ISLAMABAD: Pakistan’s liquefied natural gas terminals are overstressed and LNG value chain is very fragile from all parameters against global standards and could face operational and safety risks, contrary to common perception in public discourse that terminals are underutilised.

“Even with the low ratios of ‘re-gas to storage’ and ‘LNG import capacity to storage’, the overall utilisation rate of LNG terminals across the globe is approximately 43 per cent. Pakistan’s utilisation is at a remarkable 84pc despite having extremely inflexible infrastructure and other constraints,” Pakistan LNG Limited (PLL) and Pakistan LNG Terminal Limited (PLTL) said in a joint report to the government.

“Operating Terminal-1 [of Engro Elengy] at nearing 100pc utilisation rate leaves very little flexibility to handle shocks,” the report said, adding that when compared with the global and European averages, “it is realised that Pakistan’s utilisation rates are 249pc and 196pc, respectively”.

Moreover, when Pakistan’s LNG import infrastructure is compared with the countries which solely rely on floating storage and re-gasification units (FSRUs), the country’s utilisation rate is 30pc higher than that of Kuwait and a striking 200pc higher than Argentina.

Port infrastructure and gas pipeline constraints termed very serious

The comparison is based on FSRU capacity utilisation of nine countries. Pakistan is only next to Argentina and Kuwait in terms of throughput to storage ratios and with difference of less than 1pc. The only country which has an active third party access (TPA) regime is Lithuania which has the lowest throughput to storage ratios among all these countries.

Lithuania’s utilisation rate had been in the range of 20-30pc for many years and the country had the flexibility of implementing the TPA regime through which it achieved the historic highest utilisation rate of 45pc which is even around half than that of Pakistan’s 99pc at Terminal-1 and 71pc at Terminal-2 [of Pakistan Gasport Ltd].

Based on these global comparisons, PLTL and PLL have concluded that Pakistan is utilising its available LNG infrastructure in an efficient manner. “Instead of further stretching the limited available flexibility, Pakistan needs to optimise the usage of existing terminals by shifting LNG supplies from Terimnal-1 (99pc utilisation rate) to Terminal-2 (71pc utilisation rate),” the report suggested.

It noted that Pakistan has a very high throughput (re-gasification capacity) per unit of LNG volume storage capacity when compared with leading global LNG markets, including Japan, India, China and Europe.

Also, Pakistan’s total current re-gasification capacity of both terminals is about 1,440mmcfd (million cubic feet per day) with a very limited storage of only 317,000 cubic meters. “If global averages of capacities are used as a benchmark, Pakistan’s re-gasification capacity should have been only 550mmcfd with an LNG import capacity of 4.2 million tonnes per annum,” the report said, adding that even using the European benchmark being the highest among the dataset available, Pakistan capacity should have been only 700mmcfd and 5.25 million tonnes per annum.

But that’s not all. The report said the port infrastructure and gas pipeline constraints were also very serious. These constraints suggest that it is practically impossible to operate terminals near maximum throughput capacity. This “may lead to substantial disruptions in the entire supply chain, besides attracting significant and recurring cost implications, impact of which will be humungous as compared with the anticipated benefit”, it said.

It has been highlighted that restrictions by the Port Qasim Authority (PQA) on handling more than one LNG vessel in a day and unavailability of night navigation mean that Pakistan State Oil is importing around 73 LNG cargoes in a year, resulting in arrival of one cargo at Terminal-1 every five days and that at Terminal-2 every six days in the current scenario (66 slots) and four days in future (82 slots).

This means that in the current scenario, every 30th day cargoes will be arriving at both terminals, resulting in a delay of one day for berthing at one of the terminals and such an instance will happen at least 12 times in a year, resulting in a reduction in available berthing slots by two or three in a year. The remaining available berthing slots will be 63 or 64.

With future expansion, the frequency of clash in cargo arrival schedule will further increase to every 20h day. This is based on assumptions that there are no adverse weather conditions being experienced on the berthing days, all vessels arrive on the scheduled berthing date without a delay, no impact of fluctuation of demand on cargo scheduling and favorable tides are available on all days.

However, the past experience suggests that the PQA will not be able to handle LNG cargoes on an average of around 10 days in a year due to unfavorable tides and delivery dates of at least 65pc of PLL’s cargoes needed to be adjusted in accordance with the varying demand.

Moreover, owing to the constraints of pipeline capacity, Terminal-2 is generally forced to operate at significantly less than 600mmcfd for most part of the year.

This results in further restriction of berthing slots.

Published in Dawn, March 8th, 2021