OVERDUE CONSTRUCTION OF LNG TERMINAL
TARIQ AHMED SAEEDI (email@example.com)
Feb 1 - 7, 2010
Ministry of petroleum and natural resources has decided to push ahead the project of construction of liquefied natural gas terminal at Port Qasim for the approval of economic coordination committee of the cabinet. The total cost of the project is recently estimated at $1.2 billion, which is much higher than the previous estimations.
The LNG terminal would be the first integrated facility in the country for the re-gasification of liquefied natural gas back in to the natural gas, to be imported from Qatar, which is the world's largest exporter of LNG.
Government had signed an agreement with a private company for the construction of floating LNG terminal at Port Qasim two years back. However, it is not clear what made the unusual delays in the construction of the terminal and development of infrastructure, which is prerequisite to make use of energy supplies from overseas. It seems that now government is scouring fiscal space to keep the financial burden of the construction of the terminal and partner with private companies only for the supply of LNG.
Syed Naveed Qamar minister for petroleum and natural resources told media that the government was eager to complete the project by 2011. He said the project would be presented to economic coordination committee for approval after its finalization by the ministry of finance. Government is in discussion with suppliers for supply of LNG, he added specifying Shell as a potential supplier. Shell is a right pick by the government for its having equity interest in the Qatar-based LNG producer that is supposed to deliver LNG to Pakistan.
An agreement between Qatar and Pakistan on the supply of liquefied natural gas to Pakistan is expected to be signed, according to a news report by the MENAFN. "They are now discussing with Shell through Qatargas 4. So we will see what the results are," quoted Jordan-based leading provider of online and wireless financial content deputy premier and minister of energy and industry, H E Abdullah bin Hamad Al Attiyah as saying during the 2nd Annual Gas Processing Symposium opened January 10, 2010 in Doha. He said Shell was involved in discussion from Pakistan's side.
Qatargas exports 10 million tonnes of liquefied natural gas per annum to Japan and Spain. It is in the expansionary stage right now and all set to enlarge its exports to 42 million tons to Asia, Europe, and North America. Shell has 30 percent share in Qatargas 4 project's onshore and offshore assets. The company has so far delivered 1200 cargoes.
According to the company's forecast, the first cargo from Qatar Gas 4, one of the prolific fields, would be possible by end of 2010.
One estimate says Qatar has the 28 percent share in the total production of liquefied natural gas worldwide. According to that, global reserves of condensed gas stand at 3050 trillion cubic feet. Qatar is the world's largest exporter of LNG and its production would swell to 77 million metric tons this year. In fact, Middle East and Africa have huge reserves of natural gas that can be converted to LNG. In liquid form that is developed after natural gas undergoes super cold, it becomes cost effective to transport safely gas to long distance and that is too when this process produces gas that takes less space.
The construction cost of LNG terminal is rising with the passage of time. Port Qasim expected project's curtain raising in 2010. Recently, government revised the date of completion of the project to 2011. It is worthwhile recalling the estimated cost was calculated at $160 million when Port Qasim struck a deal with Pakistan Gasport for construction of floating LNG terminal with three million tons per annum capacity.
If things move according to the ministry's plan, the first import parcel of LNG would be ready to be converted in to natural gas in the cold storage plant at Port Qasim by 2011. However, government has to expedite its efforts to set up LNG terminal at Port Qasim without which LNG cannot be regasified back in to natural gas. With total estimated cost of $1.2 billion and conversion capacity of 3.5 million metric tons LNG in to 500 million cubic feet per day, the regasification plant is an integral part of LNG import project.
SSGCL and SNGPL are said to be in the planning of construction of gas transmission infrastructure to connect to regasification of liquefied natural gas plant at Karachi. The project involves construction of 30 inches and 18-kilometre loopline at Bin Qasim for utilizing of 200 million cubic feet per day regasified liquefied natural gas. The estimated cost of the project was Rs650 million.
Oil and gas regulatory authority is expected to finalize the decision regarding issuance of LNG construction and storage licences to LNG project applicants this year. Private companies are expressing their interests in liquefied natural gas project and government tends to share responsibilities with private sector to take in capital-intensive multistep gas supply.
Government would likely to confine itself to infrastructure developments for the gas supply from regasification plant while it seems to delegate private sector with the responsibility of LNG import. Ogra had issued provisional license to Pakistan Gasport Limited to facilitate import of LNG. Private sector can also sponsor construction of terminal.
In view of the increasing gas demand by the industries, underfed power stations of KESC, and overall rising gas load demand in CNG stations, only the further gas supply will be able to meet the demand. The addition of gas would augur well to reduce the energy shortfall in the country. Due to the heavy cost of the project, government has to seek sponsors for the infrastructure developments and financial close of the project. The LNG terminal is not delayed as far as the import is not ready to be moored. Until, the train of Qatargas is not prepared, a prolongation is justified. Nevertheless, the project should be completed as soon as possible to help abridge gas shortfall.