ISLAMABAD: The new private sector companies seeking entry into liquefied natural gas (LNG) business without government guarantees appeared to be moving in circles as the public sector stakeholders blamed each other for uncertainties relating to enabling environment and infrastructure.

This was the overriding sense of a public hearing conducted by the Oil & Gas Regulatory Authority (Ogra) on the request of Tabeer Energy and Energas for marketing licences for the sale of LNG. Both applicants said they had their own customers in the private sector and would arrange LNG imports without any liability to the government by utilising pipeline network of gas utilities.

Ogra Member Gas Muhammad Arif asked Energas if it had the capacity allocation for LNG terminal and gas pipeline network so it could supply gas to its customers and when it could start imports.

Energas’s Ansar Khan said his company had secured the licence, land allocation and related regulatory approvals for setting up of LNG terminal of its own in 2022. Initially it could import 200-250 million cubic feet per day of LNG by April 2021 using government-owned Pakistan LNG Limited (PLL) terminal capacity, he added. Khan said it would help the PLL to share a part of its surplus terminal capacity and help provide cheaper LNG to customers of group companies since it would not involve any middleman.

These included Lucky Group, Younas Brothers, Sapphire Group and Halmore and so on who did not get gas supply and had to rely on furnace oil to meet export orders and domestic production.

He said the company participated in PLL’s bidding for terminal capacity a few months back but were not allowed in the absence of a marketing licence. He said the Sui Southern Gas Company Limited (SSGCL) had recently completed a 17-km pipeline from Port Qasim to Pakland Cement and the government had given an assurance that this pipeline would de-bottleneck about 600mmcfd of additional capacity.

PLL’s Yousuf Inam said the involvement of private sector would bring efficiency by utilising unutilised capacity and create competitive market. He said Energas was not allowed to participate in bidding for terminal capacity for an import slot in November as the company lacked marketing licence. He said the bidding was later cancelled as capacity was utilised in the public sector.

However, he said both Tabeer and Energas were relying on existing customers of Sui Northern Gas Pipeline Limited (SNGPL), rather than incremental customers, which would affect SNGPL and SSGCL business. He said that company had advertised capacity but it was unable to grant due to rising demand by public sector.

Now, he said the PLL would issue advertisement for terminal capacity for February and March so that private sector could import LNG and only companies having marketing licence would be qualified to participate. He said the LNG marketing companies should also have pipeline capacity commitment from gas utilities and the regulator should spearhead such clarities.

On the occasion, Arif observed that the very objective of the third party access in terminal and pipeline capacity was to generate competition and benefit customers and the economy but challenged Energas to revisit uncertainties around capacity allocations in terminal and pipelines as he did not believe the first delivery in April 2021 was possible.

Ogra member gas and PLL officials blamed each other for causing hurdles in capacity allocation and issuance of marketing licence. The two sides, however, agreed to hold their internal meetings next week on the subject to have clarity over legal and regulatory matters.

Rahat Kamal, an intervener, sought clarification regarding allocation of capacity. He said that Energas had indicated to utilise 250 mmcfd capacity of PLL. Secondly, he said that PLL had signed agreement with K-Electric (KE) to supply 150 mmcfd. Therefore, he asked how it would be feasible.

Muhammad Kashif representing Pakistan Gas Port said the PLL had capacity for February and March while Energas was planning LNG import in April when the PLL would have no spare capacity.

Tabeer Energy Chief Marketing Officer Shigeki Terada – representing Mitsubishi – appreciated the government of Pakistan for opening up the LNG market for private sector. He said the company had integrated plan of LNG for non-interrupted supply of gas to different sectors especially CNG and power who faced gas shortages and disconnections.

Tabeer representatives said they were targeting to make their terminal operational in first quarter of 2023. He said that company had MoU with world class terminal providers and also signed MoU with SNGPL and had understanding with SSGCL to operate in gas sector.

Responding to a question, Tabeer’s Jawad Majeed said their terminal would be the first fully integrated terminal where LNG import, re-gasifications and sales would be handled by the company itself and provide massive savings in foreign exchange to the government without any off-take guarantees. Regasified liquefied natural gas would be transported to the customers using the new North-South Pipeline being undertaken by the government in collaboration with Russia.

Published in Dawn, December 18th, 2020