Pakistan liquefied natural gas (LNG) imports surge 75pc to $1.97 billion

KARACHI: Pakistan’s Liquefied natural gas (LNG) imports in seven months (July-January 2018-19) stood at $1.97 billion, up 74.68 percent as compared with LNG imports of $1.129 billion in the corresponding period last year, as the country fast switching to LNG import addiction.

Country’s liquefied natural gas (LNG) imports clocked in at $264.328 million, up 4.22 percent compared with LNG imports of $253.636 million in January 2018; and up 4.81 percent as against imports worth $252.19 million in December 2018, official numbers suggest.

In the long run, furnace oil (RFO) based generation is expected to decline as new LNG/coal based power plants become fully operational and hydel power generation improves with the restoration of water levels in the reservoirs,” a Pearl Securities report noted.

 “The gas shortage had made the government unable to provide gas to different sectors of economy including power plants, CNG stations and fertiliser plants, resulting in huge production as well as foreign exchange losses, but the import of LNG has changed the scenario,” an official said.

The first terminal is operated by Engro Elengy Terminal Pakistan Ltd (EETP). In July 2018 Vopak acquired a 29 percent stake in the project, joining Engro and International Finance Corp as an EETP partner.

The country’s second LNG terminal, Pakistan GasPort (PGP), commenced operations in November 2017 and is again based on the use of an FSRU in Port Qasim.

Pakistan relies on natural gas to meet almost 50% of its energy needs but its proven gas reserves have dwindled in recent years, as consumption has outweighed new discoveries. Early LNG imports have been substituting for domestic gas, but the intention is to raise the share of gas in the nation’s energy mix by reducing the use of polluting and inefficient furnace oil and expensive diesel oil as power station fuels and increasing LNG purchases.

In tandem with the growing commitment to LNG, the government is embarking in an US$8Bn investment programme providing new gas transmission pipelines and combined-cycle gas turbine power stations.

It may be mentioned here that country’s competition watchdog, Competition Commission of Pakistan (CCP) has found various barriers to competition at all levels of the liquefied natural gas (LNG) value chain, hence pushing the end consumers of RLNG at a competitive disadvantage.

The competition assessment of the LNG sector conducted by CCP finds competition barriers in the upstream market due to the LNG contract price negotiated and the pricing model adopted by Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL).

Based on the international best practices in the sector, Competition Commission recommended to improving the pricing models adopted in the Sale Purchase Agreements (SPAs) through alternate pricing arrangements, which will safeguard the interest of both the seller and the procurer of LNG.

CCP has also advocated introducing spot market and natural gas hubs in the pricing model. In the wake of depleting indigenous gas resources and the continuously rising energy import bill, the study also recommends greater focus of the government on renewable energy resources to meet the growing energy demand and energy sustainability.

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