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LNG import

LNG import

According to newspaper reports, the Economic Coordination Committee of the Cabinet has authorised the state-owned oil company to sign a deal with the Qatar government to import Liquefied Natural Gas to the country after the later agreed to cut its sale price to 13.39 percent of Brent. The deal will cost Pakistan $15 billion, spanning over 15 years from 2016 to 2031. Experts believe the cut in sale price will ensure annual saving of $42 million at current crude oil prices. The committee meeting, chaired by Finance Minister Ishaq Dar, has approved the signing of the deal with Qatar Gas Operating Company-2 and has authorised the PSO to execute the agreement under government-to-government arrangement. Earlier, the price committee had recommended the price at 13.39 percent of the Brent slope, which was lower than the 13.90 percent the price earlier Qatar had offered. The overall deal price will come down to $15.3 billion from the earlier estimated price of $16 billion. At 13.39 percent of Brent price, the LNG price at Port Qasim would cost $5.50 per million British thermal units.

According to the agreement, Qatar will supply 1.5 million tons per annum and the quantity will be doubled after two years to continue until December 2031. The two governments have ensured fairness of the deal, athorizing the either party to terminate the deal in case of insolvency or the breach of the agreement. The Qatar government can also cancel the deal if the bank issuing the letter falls below the required credit rating or the company fails to pay the due amount. The deal is covered by the international laws. Pakistan is energy starved country and deal with Qatar is a good omen to operate the wheel of industries in the country. The country has failed to realize the potentials of natural gas as out 282 trillion cubic feet gas reserves, only 55TCF have been estimated at recoverable which make hardly 20 percent of the total potential in the country.

Pakistan has vast coal, natural gas and shale gas reserves, but the industry continues to face shortage of gas and is subjected to load-shedding. The situation goes from bad to worse in winter season when demand is high, but supply is minimal. Governments in the world take necessary steps to facilitate their people, but every successive government in Pakistan tries to collect revenue from the masses even from welfare projects. It should be noted that good economy itself generates revenue and bad economy is a burden on the national exchequer. It is hoped that the government will rationalize the prices of the imported LNG to facilitate the people.