PGPC, PTPL Ink Deal for Pakistan's Second LNG Import Terminal

State-owned Pakistan LNG Terminals Ltd. (PLTL) inked an agreement July 1 with Pakistan GasPort Consortium Ltd. (PGPC) for the construction of the South Asian country's second liquefied natural gas (LNG) import terminal, according to sources in the Ministry of  Petroleum & Natural Resources (MPNR), local media The Business Recorder reported Tuesday.

The LNG Operations and Services Agreement (OSA) was signed between winning bidder PGPC, including Fauji Oil Terminal and Distribution Company Ltd. (FOTCO), and PTPL.

Under the agreement, PGPC will supply 600 million cubic feet per day (MMcf/d) of gas by June 30, 2017 at a levelized tariff of $0.4177 per millon British thermal units (MMBtu) -- the lowest in South Asia, MPNR sources said.

"The tariff compares very favorably with what is being charged by private sector parties in either India or Bangladesh ... The successful achievement of this new benchmark for the region will make LNG in Pakistan even more beneficial for the national economy," a Ministry official told Business Recorder.

PLTL issued the letter of award to PGPC June 24, with the deal signed following receipt of formal approvals from the PLTL Board of Directors, the Ministry of Law and Justice, and the Economic Co-ordination Committee (ECC) of the Cabinet.

The country's first LNG terminal, commissioned by Engro Corp.'s subsidiary Elengy Terminal Pakistan Ltd. (ETPL) in March 2015, is equipped to provide 400 MMcf/d of tolling capacity to Sui Southern Gas Company Ltd. (SSGC) at a levelized tariff of $0.6601 per MMbtu.

With the addition of the second LNG terminal at Port Qasim, there will be 1 Bcf/d of tolling capacity to enable the gas supplies contracted by the Pakistani Government from Qatar and Switzerland-based trading firm Gunvor to be injected into the national gas system. The entire regasification capacity of the proposed PGPC terminal would be utilized to deliver LNG to three new 1,200 megawatts power plants scheduled to commence operations in Punjab in mid-2017.

When operational, the second LNG terminal will reduce the current gas deficit by half, resulting in up to $3 billion in annual savings for the country.

Sources told The Business Recorder that the MPNR is drafting plans for three more LNG terminals before 2018, with a high-level delegation led by the Secretary of MPNR scheduled to meet with representatives of United Arab Emirates' Emirates National Oil Company (ENOC) in Dubai soon to discuss the building of a third LNG terminal through a government-to-government deal.

Natural gas accounted for around 32 percent of Pakistan's primary energy supply in 2012 and it had a supply shortfall of 912 Bcf in 2013, the U.S. Energy Information Administration said in a report on the country updated September 2015.

Chee Yew has covered the upstream and downstream sectors of the oil and gas industry in Asia for more than 15 years. Email Chee Yew at cheeyew.cheang@rigzone.com

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