US firm sets conditions for LNG import to Pakistan - The Nation

Posted - August 02, 2013 - The Nation

ISLAMABAD - The PML-N-led federal government is in a fix how to bring imported LNG to Pakistan as visiting US based ConocoPhillips Company (CPC) has linked the provision of LNG to Islamabad only after the incumbent government would ensure guarantee for its investment besides other conditions.
After, the issuance of tenders for retrofitting of LNG terminals coupled with Qatar’s recommendation to negotiate with few LNG firms to bring the imported gas to Pakistan, the 3-member visiting delegation of ConocoPhillips Company (CPC) headed by its top head told the officials of Petroleum Ministry and Inter State Gas Systems (Private) Limited (ISGS) on Wednesday during a meeting that the negotiations for import of LNG would be initiated only after a guarantee of Government of Pakistan, inclusion of ADB in the deal and the government issue the tenders for retrofitting of LNG terminals, official sources in the Petroleum Ministry told The Nation, adding, “The CPC delegation was told that the government will issue tenders just after the Eidul Fitr for reconstruction of LNG terminals at Port Qasim.”
“The ministry is in a catch 22 situation on how to bring Qatari LNG to Pakistan and so far could not find a way out in this regard,” a senior official at the ministry told this scribe late Thursday.
The official sources further disclosed that ConocoPhillips Company (CPC) enjoys the rights in Qatar to export LNG on the directives of Qatari government. The top representatives of US-based company is visiting Islamabad only to realize the export of LNG to Pakistan from Qatar, but the talks halted on the subject due to many reasons including availability of Government guarantee, inclusion of Asian Development Bank (ADB) in the deal etc. The company has also asked the top mandarins of the Ministry of Petroleum and Natural Resources to first ensure seriousness towards the construction of LNG terminals.
Earlier, the government has already sought exemption from PPRA rules in the award of contract for construction and retrofitting of LNG terminals but after finding no from the regulatory authority (oil and gas regulatory authority) coupled with the pressure of Public Procurement Regulatory Authority (PPRA) had succumbed to their pressure and left the option of exemption from necessary rules.
So far, the cost of LNG has been worked out with Qatar at $19.49 per MMBTU and the price differential will cost the country $326 million extra in the first year alone. While, under the preliminary working as per official sources the “LNG will be sourced from Qatar at a price equivalent to 14.9 per cent of Brent, which will translate to a RLNG (re-gasified liquefied natural gas) price of (110x14.9 per cent [today’s Brent price] = 16.39+0.60 [marine transport] +2.50 [terminal tolling charge) = $19.49/MMBTU. At present, the price of the commodity is significantly higher than the price obtained in the recently cancelled tender, which works out to $17.26/MMBTU. The price differential is expected to cost the country at $326 million extra in first single year.”
It is to note here that the government following the verdict of Supreme Court had scrapped last bidding process of LNG where it had received the bid of $17.26 per MMBTU which is $2.21 per MMBTU less then the preliminary offer to the new government by Qatar.
However, it has become crystal clear that to materialize the import of LNG to run power and industrial sector of the country the incumbent regime government would have to issue new tenders inviting bids for LNG supply as per PPRA rules.
ConocoPhillips with a head office at Huston -USA is efficiently and effectively involved in exploration and production of oil and natural gas. Since producing oil and natural gas and getting them to market takes ingenuity, technology and investment so the ConocoPhillips Company (CPC) with its innovative, collaborative efforts yields products that improve quality of life globally while producing economic benefits with far-reaching influence.

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