MUSHTAQ GHUMMAN
ISLAMABAD: Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi on Wednesday said that an agreement on LNG pricing will be finalized with Qatar anytime soon. It will be uploaded on the website of the Ministry.
Briefing the National Assembly Standing Committee on Petroleum and Natural Resources, the Minister said that Pakistan State Oil (PSO) and Government of Pakistan’s international consultants are currently engaged in negotiations with Qatar Gas – Qatar government’s designated entity - on the terms of a long-term LNG Sale and Purchase Agreement (LNGSPA) on government-to-government basis.
According to Minister, pricing and principal commercial terms of the LNG SPA will be reviewed and finalized by the Price Negotiation Committee constituted by the GoP.
He said the Government of Pakistan has nominated PSO as its designated LNG buyer to import LNG. Currently, two potential procurement streams are being explored for import of LNG to Pakistan.
Khaqan said that financial benefit of LNG will be Rs 300 billion per annum as the LNG will be 10 to 20 percent cheaper than other imported fuels. However, none of the sectors including CNG is interested in importing LNG on its own.
He said most of the issues between Qatar and Pakistan have been sorted out. However, issues like a payment mechanism and bank guarantees are still unresolved.
The Petroleum Minister further stated that ‘oil mafia’ is opposing LNG import because they will face a loss of $ 2.5 billion per annum.
“Oil mafia is also threatening me so that LNG import should not materialize,” Khaqan added.
According to the Minister, the efficiency of furnace oil-fired power plants will be increased by 16 per cent with the use of LNG as fuel. However, IPPs have not shown interest in direct import of LNG.
He further stated that if private parties start importing LNG directly, the government will come out of the business.
The committee presided over by Chaudhry Bilal Ahmed Virk, also examined the Royalty and Production Bonus Bill, 2015 and the (Gas Theft Control and Recovery) Bill, 2014.
The committee members raised objections on the Royalty and Production Bill 2015. Nawab Wasan of PPP from Sindh argued that royalty should be given only to those areas from where the oil and gas is discovered.
After a detailed discussion, the committee decided to review the said bills in the next meeting, on receiving amendments to be proposed by committee members.
The last rate offered by the government of Qatar to Pakistan was 14.9 percent of Brent Crude to the previous government of Pakistan People’s Party (PPP), but the incumbent government kept the benchmark at 14.5 percent; it seeks to cut it further down.
Khaqan said that due to certain clauses in the pricing mechanism India is currently buying LNG from Qatar at around $13 per Million British Thermal Unit (mmbtu) whereas the cargo that arrived in Pakistan on April 27, was priced at $8 per mmbtu.
The parliamentary panel was informed that if the LNG price was finalised at 14.5 percent of Brent Crude oil with the Qatari government then it would be around 10 percent cheaper than the price of High Sulphur Furnace Oil (HSFO), 20 percent cheaper than Low Sulphur Furnace Oil (LSFO) and 50 percent of diesel.
“We hope to hit the bargain of 14.5 percent of Brent crude price which will be among the best prices of LNG that Qatar has offered to anyone,” Khaqan said.
He said that the price of Liquefied Natural Gas (LNG) to be purchased from Qatar would be finalised in two days, and termed all reports in this regards ‘rumours’.
He said that the Qatari officials will be meeting the Price Negotiation Committee constituted by the government.
“All this misinformation regarding LNG is being floated by the oil importers as Pakistan imports furnace oil and diesel worth $2.5 billion per annum and if the LNG import becomes successful then who will buy furnace oil?,” he said.
He said a team of experts from Qatar had already arrived in Pakistan and they are negotiating the rates along with the terms and conditions.
“The price setting is a very complicated matter, but unfortunately many groups have been floating wrong information in media that Pakistan has already finalised prices with Qatar,” he said adding, “Transparency International and some NGOs, even wrote letters that the price agreed by us was not fair – we had to tell that the prices were still under negotiations.”
The committee was informed that if the same amount is spent on producing electricity from LNG instead of oil then there will be an increase of 10 percent in the efficiency of the power plants.
“This is mainly because there are regular cases of furnace oil thefts whereas gas cannot be stolen this way,” the minister said adding, “besides, there will be a saving of round $ 1billion if all the existing power plants consume LNG instead of furnace oil”.
The meeting was also attended by Dr Tariq Fazal Chaudhary, Malik Ihtebar Khan, Rana Afzaal Hussain, Syed Muhammad Saqlain Bukhari, Mian Tariq Mehmood, Rasheed Ahmad Khan, Ch. Khalid Javed Warraich, Nawab Ali Wassan, Shehryar Afridi, Nasir Khan Khattak, Abdul Waseem, Sajid Ahmed, Akram Khan Durrani and Pir Bax Junejo, MNAs, Naveed Qamar and Iqbal Muhammad Ali Khan.
Officials of Petroleum Ministry, Oil and Gas Development Company (OGDCL), PSO, SNGPL, OGRA, SSGCL and Law Ministry also attended the meeting.
