

Enhanced utilisation of LNG terminals will reduce the gas tariff by offering unutilised capacity to private parties. — AFP/File


THE government finally decided last week to auction the unutilised capacity of liquefied natural gas (LNG) terminals that it owns. It decided to allow third-party access (TPA) to private firms to import the product for self-consumption or onward sales to other consumers.

Private companies had been demanding it for a couple of years. At least three firms had already secured licences from the regulator.

The decision coincided with the lowest-ever bid for LNG cargo that state-run Pakistan LNG Ltd (PLL) received from State Oil Company of Azerbaijan Republic (SOCAR). At 5.74 per cent of Brent or $2.2 per million British thermal units (mmBtu), SOCAR’s bid is the lowest since Pakistan entered the LNG business five years ago. None of the traditional traders — Gunvor, Trafigura and PetroChina at 7.84pc, 8.35pc or 10.38pc of Brent, respectively — could even get close to SOCAR.

Both are positive developments. The first decision by the Economic Coordination Committee (ECC) should create a competitive environment. The Ministry of Energy (MoE) had proposed allowing third-party access to LNG terminals to use excess capacity or government-contracted unutilised capacity. The ECC “approved the proposal for selling the unutilised capacity”.

Enhanced utilisation of LNG terminals will reduce the gas tariff by offering unutilised capacity to private parties

The decision comes after a lot of debate among cabinet members as public-sector companies were reluctant to give up their monopoly and, to some extent, because of faulty supply-chain agreements. The discussion in the cabinet focused on revenue sharing while maintaining the priority rights of the government on the use of contracted capacity. The sale of unutilised government-contracted capacity has a direct bearing on excess capacity.

The second development – the low bid for LNG cargo – apparently is a message that Pakistan needs to reach out to the owners/source of LNG like SOCAR or any other producer/supplier from source countries like Australia, Malaysia, Qatar or the United States to secure a better deal that may be easier in the private sector.

This comes at a time that a long-term agreement with Gunvor at a higher price of 13.37pc of Brent is due to expire in January 2021 followed by another having a price of 11.62pc of Brent in 2022. The public-sector companies now want to have service charges on private-sector imports for processing and transportation etc.

According to the MoE, at present two LNG regasification terminals are operational in the country with the total physical capacity of first and second terminals of 690 million cubic feet per day (mmcfd) and 750mmcfd, respectively. For the first terminal, SSGC has contracted the regasification capacity of 630mmcfd with a peak capacity of 690mmcfd on the best-effort basis as and when required and is utilising it fully through PSO-contracted term cargoes. At the first terminal, the sponsor (Engro) is in the process of replacing the floating storage and regasification unit (FSRU) with a bigger ship and will create private excess capacity later this year.

For the second terminal, Pakistan LNG Terminals Ltd (PLTL) has a contracted capacity of 600mmcfd with the peak capacity of 690mmcfd on a reasonable endeavour basis as and when required. At this terminal, PLL is importing two LNG cargoes per month (nearly 200mmcfd) on a term contract basis whereas additional LNG imports are made through spot tenders to meet gas requirements in the country.

The second terminal is underutilised with the average utilisation of nearly 62pc and 51pc in 2018-19 and 2019-20, respectively, with the drop in the last year being on account of Covid-19. In March 2021, RLNG supply of 150mmcfd to K-Electric will begin on a firm basis and the utilisation will go above 70pc.

Due to the underutilization of the second terminal, the regasification tariff works out at the higher level of $0.6159 per mmBtu and $0.7273 per mmBtu in 2018-19 and 2019-20, respectively, against the levelised contracted tariff of $0.4177 per mmBtu had the terminal operated at 600mmcfd. The resultant higher terminal tariff caused an additional burden of $32.5m and $43.2m in 2018-19 and 2019-20, respectively. That was shifted to the consumers of RLNG in the form of higher gas prices.

