Pakistan gets into an LNG deal
According to a foreign news agency, the Pakistan government has, after two and half years of negotiations with Qatar, finalised a 15-year 22.5 million tonne Liquefied Natural Gas (LNG) deal at a total price tag of 16 billion dollars and shipments are scheduled to begin in December. Projecting these figures gives a purchase price of 6.44 dollars per mmbtu; however it is unclear as to what other costs would be added on to set the final price for consumers notably transport cost, distribution cost, health safety cost, environment protocols and the tariff regime.
The Minister for Petroleum and Natural Resources ShahidKhaqanAbbasi had inexplicably continuously maintained that not only are such commercial negotiations kept secret till they are finalised but also that his Ministry would put up details of the deal, once finalised, on the website. A fait accompli in terms of the price and quantity agreed was thus to precede any attempt at transparency which, critics – political as well as sector experts – pointed out would defeat the basic premise of transparency. In addition, serious concerns by the Sindh government had been raised with respect to the federal government’s intent to transport the regassified LNG through first injecting it into the Sui Southern Gas Company Limited (SSGCL) system and later transporting it to Sui Northern Gas Pipelines Limited (SNGPL) that supplies upcountry areas, including Punjab. Sindh argued that it had first digs at the much cheaper domestic gas as per Article 158 of Constitution which stipulates that “the province in which a wellhead of natural gas is situated shall have precedence over other parts of Pakistan in meeting the requirements from the wellhead.” Thus Sindh, accounting for over 70 percent of all natural gas production in the country, is legitimately concerned that its consumers maybe compelled to pay a higher price for the LNG than what is currently available to them from domestic gas.
Additionally, the Sindh government expressed reservations over the decision taken by the Cabinet Committee on Energy (CCoE) to construct three LNG-based power plants in Punjab from the federal public development programme. Why not also establish such plants in other provinces, particularly in Sindh, where LNG transporting ships would dock. The provincial government argued that all these issues need to be discussed at the Council of Common Interests (CCI) and requisitioned a meeting late last year. ShahidKhaqanAbbasi dismissed this request by maintaining that LNG is a fuel and fuel is not a provincial subject. This was unfortunate and Business Recorderhas invariably maintained that the federal government in the interest of forging harmonious relations with federating units, particularly those that are governed by other political parties, must take everyone on board with reference to economic decisions in general and most particularly those where binding long-term deals are made with other governments/foreign private sector to ensure that they are honoured in years beyond the end of the current tenure of the incumbent government.
Be that as it may, reports indicate that several governments including Egypt’s and Jordan’s, had decided to take advantage of low global oil prices to procure LNG; however the two countries made five and four-year deals, respectively. Pakistan has emerged as the largest LNG importer for the longest time. There is reportedly a hefty penalty for not purchasing the LNG as per agreement for 15 years and critics query if the proposed energy projects come on board, including Turkmenistan, Afghanistan, Pakistan and India (TAPI), Central Asia South Asia 1000, Iran-Pakistan gas pipeline, construction of several dams as well as other energy projects then would this long-term deal could become an albatross around our neck. One can only wait for a response from the government to this question as to date the Sharif administration has shown a marked reluctance to share any specifics of numerous deals with the public.
https://www.brecorder.com/editorials/0/1245059/
