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The government is considering constructing a Liquefied Natural Gas (LNG) terminal at Gwadar Port in a bid to enhance the capacity for the storage of LNG in the country with the objective of replacing imports of the more expensive Furnace Oil (FO), it is learnt.
According to sources privy to the developments, there is no possibility of the completion of Iran-Pakistan (IP) or Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects in the foreseeable future, while local gas reserves are gradually depleting. As a result Pakistan would be compelled to enhance dependence on the imported FO to produce power. However, the government has opted to enhance reliance on the relatively cheaper LNG.
For this purpose, top government officials have decided to build a LNG terminal at Gwadar Port, for which modalities are being finalised and would soon be announced. If the government constructs an LNG terminal in Gwadar with a total capacity of 1 BCFD of LNG it would cost $1 billion.
According to an assessment by the Ministry of Petroleum, domestic gas production will drop from the current 4.2 Billion Cubic Feet per Day (BCFD) to 2.5 BCFD in 2019-20, unless exploration activities bear fruit. At present, total gas shortfall is 1.88 BCFD, which would jump to 4.8 BCFD in 2019-20. To bridge the increasing gas demand/supply gap, the economic managers have planned to import up to 2 BCFD of LNG, 750 MMCFD of natural gas from Iran and 1.365 BCFD from Turkmenistan. It also wants to enhance supplies from domestic sources to meet energy needs in future, for which this year the government has awarded 50 Petroleum and Concession blocks to local as well as international oil/gas exploration and production companies.
The government has allowed Elengy Terminal Pakistan Limited (ETPL) to start the construction of Liquefied Natural Gas (LNG) terminal at Port Qasim Karachi which would initially handle around 200Million Cubic Feet per Day (MMCFD) of LNG and has total capacity to handle 600 MMCFD of LNG.
According to a senior government official, Pakistan is going to begin talks with Qatar to finalise plans to import 3.5 million tons of LNG per year. According to the government officials, Pakistan is also considering importing up to 200 MMCFD of LNG from India via Wagah border, but India is offering a high price of $22 per MMBTU which compares unfavourably to the international price of around $17 per MMBTU. Pakistan has offered $18.5 to $19 per MMBTU to India which is importing the commodity at $14 per MMBTU.
"The decision would enable the government to save around Rs 60 billion per annum in oil imports and alleviate the energy crisis. In addition, it would have a positive impact on a circular debt and is expected to reduce the weighted average electricity tariff by at least 10%, if LNG were to replace HFO and HSD in existing power generation units," officials added.
Elengy was awarded a 15-year contract, which comes with servicing fees of $0.66 per MMBTU. According to the agreement, Elengy has 11 months following approval to build the terminal, the official said. In the second, the phase of construction, the complex would double its capacity to 400 MMCFD. Pakistan and Qatar signed a Memorandum of Understanding (MoU) for LNG imports in February 2012, but progress was slow due to disagreements over the gas price.
"In the past 8 years LNG prices in the international market have increased manifold, had we begun to import of LNG in 2008 or 2009 when prices were between $12 to $13 per MMBTU we could have saved billions of dollars for the country; at present prices are hovering around $16 to $17 per MMBTU and any agreement today would be that much more costly," the official stated.
Gwadar Port: government mulling constructing LNG terminal | Business Recorder
According to sources privy to the developments, there is no possibility of the completion of Iran-Pakistan (IP) or Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects in the foreseeable future, while local gas reserves are gradually depleting. As a result Pakistan would be compelled to enhance dependence on the imported FO to produce power. However, the government has opted to enhance reliance on the relatively cheaper LNG.
For this purpose, top government officials have decided to build a LNG terminal at Gwadar Port, for which modalities are being finalised and would soon be announced. If the government constructs an LNG terminal in Gwadar with a total capacity of 1 BCFD of LNG it would cost $1 billion.
According to an assessment by the Ministry of Petroleum, domestic gas production will drop from the current 4.2 Billion Cubic Feet per Day (BCFD) to 2.5 BCFD in 2019-20, unless exploration activities bear fruit. At present, total gas shortfall is 1.88 BCFD, which would jump to 4.8 BCFD in 2019-20. To bridge the increasing gas demand/supply gap, the economic managers have planned to import up to 2 BCFD of LNG, 750 MMCFD of natural gas from Iran and 1.365 BCFD from Turkmenistan. It also wants to enhance supplies from domestic sources to meet energy needs in future, for which this year the government has awarded 50 Petroleum and Concession blocks to local as well as international oil/gas exploration and production companies.
The government has allowed Elengy Terminal Pakistan Limited (ETPL) to start the construction of Liquefied Natural Gas (LNG) terminal at Port Qasim Karachi which would initially handle around 200Million Cubic Feet per Day (MMCFD) of LNG and has total capacity to handle 600 MMCFD of LNG.
According to a senior government official, Pakistan is going to begin talks with Qatar to finalise plans to import 3.5 million tons of LNG per year. According to the government officials, Pakistan is also considering importing up to 200 MMCFD of LNG from India via Wagah border, but India is offering a high price of $22 per MMBTU which compares unfavourably to the international price of around $17 per MMBTU. Pakistan has offered $18.5 to $19 per MMBTU to India which is importing the commodity at $14 per MMBTU.
"The decision would enable the government to save around Rs 60 billion per annum in oil imports and alleviate the energy crisis. In addition, it would have a positive impact on a circular debt and is expected to reduce the weighted average electricity tariff by at least 10%, if LNG were to replace HFO and HSD in existing power generation units," officials added.
Elengy was awarded a 15-year contract, which comes with servicing fees of $0.66 per MMBTU. According to the agreement, Elengy has 11 months following approval to build the terminal, the official said. In the second, the phase of construction, the complex would double its capacity to 400 MMCFD. Pakistan and Qatar signed a Memorandum of Understanding (MoU) for LNG imports in February 2012, but progress was slow due to disagreements over the gas price.
"In the past 8 years LNG prices in the international market have increased manifold, had we begun to import of LNG in 2008 or 2009 when prices were between $12 to $13 per MMBTU we could have saved billions of dollars for the country; at present prices are hovering around $16 to $17 per MMBTU and any agreement today would be that much more costly," the official stated.
Gwadar Port: government mulling constructing LNG terminal | Business Recorder