This called for enhanced utilisation of LNG terminals to reduce the tariff by offering unutilised capacity to private parties. The MoE advocated offering the unutilised government-owned terminal capacity to private parties on a short-term (three-month) forward visibility basis as the most viable option keeping in mind the increasing utilisation by the government itself. This will mean the government will continue to have priority rights of terminal utilisation and maintain operational flexibility.

The MoE, however, fears that TPA could result in some bulk consumers shifting to private suppliers, thus increasing the take-or-pay risk for the government on account of three mega power projects. Hence, it is reluctant to make a long-term commitment with the private sector for unutilised terminal capacity.

Various private parties have expressed their interest in availing unutilised government-contracted capacity at the second terminal. All interested parties having the necessary regulatory authorisation and contractual arrangements will be given access to the available unutilised terminal capacity. Under this TPA framework, private parties will import LNG. The relevant state entity will only provide regasification services and deliver RLNG at the combined terminal station to the importing private parties on the Ogra-determined tariff.

TPA arrangements for excess and unutilised capacity will be exercised through an agreement between the stakeholders on the storage and handling of comingled cargoes and will be administered by Ogra until the promulgation of TPA Rules for LNG terminals. This capacity will be offered to private parties through auction and, in case the total requirement of all eligible interested parties exceeds the total offered capacity, the capacity will be allocated proportionally.

Moreover, the Power Division and the Ministry of Industries will be required to firm up their RLNG requirements at least six months in advance on a recurring basis, enabling state entities to assess unutilised capacity and seek the private sector’s interest in it. That has been a major challenge.

The inability of the Power Division to accurately forecast its LNG demand has been resulting in oversupplies of gas amid low power demand and gas shortages amid peak power demand, exposing gas companies to heavy liabilities and safety challenges. That is where the government will have to put its house in order.

Published in Dawn, The Business and Finance Weekly, August 4th, 2020

 

[ghazi52]

 

[ghazi52]

SARA Pakistan’ Energy policy set to unveil!

You may be wondering what is S.A.R.A (Sustainable, Affordable, Responsible, Available)

The key features are as follows;

1- All LNG terminals will be privatised

2- Anyone can import LNG and government will charge rent to transport gas through its pipeline

3- This is to break monopoly of existing LNG companies and price competitiveness

4- Euro 5 petrol only can be allowed to import from September 1st

5- Euro 5 Diesel only allowed to import from January 1st

6- Refineries will be allowed to produce Euro 2 till up-gradation

7- Refineries will be given incentives to upgrade

8- Massive auction of oil blocks. 20 blocks auction in September

9- Another 20 blocks to be auction next year

10- LPG policy will be released in next 10-15 days. To make fuel cheap and competitive

The government has decided to make energy market competitive and import dependence lower. Exciting time ahead. Stay tune with energy sector investments.

 

[ghazi52]

New gas reserves discovered in Ghotki Sindh


- According to a statement issued by Mari Petroleum Company, the company has discovered new gas reserves at Ghotki district.

This is the sixth consecutive gas discovery by Mari Petroleum Company in the area. According to preliminary results, the well produces 3.1 million standard cubic feet gas per day.

Mari Petroleum Company statement added the well was drilled down to a depth of 1,250 metres. According to experts, the discovery of this new gas reserve will help meet the gas demand in the country.

 

[ghazi52]

Gov’t plans to start ‘physical work’ on PARCO coastal refinery before next summer

