Pakistan will be installing an additional two liquefied natural gas (LNG) import terminals within the next 12-15 months to help cope with the gas crisis. The government has approved the connection of the terminals with the transmission and distribution network from Karachi to upcountry areas.
The terminals are being built by Energas and Tabeer. Once the terminals are commercially operational, they will increase the gas storage capacity twofold to 10 days in comparison to the current capacity of five days.
Since the private sector is responsible for setting up the terminals, the government will not be required to pay capacity charges in case it does not utilize the storage facilities.
It must be mentioned, the government of Pakistan pays each of the two currently operational LNG terminals up to $272,000 per day.
The new terminals will be directly selling imported gas to industries as well as commercial and domestic consumers at competitive rates rather than selling through the state. However, the government will always have the option of importing gas via the new terminals.
The state has allowed, the two terminals to transport LNG up to 300-350 million cubic feet (mmcfd) each on a daily basis through the network of Sui Northern Gas Pipelines Limited (SNGPL).
An official from one of the companies said, “They are expected to formally ink a gas transportation agreement (GTA) in the next one to two months.”
The total cost of construction for the two terminals is approximately around $1 billion. The official added,“It costs around $500 million to construct a jetty and acquire a Floating Storage and Regasification Unit (FSRU).”
Capacity allotted to LNG terminals
Federal Minister of Energy Hammad Azhar tweeted on Saturday, “The government has facilitated the allocation of pipeline capacity firm offer to 2 upcoming (LNG import) terminals. The new terminals will have no take-or-pay liability (daily capacity charges) on the government like previous terminals and they will be based on business-to-business models. These measures will enhance the capability of the system to handle imported gas in a cost-efficient manner.”
The industry official said the inking of the gas transportation agreement was a necessary prerequisite to commencing the construction of new terminals. He said, “A terminal can be set up in around one year.”
An announcement regarding the establishment of LNG terminals at Port Qasim in Karachi was made by Tabeer and Energas a couple of years ago. The acquisition of construction licenses and getting approval to connect the terminals with the gas distribution and transmission network across the country took a long time.
The official said,” Each terminal would have installed capacity to import 1,000 mmcfd of LNG, however, they would transport just 300-350 mmcfd until the North-South pipeline was laid”.
The minister further wrote in his tweet, “The government is moving fast on finalizing details of PakStream gas pipeline project (formerly called North-South pipeline) with Russia”.
Currently, Engro and Pakistan GasPort contribute to the import of a total of 1,200 mmcfd of LNG, however, the slowdown in the production of gas from local fields is adding to the deficit, which results in outages. In 2015 Pakistan set up its first LNG terminal.
Local oil and gas exploration firms contribute around 3,400 mmcfd. A total of 4,600 mmcfd of gas is supplied across the country through SNGPL and Sui Southern Gas Company (SSGC) but the required amount is 6,500 mmcfd.
The largest consumers of imported gas are power producers. Apart from them, fertilizer manufacturers, CNG fuel stations and textile manufacturers also use LNG as the locally produced gas remains unavailable to them.
