License to sell gas to private sector sought

Category: General

PGPL is one of the only two LNG import terminals operating in the country at present. It has an installed capacity to import and sell up to 750 million standard cubic feet per day (mmscfd). It is, however, selling only 600 mmscfd to the government, while the remaining 150 mmscfd capacity has been idle since it began commercial operations in December 2017.

“The Economic Coordination Committee (ECC) and the government have approved the utilisation of excess capacity by the private sector. In view of the ongoing energy crisis in the country, it is in the national interest to utilise the available capacity at our terminal as soon as possible,” PGPL said in its application for the licence to Ogra.

The company has applied for a grant for the licence of the sale of natural gas/RLNG for a 20-year period (2022 -2042) under the Ogra Natural Gas (Licensing) Rules, 2002.

PGPL owns 100% of the PGP Consortium Limited (PGPCL) which owns and operates an LNG import terminal at Port Qasim, Karachi. Under the operation and services agreement (OSA), PGPCL is obligated to re-gasify and deliver 600 mmscfd of RLNG to Pakistan LNG Limited (PLL).

“Considering the FSRU (Floating Storage and Regasification Capacity) regasification capacity of 750 mmscfd, free capacity of up to 150 mmscfd is available with PGPCL that will be utilised through PGPL or through another company or through a group of companies,” according to the application documents.

Pak-Kuwait Investment Company (PKIC) Head of Research, Samiullah Tariq said that the “recent amendments in concerned regulations have allowed LNG import terminal operators to utilise the excess gas supply capacities to sell gas to the private sector”.

“This is an important development ahead of the winter season, as Pakistan has been facing a gas crisis for the past few years,” he added.

“On the other hand, the price of RLNG (regasified liquefied natural gas) skyrockets during winter in international markets that becomes infeasible for many to afford in the country. The situation thereby results in a gas crisis during the winter season,” Tariq explained.

“The private sector, however, can still afford to buy the expensive gas. The allocation of excessive gas supplies would allow the sector (especially exporters) to fulfil their business commitments through delivering goods to their clients,” he noted.

“To recall, a section of the business community demanded that the government supply gas at any cost during the previous winter seasons. They found paying a higher price for the fuel a better option than losing the trust of international clients,” Tariq added.

This is not the first-time people in the business community have made efforts to import gas through PGPL’s excess import terminal capacity for the private sector. Earlier, a group approached the government to allow it to utilise the excess capacity at the terminal to import gas for itself and for others in the country. PGPL, however, had denied renting out its capacity to a third party, it was learnt.

Over a period of time, Pakistan has become a gas deficient country. Its dependence on imported gas has also increased. Gas reserves are depleting at an average of 10-15% per annum, as demand for fuel has continued to surge while supplies are shrinking due to no meaningful discovery of new gas reserves over the past two decades.


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