August 26, 2020

News Desk

The Petroleum Division is planning to start ‘physical work’ on the much-delayed Pakistan Arab Refinery Company (PARCO) Coastal Refinery before the next summer to achieve self-reliance in the oil production sector.
“All formalities including the refinery’s design, licensing, engineering work, sizing and product-slab have been completed. Hopefully the physical work on seven- billion dollar project will start before next summer after its formal groundbreaking,” a senior official privy to petroleum sector developments told APP.
The refinery project, which was approved in October 2007 but remained suspended due to paucity of funds, would have the capacity to refine 250,000 barrels oil per day, equal to 13 million tons of petroleum products per annum.
The official said the Petroleum Division had completed all the necessary requirements to upgrade the other four existing oil refineries operating in the country, terming the coastal refinery ‘biggest project’ of the country
The refinery would be set up at Lasbela district of Balochistan province where the federal government had allocated 1,811 acres (7.3 km2) land for the project.
According to an official report, currently as many as five refineries are operating in the country with overall installed capacity of 417,400 barrel per day (BPD) oil and contributing significantly in meeting the petroleum needs through indigenous production.
Out of which, Pak Arab Refinery Limited (PARCO) has 100,000 BPD oil refining capacity, Attock Refinery Limited (ARL) 53,400 BPD, Byco Petroleum Pakistan Limited (Byco) 150,000 BPD, National Refinery Limited (NRL) 64,000 BPD and Pakistan Refinery Limited 50,000 BPD.
During the last fiscal year, the petrol consumption in the country stood at 7.6 MTs per annum, out of which 30 percent was being catered from local refineries and rest was being imported to meet the national demand.
Similarly, the consumption of diesel was around 7.3 MTs/annum. The local production could meet 65 percent of the total demand, while rest was being imported.
At present, thirty Oil Marketing Companies (OMCs) including Pakistan State Oil Company Limited (PSOCL), Shell Pakistan Limited (SPL), Total Parco Pakistan Limited (TPPL), Attock Petroleum Limited (APL), Gas & Oil Pakistan Private Limited (GOPPL) and Hascol Storage Limited (HPL) are operating in the country.
Among these OMCs, PSO leads with an overall market share of 42.5 percent, followed by APL with 10.9 percent, TPPL 10.3 percent, HPL 9.8 percent and SPL 8.3 percent.
OMCs receive, store and distribute the petroleum products in the country by utilizing their supply arrangements and infrastructure, comprising of their installations, storage depots, oil pipelines and retail outlets.
The bulk of 19.68 million tons of petroleum products required by the Pakistan’s market is transported by road (around 74 percent), Oil pipelines (24.4 percent) and Railways (1.5 percent).

 

[ghazi52]

Pakistan, Russia likely to decide fate of 1,100km North South Gas Pipeline next month

Pakistan and Russia may take important decisions during the next month for the transportation of Regasified Liquefied Natural Gas (RLNG) from #Karachi to #Lahore by setting up a 1,100 kilometer (km) North South Gas Pipeline (NSGP).

A decisive meeting between Pakistan and officials from the Russian Federation is likely to be held during September 2020. The meeting will take important decisions regarding the NSGP project.

An agreement for the construction of the NSGP can possibly be inked between the two countries if Russia accepts Pakistan’s proposal to reduce the cost of the project and awards the project to Gazprom, a Russian energy company, in partnership with Pakistani companies

 

[ghazi52]

 

[ali_raza]

This is going on for the last ten years, lot of work has been done, it is PARCO project, UAE has 49% share, only now they are putting money.

as usual pakistani government is at fault
land is the issue

 

[ghazi52]

https://www.thenews.com.pk/writer/khalid-mustafa




North-South Gas Pipeline: Pakistan accepts latest structure headed by ETK


September 1, 2020

ISLAMABAD: In a major development, Pakistan has finally accepted the latest structure headed by the ETK earlier extended by the Russian government paving way for starting work on construction of the much-touted North-South Gas Pipeline Project (NSGPP).

The project will pave way for increased Pak-Russia strategic partnership in more sectors of economy. “All the stakeholders of the State of Pakistan including the ‘powerful circles’ have given go-ahead to the new structure, which is why the Petroleum Division has vigorously started working on the project,” a senior official of the Energy Ministry told The News.

The government wants to increase the scope of capacity and design of the project to transport 1.6 billion cubic feet gas per day (bcfd) as earlier it was proposed with the capacity to transport 1.2bcfd.

In the years to come such project with capacity to transport 1.2 bcfd RLNG will not be enough to cater to future gas demands which is why the authorities concerned are mulling over increasing the capacity of the proposed 11,00 kilometers North-South Gas Pipeline Project to transport 1.6 bcfd RLNG.

