Government to Import LNG Itself Until Resolution of New Terminals Issue

The Ministry of Maritime Affairs (MoMA) has proposed to the government to import LNG itself till new terminals are commissioned.

LNG will be imported as per available extra capacity in the existing pipeline network, reported Business Recorder.

In its meeting held on August 2, 2019, the Cabinet Division had decided to issue provisional letters of interest (LoI) to all five LNG terminal operators that have conducted QRA on the sites assigned to them be issued.

Consequently, Port Qasim Authority (PQA) issued LoI to all five terminal operators, as a result of which two terminal operators (M/s Energas Terminal (Pvt) Limited and M/s Tabeer Energy (Pvt) Limited) accepted the terms and conditions and deposited $2 million each, as part of concession fee (out of total $10 million concession fee each) with remaining $8 million to be deposited upon signing of Implementation Agreement (IA).

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The newspaper reported that the Ministry of Maritime Affairs, in collaboration with the Petroleum Division, facilitated the new LNG terminal developers in securing no-objection certificates (NOCs) from various Ministries/Departments for expeditious completion of new LNG terminals.

However, two issues have impeded the implementation of the project; allocation of capacity in the existing and a planned gas pipeline to transmit LNG from new terminals and grant of NOC by the Ministry of Defence to establish LNG terminals at Port Qasim.

Ministry of Defence finally issued NOCs to both the new terminal developers on October 16, 2020. However, Petroleum Division has yet to respond on the matter.

There are concerns that the Ministry of Energy (Petroleum Division) may issue the existing pipeline capacity to the terminal operators on a first-come, first-serve basis, which was in favor of the two already existing terminals.

Another important stakeholder in this process is Oil and Gas Regulatory Authority (OGRA), which holds control over the transportation agreement since that is contingent upon a gas transmission license by OGRA.

OGRA has received requests and documents from both the new terminal developers for the grant of gas transmission license, construction and gas sale, and marketing license.

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In the meantime, the Ministry of Maritime Affairs has recommended that if there is any pipeline capacity in the existing pipeline network, it may be used by the Government importing LNG itself till the time new terminals are commissioned,x and the Government-used existing pipeline capacity can be transferred to new terminals.

The maritime ministry has also recommended that any capacity, whether ‘unutilized’ or ‘excess,’ is offered to private parties only on a short term 3-month forward visibility basis, after approval from all relevant stakeholders.