Home > Government comes under fire over LNG purchase at ‘high prices’

Government comes under fire over LNG purchase at ‘high prices’

The terminal’s tolling fee was 66 cents per mmbtu, which Abbasi termed the lowest in the world. PHOTO: AFP

The terminal’s tolling fee was 66 cents per mmbtu, which Abbasi termed the lowest in the world. PHOTO: AFP


Senators belonging to the Pakistan Peoples Party (PPP) on Thursday chastised Petroleum and Natural Resources Minister Shahid Khaqan Abbasi for spot purchases of liquefied natural gas (LNG) from Qatar at high prices.

In a meeting of the Senate Standing Committee on Petroleum and Natural Resources, PPP Senator Muhammad Yousaf alleged that the government had arranged LNG supply from Qatar’s spot market at an average price of $8 per million British thermal units (mmbtu), which was higher than the price of $7.35 paid by Japan for gas import.

He pointed out that vessels took 22 days to reach Japan from Qatar whereas ships could arrive in Pakistan waters in just three days. “The freight for Pakistan-bound ships was lower than that for Japan,” he said and disclosed that $58 million had been paid to Engro’s LNG terminal in capacity charges.

He believed that dealers in Qatar were acting like a mafia and creating hurdles in the way of clinching an LNG supply deal at competitive rates. The demand of commission was also a stumbling block, he said.

Another PPP senator, Saeed Ghani, reminded the petroleum ministry that the LNG terminal at Port Qasim had started functioning over five months ago, but the government could not enter into a contract for LNG purchase from Qatar.

The heads of Sui Northern Gas Pipelines Limited and Central Power Purchasing Agency had resigned because of concerns over the potential LNG deal, he said and asked, “how do you say all things are going on smoothly?”

Petroleum Minister Abbasi blamed media for scandalising the matter and insisted that all hurdles had been removed.

“Everything will be finalised for the signing of a long-term contract with Qatar after the Oil and Gas Regulatory Authority approves the LNG price,” he said, claiming the deal with Qatar would be the best in Asia. “Japan imported LNG from Qatar at $7.35 per mmbtu, but we will bring LNG at less than $7 in line with current oil prices,” he said and stressed that the country would save $2 billion per annum if all oil-based power plants were replaced with LNG fuel.

Abbasi called LNG a game changer for Pakistan while outlining the fact that domestic gas production had been stagnant at 4 billion cubic feet per day for the last 10 years. Now, it has dropped to 3.8 billion cubic feet per day.

Regarding capacity charges, the minister said $100 million per annum would be paid to the LNG terminal operator. The terminal’s tolling fee was 66 cents per mmbtu, which Abbasi termed the lowest in the world. He also spoke about the Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline projects. Progress had been slow on the IP project because of international sanctions and the Tapi pipeline was a complicated project as it would pass through the Afghan territory, he said.

“Turkmenistan has taken an initiative to finance the $25 billion Tapi pipeline and its groundbreaking ceremony will take place in the next three months.”

Reko Diq

Senate Committee Chairman Mir Israrullah Khan Zehri revealed that the Balochistan government had been asked to give in-camera briefing on the Reko Diq copper and gold mining project. However, the provincial government turned down the request.

“The parliamentary committee has the right to know about the progress on the project,” he said.

Countering him, Senator Muhammad Azam Khan argued that the committee could not ask Balochistan to give a briefing on the project after the passage of 18th Constitutional Amendment.

Abbasi said the company working on the project had gone to the international court of arbitration and liability had also been put on the federal government. He added that the federal government was assisting Balochistan in the project and it could brief the committee.

Published in The Express Tribune, October 2nd, 2015.

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