Though Pakistan took over four and a half years in finalizing the structure, it has ensured that the companies involved in the structure are not blacklisted and have the requisite experience of laying down such a mega pipeline.

More importantly, the Russian Energy Ministry has its state-owned company in the new structure, as the project will be executed under the government-to-government agreement. The ETK company has the experience to lay down 4,000-kilometer pipelines and rich expertise in supplying the related equipment. To a question, he said Russia was the only country in the world, which had the biggest network of pipelines.

“We have carried out strict and detailed due diligence of the latest structure independently and after getting satisfied we have approved the new structure and now Pakistan and Russia will initiate talks in September for monitoring and implementation of the project,’’ the official said.

‘’We want to initiate the project as soon as possible particularly keeping in view the recent judgment of the Supreme Court on Gas Infrastructure Development Cess (GIDC) on August 13.’’

As per the proceedings of the Apex Court on GIDC, the Finance Division had given an undertaking that Rs295 billion amount in the head of GIDC was lying with it and in case of cash call from the Petroleum Division, it will release the said amount and over Rs417 billion is to be collected from various sector of economy in 24 installments. The Petroleum Division has geared up its efforts to collect the said amount. Under the new scenario, the government feels itself in a comfort zone with regard to the availability of liquidity on account of undertaking given by the Finance Division in the Supreme Court.

“Now we have the option to increase the volume of Pakistan’s equity in the proposed North-South Gas Pipeline to reduce returns to Russian companies and currently many options are under review on how to advance on the project with Russian counterparts. Before the SC judgment on GIDC, Russian companies were not only supposed to provide financing, but also the technical assistance, pipeline and compressors. Now with the liquidity and the scene has changed.”

The senior official said the Petroleum Division had proposed 7th meeting of Pakistan Russian Joint Coordination Committee for implementation of the project in the last week of September to finalize a way forward on how to advance on the project along with the commercial agreement. Spokesman for the Petroleum Division, however, skipped the question if Pakistan had accepted the latest structure but responded saying that in view of the Supreme Court judgment on GIDC, the Petroleum Division intends maximum utilization of GIDC for the North South gas pipeline.

The Petroleum Division looks forward to technical cooperation with the Russian government on building the pipeline. Therefore, it has proposed to the Russian Ministry of Energy for a meeting in September to discuss the project structure and informed that project implementation is required to be done at the earliest. The project currently envisages supply of 1.2 bcfd over 1100km from Karachi to Lahore.

North-South Gas Pipeline: Pakistan accepts latest structure headed by ETK

ISLAMABAD: In a major development, Pakistan has finally accepted the latest structure headed by the ETK earlier extended by the Russian government paving way for starting work on construction of the...

www.thenews.com.pk

 

[ghazi52]

The case for the private import of LNG

Energy alternatives need to be considered dynamically to optimise commercial efficacy


Ibtisam Ahmed
September 03, 2020





Pakistan’s natural gas demand-supply gap, currently at 1,440 MMCFD, is projected to rise to 3,684 MMCFD by 2024-25 and 5,389 MMCFD by 2029-30. For a country that relies on indigenous and imported gas for more than 40% of its energy requirements, this is an alarming situation. And it has been here for some time now. In fact, the country’s industrial sector has been reeling from the constraint for the better part of this decade as even with the induction of imported RLNG in 2015 the country is far from overcoming its energy woes.


This industrial bottleneck has also had a profoundly adverse impact on the country’s export-oriented industries and, consequently, on its external account. But despite the incumbent government’s overwhelming focus on correcting the current account deficit (CAD) and growing exports, avenues of bridging this energy gap remain underexplored due to ineffective decision-making structures and non-existent employment of across the board cost-benefit comparisons.
The country’s industrial sector has been operating below capacity for some time now, but opportunities to optimise production and consequently exports, in the wake of historically low energy prices, have been woefully underutilised. RLNG prices plummeting to $2/MMBTU presented the country’s industry with an extraordinary opportunity, but not only were the private importers not allowed to jump in until prices had rebounded higher, the subsequent go-ahead remains ineffective due to the monopolisation of state-owned enterprises.

