K-Electric’s power plant to get 150 mmcfd of LNG
The Cabinet Committee on Energy (CCOE) has approved allocation of 150 million cubic feet per day (mmcfd) of liquefied natural gas (LNG) to K-Electric for consumption in its power plant, giving some breathing space to the government as LNG demand has dwindled.
According to agreements, the government of Pakistan is required to receive 800 mmcfd of LNG, mainly from Qatar and some other suppliers. Pakistan State Oil (PSO) imports 500 mmcfd from Qatar whereas 100 mmcfd is supplied by global commodity trader Gunvor.
State-run Pakistan LNG Limited (PLL) imports 200 mmcfd by entering into contracts with Italy’s Eni and Gunvor whereas some additional quantity is purchased through spot contracts.Owing to a long-term deal signed with Qatar at a higher price by the previous government, no sector is now ready to purchase the imported gas.
The previous Pakistan Muslim League-Nawaz (PML-N) government had inked the LNG deal with Doha for gas supply to LNG-based power plants in Punjab but these plants have dropped below the economic merit order because of expensive LNG and cheaper coal-fired power plants.
In this scenario, most of the time the LNG-based power plants remain shuttered. However, consumers are forced to pay capacity charges either to LNG terminal operators or LNG power plants due to a “take-or-pay” clause.
Now, reports are circulating that Qatar has agreed to reduce supplies to three LNG cargoes per month compared to existing five cargoes in the wake of thin demand in Pakistan. At a time when power producers in Punjab are not ready to consume LNG, K-Electric has come up with a plan to buy the gas from PLL, which officials term a positive sign.
According to the officials, the CCOE, which met on March 27, was informed that a meeting was held on January 14 this year related to the transmission infrastructure and re-gasified LNG (RLNG) supply to K-Electric’s 900-megawatt power plant at Bin Qasim.
First unit (450MW) of the plant is expected to come on line in April or May 2021 and the second unit will come on stream by September or October 2021. Total fuel requirement of the RLNG-based plant is 150 mmcfd but it will be required from January 2021 for testing and kicking off commercial operations on time. It was agreed that K-Electric would build a pipeline for RLNG supply from the terminal to the Bin Qasim Power Complex.
Another meeting was held on January 30 for additional power supply to K-Electric from the national grid and provision of 150 mmcfd of LNG to the Bin Qasim Power Complex.
It was agreed that RLNG would be provided as per requirement of K-Electric through Pakistan LNG Terminal Limited (PLTL)/PLL, effective January 2021 to December 2025, at prices notified by the Oil and Gas Regulatory Authority (Ogra).
During the CCOE meeting, it was proposed to allocate 150 mmcfd of LNG to K-Electric, which was approved.