Construction mode of Gwadar LNG terminal changed from BOOT to APC

Construction mode of Gwadar LNG terminal changed from BOOT to APC

The government is likely to rent Floating Storage and Regasification Unit (FSRU) for the proposed Liquefied Natural Gas (LNG) terminal at Gwadar, after change in its mode of its construction, it was learnt here on Sunday.

“The Ministry of Planning has asked the Ministry of Petroleum and Natural Resources to provide separate calculation for the per MMBTU cost of RLNG with rented and purchased FSRU,” official sources in the Ministry of Petroleum and Natural Resources told The Nation.

Earlier, the Executive Committee of the National Economic Council (ECNEC) had approved Gwadar-Nawabshah LNG terminal and pipeline project at a cost of $2 billion.

“At that time, the cost of the terminal project was $650 million. However, now the cost has reduced. Since in the new calculation, the price of FSRU is not included; therefore the decision will reduce the cost of the project from the earlier $650 million to $350 million,” the sources elaborated.

“In its summary, to be presented to the planning ministry, the Ministry of Petroleum and Natural resources has proposed that FSRU will be leased on rent,” the sources explained.

The government has decided to separate the construction of LNG terminal from the LNG pipelines project and instead of BOOT the project will be completed on the Engineering Procurement and Construction (EPC) mode.

The decision was taken after the Chinese government withdrew its earlier offer of construction through BOOT basis.

Under the new arrangement, Pakistan will own and operate the terminal and award EPC contract to the Chinese company.

Now the government of Pakistan will provide sovereign guarantees to the Chinese company, the source said.

The terminal will be built in Gwadar under government-to-government mode, and will be linked with a 700-km pipeline, stretching from Gwadar to Nawabshah.

China Pipeline Petroleum Bureau (CPPB) has been assigned to build the pipeline from Gwadar to Nawabshah.

Out of $2 billion, the cost of RLNG pipeline project is $1.35 billion while the remaining is the cost of the terminal.

As per the earlier plan, Gwadar LNG plant was due in 2018, with an initial regasification capacity of around 6.2 BCM per year. However, now it doesn’t seem that the government can meet the target.

Under the BOOT mode the proposed tariff was around $0.44 per MMBTU, which will now definitely come down under the new arrangement, the sources added.

“However it is yet to be known of how much amount Pakistan will save in the coming 20-25 years in term of tolling fee,” the sources further informed.

The sources revealed that per MMBTU regasification rates were likely be much lower than the other two terminals.

The government has already established Pakistan LNG Terminal Limited (PLTL) to look after the matters pertaining to the future construction and operation of the LNG terminals in the country.

However it seems that despite the establishment of the PLTL, the Ministry of Petroleum still solely controls the matters related to the construction of LNG terminal in Gwadar.

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