The country currently has two LNG terminals with capacities of 690 MMCFD and 750 MMCFD. The second terminal remains underutilised with 62% and 51% utilisation in FY19 and FY20, respectively. Private usage of this idle capacity seems to be a no-brainer as it would not only, in the prevailing price scenario, provide a cheaper source of energy for many industrial users and therefore help in enhancing their export competitiveness, but it will also allow indigenous gas to be diverted to uses it is more suited for and reduce the probability of gas shortage for domestic consumers.


Despite the spot price rebounding from around $2 in April, the current price still enables feasible induction into several industrial uses. In fact, in the prevailing price scenario, the move could open up avenues of coveted foreign exchange earnings, including through unconventional commodities like Urea as RLNG (after accounting for averaged relevant T&D costs) comes up to, at a $4 spot price, around PKR915/MMBTU, cheaper than PKR1021/MMBTU that the fertiliser sector currently pays for its fuel gas and which is marked for an upward revision. At a $2 spot price, the cost would have been reduced to PKR575/MMBTU, which would have been even cheaper than the subsidised RLNG feedstock price designated for two companies at PKR756/MMBTU.
With the country’s domestic Urea demand projected to fall short of production capacity by 0.6-0.8 million tonnes in 2020, the surplus could have translated into a foreign exchange earning to the tune of USD125-170mn. A substantial differential, especially when put into context of the commemorative reception of a USD424mn surplus in July 2020 and the FY20 CAD coming up to USD2.96bn.
The regulatory framework, however, prevents the private sector from exploiting such opportunities. Even without the projected fall in domestic demand, the import structure has created an unnecessary market anomaly, restraining private companies from switching to a low-cost energy alternative. The problem stems from the markedly centralised nature of essentially commercial decision making. The optimum capitalisation of emerging opportunities and pertinent response measures can only be ensured when the regulatory setup allows the decision-making in this regard to be divested to private entities which are exposed to the economic consequences of these decisions. These entities are best placed to make the relevant cost-benefit comparisons and act upon them when it becomes commercially viable.

In the context of RLNG, this becomes even more important because Pakistan remains a highly price-sensitive market. This means that commercial operations on the basis of cost calculations that might seem feasible in the current price scenario might not be so a few months from now. Centralised policymaking seems to make little sense in this context as it usually is quite protracted due to the required on boarding of a long list of regulatory stakeholders taking months if not years to complete, resulting in timelines that make dynamic decision-making impossible.

Moreover, there is also an urgent need to expand the country’s RLNG import capacity, which currently stands at 1440 MMCFD, if the country intends to sustainably curtail its external account deficit. Import restrictions can only help for so long to manage the current account balance and cannot be relied upon indefinitely as they have natural repercussions for the economic growth of the country. In order to balance the management of current account deficits with economic growth targets,
Pakistan needs to expand its export base which requires investing in its industrial sector and plugging bottlenecks. With the local energy reserves plummeting sharply and hindrances in industrial operations caused by the resulting constraints all too familiar, energy alternatives need to be considered dynamically to optimise commercial efficacy and competitiveness of the domestic industry.

RLNG is already an important alternative with its share in natural gas supplies increasing to 27 percent in FY2018-19 from 24 percent in the preceding year and the trend is expected to sustain. It is also an alternative which can be employed at a relatively shorter timescale than others. Against this backdrop, it has become more important than ever then to prioritise sourcing optimisation, and to ensure that effective decision making and cost-benefit comparisons are allowed for private undertakers.

The case for the private import of LNG | The Express Tribune

Energy alternatives need to be considered dynamically to optimise commercial efficacy

tribune.com.pk

 

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The federal government approved 2 new LNG terminals at Port Qasim conditionalising them to NOCs from the defence ministry within 30 days, while the Petroleum Division will allocate the capacity to them in the existing pipeline on first come first served basis.