The new LNG terminals will be based on the B2B model: Minister

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ISLAMABAD: Energy Minister Hammad Azhar tweeted on Saturday that the new LNG terminals would have no accountability to the government like the previous terminals and would be based on the Business-to-Business (B2B) model.

These measures will improve the system’s ability to process imported gas, but in a cost-effective manner, he added.

Approvals of new LNG terminals are accelerated after the resignation of SAPM on Power and Petroleum Tabish Gauhar, which supported the replacement of Engro’s existing FSRU with a larger FSRU and at the same time opposed the new LNG terminals on the grounds that the Most countries only have two LNG terminals. However, he was reportedly forced by “an influential group” in Cabinet to resign.

The Energy Minister, who recently paid a visit to Russia, further tweeted that the government is moving quickly towards finalizing the details of the PakStream pipeline project (formerly known as the North-South pipeline) with its Russian counterparts.

At the same time, the government facilitated the award of the firm bid for pipeline capacity to two upcoming terminals, Hammad Azhar said.

On October 8, 2021, the Cabinet Committee on Energy ordered the Sui companies to allocate capacity to the two new LNG terminals, after the Ministry of Maritime Affairs (MoMA) accused the two Sui companies of using delaying tactics in allocating pipeline capacity to the two new LNG terminals. developers, informed sources said Business recorder.

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Sharing the details, the sources said the Federal Cabinet on April 2, 2019 ratified the ECC’s decision of March 27, 2019 and ordered the Ministry of Maritime Affairs (MoMA) to speed up the process of establishing the 3rd terminal. LNG carrier in view of the impending gas shortage in the country. Later, on March 26, 2021, the Cabinet Committee on Energy (CCoE) ordered MoMA to immediately deliberate on issues delaying the establishment of new LNG terminals within the inter-ministerial committee under the chairmanship of the Minister of Maritime Affairs. .

The committee shortlisted all outstanding issues and suggested the way forward for each. The first inter-ministerial meeting was held on December 12, 2019, co-chaired by Minister of Maritime Affairs Syed Ali Haider Zaidi, Minister of Energy Omar Ayub Khan and SAPM (Oil) Nadeem Babar to facilitate new terminal developers in with regard to the approvals required by M / s Tabeer and M / s Energas.

Subsequently, fifteen interdepartmental meetings were held from December 2019 to August 2021. In the first meeting to date, the forum was successful in resolving all pending approvals / NOCs. However, there are still contentious issues, which require the intervention of the CCoE.

The first issue concerns the allocation of pipeline capacity and the gas transportation agreement with Sui Companies.

According to MoMA, on September 20, 2020, the Federal Cabinet, when reviewing the summary titled “Establishment of LNG Terminals at Port Qasim”, ordered the Petroleum Division to allocate pipeline capacity into the existing pipeline and the new pipeline expected within 30 days. In addition, the Oil & Regulatory Authority (OGRA) in its letter of May 26, 2021 also ordered the Sui companies to allocate 300 to 350 MMCFD of the pipeline capacity to M / s Energas and M / s Tabeer Energy each. , but after the expiration of more than three months Sui companies remain reluctant to allocate pipeline capacity.

Considering seriously flouting the regulator’s order, OGRA wrote another letter on September 2, 2021, severely ordering Sui companies to allocate pipeline capacity to new LNG terminal developers in order to comply with CCoE guidelines.

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There was a general consensus, with the exception of SNGPL, that there is capacity in the pipeline available for new LNG terminal developers. The regulator has subscribed to the general consensus. The decommissioning is as follows: (i) total pipeline capacity of SNGPL-1200 MMCFD; (II) long-term contract until 2024-1000 MMCFD; (iii) gas supplied to K-Electric – 150 MMCFD; (iv) gas supplied to SSGC-250 MMCFD; and (v) available pipeline capacity – 1200 MMCFD.

SSGC has agreed to allocate pipeline capacity to the two new LNG terminal developers according to their needs.

The sources said that SSGC has been repeatedly ordered to allocate the existing land / plot to new LNG terminal developers to build their connection point and the fire station could be built on new land. leased under the same conditions as the earlier two existing LNG terminals, but SSGC has delayed its land lease agreement with the LNG terminal developers.

According to MoMA, the narrative makes it clear that Sui companies appear reluctant to deregulate the gas market despite the fact that a substantial amount of gas is diverted from their systems, adding to the billion dollar circular gas debt. rupees. The gas sector, like aviation and banking, can be deregulated in order to reduce the burden on the public purse and save money for taxpayers.

MoMA proposed that, in accordance with OGRA guidelines, SNGPL should allocate a pipeline capacity of 250-300 MMCFD to each of the new LNG terminal developers. SSGC should provide the land for the establishment of a firefighting station and a connection point to new LNG terminal developers under the same terms and conditions as those to which the connection points were allocated to the old ones. existing terminals. The two new LNG terminal developers are expected to sign the Gas Transmission Agreement (GTA) with SSGC and SNGPL within 15 days. New LNG terminal developers are expected to close their FIDs within 60 days of signing the GTA.

Copyright Business Recorder, 2021


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