Imported LNG over 1100pc dearer than local gas for fertiliser industry
As compared to the local gas, the cost of imported LNG is about 591 percent higher for the old fertiliser plants and 1114 percent for the new fertiliser plants.
The prices of the imported LNG is much higher than the local gas for the fertiliser industry, said the Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi while briefing the Senate Standing Committee on Petroleum & Natural Resources regarding the import of LNG in the country. The meeting was presided over by Senator Israrullah Zehri.
“The price for the local gas to the new fertiliser plants is Rs 70 per mmbtu, for the old fertiliser plant is Rs123 per mmbtu, while the imported LNG will cost them about Rs 850 per mmbtu,” the minister said while replying a query of the PPP senator Saeed Ghani. “So far only one fertiliser plant is using imported LNG” the minister added. The prices of imported LNG would be 6 times or 591 percent higher , for the old fertilizer plants , while for the new fertilizer plants it will be more than 1100 percent expensive.
The minister said that Pakistan is going to have a long-term contract with the Qatari government for the import of the Liquefied Petroleum Gas (LPG) soon. “Negotiations have been finalised, and we hope to sign this deal below $7/MMBtu which would be one the lowest deals in Asia,” the minister said.
He said that the government is awaiting the Oil and Gas Regulatory Authority’s (OGRA) determination of the consumer-end price of the LNG which is expected to be carried out in a few days. The initial volume of LNG will be 1.5 million tons per annum (MTPA) which will reach to 3 million tons per annum in three years. “Our requirement will be around 15 MTPA in next five to six years, which will require us to have around five such contracts” the minister informed.
Around half of the country’s primary energy source is natural gas, but unfortunately its supply is 4000 million cubic feet per day (MMCFD) against demand of the 6000 MMCFD. Currently, around 2000 megawatts of power plant are idle because of expensive fuels and lack of indigenous gas supply.
By converting the inefficient power plant from diesel to RLNG, the country can save around Rs100 billion a year and the conversion of the entire thermal power plants to the RLNG, will save Rs200 billion a year, minister said. “Some so called energy experts are criticising government for the LNG prices and are comparing the price LNG with the Furnace Oil but in reality both cannot be compared,” Abbasi said, adding that LNG can be compared with Diesel oil as only diesel fueled power plants have the option to be either operated on LNG or Diesel.
“LNG is 5 to 10 percent cheaper than HSFO, 20 percent cheaper than LSFO and 50 percent cheaper than the High Speed Diesel Oil,” the minister claimed. Beside the price difference LNG is much more efficient for the power generation as compared to all the other fuels, he maintained. The minister said that the tripartite agreement among PSO, SNGPL and SSGC is finalised and will be implemented after the approval of the board of directors of these companies.
To bridge the gap, the government is focusing on the importing of this low cost and feasible source of energy. Besides, we cannot wait for years for materialisation of 750 MMCFD Iran-Pakistan gas pipelines and 1,325 MMCFD Turkmenistan-Afghanistan-Pakistan-India (TAPI), as these will take years and are facing various difficulties.
The government has started work on Iran-Pakistan Gas Pipeline, from Gwadar to Nawabshah, but its gas may be available in the country in 2017, provided the international sanctions on Iran are lifted. Regarding TAPI, minister said that for the last more than two decades, the project is under process, and it will require huge $25 billion investment ($15 billion for gas field development in Turkmenistan and another $10 billion for laying gas pipeline).
The Turkmenistan government has decided to develop the gas field and will also bear half of the pipeline cost, while in remaining; Pakistan will put its share. He said that the ground-breaking of the TAPI is expected in next 3 to 4 months; however its gas cannot reach Pakistan before 2020.
A LNG terminal is already functional at Port Qasim, which the private sector after winning a competitive bidding has developed under Built-Operate-transfer [BOT] mode.
Since March 26, 2015 when the LNG import started into the country, 11 cargo ships have been imported so far and till March 26, 2016, we have to bring 14 more ships under the contract. However, if we increase the number of ships the tolling charges will reduce, so we target to import around four more ships. In October, two ships are going to come to Pakistan.
Regarding the gas supply to Balochistan, the minister said that to compensate the people of Balochstan the federal government is planning to start operating LPG plants in 24 cities of the province.
