ABDUL RASHEED AZAD
ISLAMABAD: The Qatargas authorities have linked the signing of Liquefied Natural Gas (LNG) Sales Purchase Agreement (SPA) to the construction of required channel at Port Qasim Authority (PQA), officials said.
Officials of the Petroleum Ministry told Business Recorder here on Wednesday that recently a high-level delegation of Qatargas visited Pakistan and held meetings with the relevant quarters.
“We are expecting that in the start of June 2015 Pakistan and Qatar will sign a long-term LNG SPA on government to government basis of 400 Million Cubic Feet per Day (MMCFD),” the officials added.
Sources said that so far PQA has failed in satisfying and clarifying the Qatargas Company officials on the depth of LNG channel but during the recent meeting PQA officials assured the company that by the end of ongoing month PQA will carry out all the necessary developments required for the channel. They said that the channel’s depth should be 14 meters but PQA has a 13-meters-deep channel.
The Qatari delegation has shown serious reservations over the failure of PQA of making proper arrangements for LNG cargo handling, the officials said and added that within the next week another Qatari delegation will visit the facility to inspect the arrangements.
Sources added that the PQA has also not signed an agreement with Qatargas for the berthing of LNG cargo ships.
The minister, however, pointed out that there were capacity issues pertaining to LNG import through Port Qasim, saying that the port authority should address the issues and develop the capacity. “The Ministry of Petroleum is even ready to give funds for developing the capacity.”
Sources said that besides PQA’s failure in developing the required channel depth for LNG cargos, the deal is also not been finalized, as the Ministry of Water and Power failed to persuade furnace oil-based Independent Power Plants (IPPs) to open letters of credit (LCs) and establish a payment mechanism for the commodity suppliers.
The Petroleum Ministry’s responsibility was to negotiate rates and terms for LNG import and provide gas to Ministry of Water and Power for replacing furnace oil in power production.
Sources also said that as per plan of the government, power sector was to use the imported LNG but private power plants did not open any Letter of Credit (LC) accounts as the power sector also linked to purchase of LNG to certain conditions.
Sources said the PQA authorities are have quoted a rate for each cargo ship of LNG at the rate of $1.2 million which is too high as compared to international standards as in Nigeria it costs $0.75 million, in Qatar 0.125 million and in India 0.12 million.
Engro Corporation’s subsidiary Engro Elengy Terminal Limited (ETPL) has completed an LNG terminal at Port Qasim at the cost of $135 million.
