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Award of contract for LNG terminal at Port Qasim likely today

Award of contract for LNG terminal at Port Qasim likely today

ISLAMABAD: The federal cabinet is meeting today to award contract of multi-million-dollar liquefied natural gas (LNG) terminal at Port Qasim to either of its two bidders, Elengy Terminal Pakistan Limited (ETPL) and Fauji Foundation.

The cabinet will take up the LNG services agreement initiated between Sui Southern Gas Company (SSGC) and ETPL for approval. Petroleum and Natural Resources Minister Shahid Khaqan Abbasi has said that there would be no more delays. “We were just waiting for the meeting to be held. Everything has been done and we will get the final approval today.”

As the competition between Fauji Foundation and ETPL rages, the former’s Managing Director Lieutenant General (retired) Muhammad Mustafa Khan, in a letter to Prime Minister, has written the proposed LNG tolling project was not proceeding as planned as it did not meet the fundamental criterion of site selection for safety and marine operations.

However, ETPL Chief Executive Officer Imran Sheikh insisted that the LNG services deal was in line with the request for proposals and met transparency requirements. He said international consultant Lloyd’s Register had cleared the site of existing terminal for handling LNG import and the company had met requirements of the Port Qasim Authority (PQA) for a no-objection certificate.

“Now, we are hoping for the approval of the LNG services agreement by the cabinet,” he said, adding after the award of contract, terminal facilities would be set up in 11 months.

The cabinet go-ahead is expected to pave the way for LNG import from Qatar based on a state-to-state deal. Earlier, Doha asked Pakistan to first put in place an LNG handling facility before going for import.

The government is stepping up efforts to bring first LNG supplies this year and has assigned Pakistan State Oil (PSO) the task to import gas because of its sound financial position.

The terminal will handle 200 million cubic feet of LNG per day in the first phase and 400 million cubic feet per day in the second phase, which will begin next year.

Besides imports from Qatar, the government is also exploring the possibility of inviting tenders from private players. “Multinational companies like Royal Dutch Shell have expressed interest in arranging LNG supplies, which will be possible through floating tenders,” an official said.

ETPL, which had been declared successful bidder, had quoted a tolling fee of 60 cents per million British thermal units. This price had been approved by the consultant.

According to officials, the price was evaluated and matched with the regional tolling fee for terminal services and therefore the Ministry of Petroleum and Natural Resources requested the cabinet to approve the award of contract.

The petroleum ministry pointed out that the consultant had also taken into consideration the engineering estimates of similar projects. In a similar project, advertised by SSGC, the tolling charges were quoted at 80 cents per million British thermal units.