Incompetence as well as lack of interest and expertise of higher authorities of Pakistan LNG Terminals Limited (PLTL) are believed to be the factors behind undue delay in functioning of second LNG terminal.
Pakistan Observer has learnt reliably that Pakistan’s second Liquefied Natural Gas (LNG) terminal is getting delayed as authorities concerned have failed to arrange commissioning cargo.
While officials there claim that efforts are afoot to execute a fresh commercial operation date (COD) to sidestep liquidity damages to private investors, however, sources said chances were minimal to get the terminal functioning.
“ I don’t see chances of functioning of the second terminal sooner,” said an official on condition of anonymity.
It’s worth mentioning that government had appointed Azam Sufi as head of PLTL last year at a hefty package amounting to Rs 3 million Pak rupees per month expecting him to deliver on time. However, said the sources, he failed to deliver what was expect of him.
‘But now when second LNG terminal needs commissioning cargo, government is in a trouble and do not know how to manage, a senior government official said adding that head of PLTL had lack of experience and was a foreign nationality holder who had worked earlier in Lucky Cement before joining PLTL.
Pakistan Observer has learnt that the government has been postponing shipments of LNG secured in January through competitive bidding from Gunver and ENI because of the infrastructure shortfalls. It has already delayed four LNG cargoes to October. These were originally planned for July.
The suppliers are reported to have warned the government to make arrangements for LNG off-take, cancel the bids or get ready for penalties. An official, however, claimed the government had the window until December to keep these bids secured.
The LNG shipment from the second terminal were expected to be fed to three mega LNG-based power projects in Punjab – Bhikki, Balloki and Haveli Bahadur Shah – of 1,200-megawatt each. While one of these projects has its own technical problems, the other two are also currently in the partial testing phase.
On the other hand Officials said that PLTL should have worked out arrangement of bringing first LNG commissioning cargo earlier. He said that it should have either floated a tender or contact other private parties like fertilizer, textile, industries and CNG sectors for bringing first commissioning LNG cargo. But due to lack of expertise, it depended on Fatima Fertilizer which had already dispute with SSGC over payment of tolling fee. All process of awarding contract of second LNG terminal was completed and PLTL was to arrange only commissioning cargo but it had failed so far to make arrangements.
Earlier, Fatima Fertilizer was ready to bring commissioning cargo of LNG but a dispute between Sui Southern Gas Company (SSGC) and Fatima Fertilizer over fee payment for handling liquefied natural gas (LNG) imports has prompted Pakistan LNG Terminal Limited to weigh the option of diverting gas imports from Qatar to the second LNG terminal, an official says.
Fatima Fertilizer has paid a levellised tariff of $0.66 per million British thermal units (mmbtu) but SSGC, which transmits LNG through its pipelines to the fertiliser company, asks it to pay $1.45 per mmbtu as agreed by the regulator. Owing to the disagreement, SSGC is not ready to allow Fatima Fertilizer to bring cargo at the second LNG terminal.
Pakistan State Oil (PSO) and Qatargas have an agreement on LNG supply, which is being handled by the first LNG terminal set up by Engro’s subsidiary Elengy Terminal Pakistan Limited at Port Qasim.
The second LNG terminal has also been built but Pakistan LNG Terminal has been unable to put in place a mechanism to start handling gas imports at the new facility.
Officials said that PLTL had put weight on PSO to place request before Qatargas to divert one LNG cargo to second LNG terminal for commissioning. But PSO preferred to be stay away and asked PLTL as operator of LNG terminals in Pakistan to talk to Qatar gas.
The gas sales purchase agreement between PSO and Qatargas had a clause to divert LNG cargo to another terminal but subject to the approval of Qatar gas. Now, Pakistan LNG Terminal is putting pressure on PSO to divert one LNG cargo to the second terminal in order to start the facility.
“It is the responsibility of Pakistan LNG Terminal to arrange cargo, which must be brought 10 days before the commercial operation date of the terminal,” the official said..
However, Qatargas needs to undertake due diligence to assess compatibility and make risk analysis. Official said that there were some other challenges like additional cost which should be addressed.
Official said that PLTL was now in a contact with Qatar gas to divert one LNG cargo from first LNG terminal set by Engro to second LNG terminal built by Pakistan Gas Port Limited (PGPL). He said that a team of Qatar gas would now visit Pakistan next week to hold talks with PLTL to divert one cargo from first LNG terminal to second LNG terminal.