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Revival of CNG sector set to take effect

Pakistan is an energy-deficit country. It has a huge, demand for natural gas that has hindered economic growth over the years. But the country has recently embarked on an ambitious and aggressive plan to meet its energy needs.

We have been keenly observing that the Compressed Natural Gas (CNG) sector of Pakistan is gradually reviving. Motorists have started giving preference to CNG on petrol again, which is an inexpensive and environment-friendly fuel. In order to meet and balance the demand and supply gap the Government of Pakistan will soon stop rationing in CNG sector.

Pakistan is heightening imports of liquefied natural gas (LNG) to overcome energy shortage, while undertaking the longer term goal of upgrading its energy infrastructure with new pipelines, refineries and storage facilities. Pakistan is floating terminals that will convert imported LNG into gas. The floating import terminals have opened up new markets for LNG producers.

Pakistan started LNG imports in 2015, with Pakistani petrochemical and energy company Engro Corp Ltd leasing a floating import terminal, stationed in Karachi’s Port Qasim from where gas is piped into Pakistan’s local distribution system.

A number of international entrepreneurs were contacting The All Pakistan CNG Association (APCNGA) and showing keen interest to invest after seeing potential in CNG sector of Pakistan. Like in 2012, Pakistan will be on top among CNG user countries. With continued government policies to revive the CNG sector, Pakistan would be again number one CNG user country in next four years.

It appears that the fate of thousands of CNG stations is closely tied to signed agreements to haul Liquefied Natural Gas (LNG) vessels into Pakistan. Previously closed down due to shortage of gas, the CNG stations are confident that, along with the imported fuel, a robust revival is in the pipeline.

APCNGA is finalizing modalities with Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas (SSGC) for effectively utilizing their network to supply its own imported LNG to CNG stations.

The Universal Gas Distribution Company (Pvt) Limited is the first-ever company to secure LNG sale and marketing licence from the Oil and Gas Regulatory Authority (OGRA) to feed CNG outlets.

Now with confidence we can safely say that future will be of the cheap and environment-friendly fuel, which is almost 30 percent cheaper than the petrol at the current rates. CNG stations are consuming 100 mmcfd gas per day and it will be increased to 250 mmcfd per day level soon.

The government encouraged CNG as an alternative fuel as it was environment-friendly and helped unburden country’s fuel import expenditure. The rapid rate at which the stations grew, combined with fast depleting natural gas reserves, resulted in a ban on new stations in 2008.


The CNG stations, which were closed in Punjab due to the gas supply constraints, would be operational again once Rs800 billion gas projects were initiated. The second LNG terminal, Pakistan LNG Terminal Limited at Port Qasim, is expected to kick-start operation in 2017. The terminal is being set up by Pakistan GasPort Consortium Limited.

Pakistan is aggressively pursuing the import of Liquefied Natural Gas (LNG) as its third terminal at Port Qasim would become operational in 2018, taking the total installed capacity close to 2,000 million cubic feet per day.

A Turkish company, Global Energy Infrastructure Limited (GEIL), is constructing the third terminal that will have a capacity of 750 million cubic feet per day (mmcfd) at Port Qasim’s LNG Zone in Karachi.

The terminal would be ready to import LNG in the second half (July-December) of 2018. This is being set up at a cost of $250-300 million and will be the first private-to-private LNG project.

The terminal is being constructed by a consortium of the private sector and would facilitate players such as CNG dealers, fertilizer manufacturers, power producers and state-owned companies like Pakistan State Oil.

Höegh LNG, one of the leading providers and operators of LNG Floating Storage Regasification Unit (FSRU), and LNG carriers signed a contract in December 2016 for chartering FSRU with GEIL for the LNG import terminal.

Qatar Petroleum (QP) announced that it along with Total, Mitsubishi, ExxonMobil and Hoegh have joined the consortium busy in setting up the terminal.

The FSRU, as per the agreement, would help import gas in the country for a period of 20 years from Qatar gas. The agreement also provides an option to extend the gas import period by an additional two to five years.

Qatar Petroleum said in a statement “the Consortium will seek to develop a project that includes a Floating Storage and Regasification Unit (FSRU), a jetty and a pipeline to shore to provide a timely and reliable natural gas supply to Pakistan.”

The FSRU will have a minimum regasification capacity of 750 million cubic feet per day by 2018.

The first LNG import terminal in operation was established by Engro’s Elengy Terminal Pakistan Limited. It has an installed capacity of 600mmcfd.

Pakistan will be in the market within the next four months to buy around 4 million tons per year of LNG to supply its second import terminal.

The LNG will most likely be purchased in a series of tenders at between 0.75 and 1.5 million tons apiece. Pakistan officials see LNG imports as providing fast relief.

The country produces around 4 billion cubic feet of gas a day, meeting around half of the country’s gas needs.

Compounding the shortfall, domestic gas output is falling at a rate of up to 3 percent a year. Each LNG import terminal can supply around 0.6 to 0.8billion cubic feet of gas a day.

In terms of meeting potential demand for five import terminals, China is planning the country’s third floating import terminal at Gwadar Port. Three other floating import projects are under consideration.

The floating gas terminals will feed a network of pipelines in Pakistan, including several in the works.

China is building a pipeline eastward from Gwadar Port to Nawabshah, in the southern province of Sindh. That will move gas from the floating terminals and could also help with the transit of gas from neighbouring countries.

Production at one fertilizer plant in Karachi has risen 5 percent since using LNG.

Pakistan is to start importing huge quantum of 1.2 billion cubic feet per day LNG from July 1, 2017 ensuring the substantial relief to the masses of the country presentably experiencing unbearable gas load shedding. Currently Pakistan is importing LNG in the range of 400 mmcfd, which is not enough to cater to the needs of the countrymen.


Gunvor and ENI have managed the biggest-ever LNG supply deal for 5 to 15 years under which Pakistan will be having 240 LNG shipments. LNG supply under the said new deals will start from July 1, 2017, according to the official source.

Pakistan LNG Ltd completed the international competitive bidding and declared the ENI for 15 years LNG supply contract and Gunvor for 5 years contract as winner parties.

ENI has won the 15 years tender at the price of 12.29 percent of the Brent under which it will provide 180 LNG cargoes. The ENI’s bid was found the lowest one among the five shortlisted bidders.

Similarly, Gunvor has bagged five year LNG supply contract under which 60 LNG cargoes to be provided to Pakistan at the price of 11.6247 percent of the Brent which is the lowest one among the 10 bids.

Pakistan has only one LNG terminal owned by Engro which is being used to import LNG. The Government and Engro Company are in talks for handling the import of 200 mmcfd LNG more.

The second LNG terminal being erected by Pakistan GasPort Consortium Limited (PGPC) is scheduled to come on stream on June 30, 2017 and LNG of another 600 mmcfd will be supplied through the said LNG terminal enabling country to import of 1.2 bcfd LNG from July 1, 2017.

For the second LNG terminal, LNG floating storage and re-gasification unit (FSRU) to be deployed in Pakistan has achieved completion and will sail to Karachi on schedule.

The government is also going to establish two LNG terminals at Gwadar each having capacity to handle 600 mmcfd LNG meaning by that once the LNG terminals are set up at the port, the government will also start importing another 1.2 bcfd LNG in the country.

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