Long-term LNG deal

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THE Government really deserves credit for striking a long- term deal with the brotherly country Qatar for import of LNG for ten years and that too on cheaper rates.

The price for additional 200 million cubic feet a day (MMCFD) is around 31 per cent lower than the 2015 contract for 500MMCFD.

According to Special Assistant to the Prime Minister on Petroleum Nadeem Babar, the agreement entails the “lowest-ever publicly disclosed price under a long-term contract in the world” and was achieved through joint efforts of the political and military leaderships.

Pakistan has long been facing the energy crisis, which was mitigated to some extent when a number of power projects initiated under the China-Pakistan Economic Corridor (CPEC) became operational, making the perennial load-shedding a history of the past.

However, gas shortage still poses serious challenges especially during winters when the demand increases, forcing the government to go for load-management under which gas supply to the industry is suspended as uninterrupted supply to domestic consumers is understandably the highest priority.

With domestic gas reserves depleting fast and no significant new discoveries, the country is left with no option but to import either piped gas or LNG.

There are two viable projects for gas supply from Turkmenistan and Iran but actual implementation of IP has become a dream because of unending US sanctions against Iran while the progress on TAPI is not satisfactory and its successful operation is contingent upon the security situation in Afghanistan.

Under these circumstances, import of LNG was the only viable option to meet increasing gas requirements and, therefore, the government has done well by inking a favourable agreement with Qatar for the purpose.

It is noteworthy that the country would save about three billion dollars over the contract period as compared to the deal done previously with Qatar.

The Government, under direction of Prime Minister Imran Khan, also revised agreements with IPPs, which would also result in huge savings and might ultimately help reduce the overall tariff for different categories of consumers.

The PM also took up the issue of Karkey with the Turkish President whose intervention saved Pakistan from paying a penalty of $1.2 billion.

In the latest development, irrespective of saving, it is all the more important that the government has firmed up long-term arrangements for import of LNG, which now plays a crucial role in the overall economic development of the country. We hope the same visionary approach would be displayed in expediting construction of more LNG terminals.

 

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