ISLAMABAD - Qatar has agreed to export LNG to Pakistan while Iran has agreed to review the gas tariff and exemption from heavy penalties to fast-track the IP gas pipeline project, according to official sources.
Major breakthroughs are import of LNG from Qatar to Pakistan and the IP gas pipeline following the recent visit of a high-level Pakistani delegation led by Petroleum Minister Shahid Khaqan Abbasi to Qatar and Iran.
The sources also told The Nation that the recent visit of Pakistani delegation was successful as meetings with the officials of Qatar government and the high-ups of US-based Conoco Phillips Company (CPC) concluded in a pragmatic manner. Shahid Khaqan Abbasi briefed the meeting in detail on the initiatives Pakistan has taken to fulfil the condition of Qatar regarding construction of an LNG terminal in Karachi.
According to the sources, the minister told the meeting that Pakistan had made arrangements for LNG distribution system. He also said a formal agreement with Engro Vopak Terminal Limited (EVTL) would be inked very soon to bring LNG to the country to meet the burgeoning energy needs.
Qatar expressed its satisfaction over the initiatives of Pakistan and showed willingness to export 400 million cubic feet of liquefied natural gas (LNG) to Pakistan, the sources added.
“Around 40mmcfd of LNG will be injected into the gas system of the country by November 2014,” a senior official at the petroleum ministry said.
It is also learnt that a Pakistani delegation, after having negotiations with Qatar and ConocoPhillips Company (CPC), left for Iran on December 8, 2013, to fast-track the Iran-Pakistan gas project. The sources also said Iran had expressed willingness to review the IP gas pipeline project tariff. Similarly, Iran had agreed to exempt Pakistan from heavy penalties in case Pakistan failed to construct the gas pipeline till December 2014. Moreover, Iran has once again offered financial support to Pakistan for the construction of gas pipeline inside Pakistan if the latter sped up the work on the project. And, last but not the least, Iran has asked Pakistan to ink a deal with Iranian company, Tadbir, with regard to engineering, procurement and construction (EPC) of the IP gas pipeline.
The high-level delegation, led by Petroleum and Natural Resources Minister Shahid Khaqan Abbasi, visited the two countries to materialise import of the much-needed gas to the country.
Earlier, Qatar, while refusing to construct an LNG terminal at the port city of Karachi, had expressed a friendly gesture of agreement to supply 500mcfd liquefied natural gas (LNG) to Pakistan to resolve the energy issue.
At present, Sui Southern Gas Company Limited has cleared the retrofitting of the LPG terminal for import of LNG, besides approving the service-tolling contract to Engro Vopak Terminal Limited (EVTL) with certain conditions. After the approval of $2 billion service tolling contract to Engro Vopak Terminal Limited (EVTL) for the import of LNG, the government has swung into action to ensure LNG supply from Qatar. Again, the cost of LNG which has so far been worked out with Qatar at $19.49 per MMBTU and the price differential will cost the country $326 million extra in the first year alone.
Earlier, Qatar had asked Pakistan to ink a deal with US-based ConocoPhillips Company (CPC) which had linked the provision of LNG to Islamabad only after the incumbent government would guarantee its investment, besides other conditions. ConocoPhillips Company (CPC) enjoys the rights in Qatar to export LNG on the directives of Qatari government. Certain issues with regard to import of Qatari LNG to Pakistan have already been settled with the US firm during the energy talks held in the US this year.
Qatari LNG is primarily for the powerhouses in Pakistan to generate 2,500megawatt electricity. Moreover, EVTL terminal would first import 200mmcfd LNG and then 400mmcfd while Pakistan wants to import 2bcfd LNG in two years.
Following the deal between Iran and the world powers, it is believed that sanctions would be relaxed and Pakistan would be able to bridge the widening power demand supply gap. Pakistan has already told the US that both Pakistan and Iran have signed gas agreement. A detailed non-paper stating Pakistan’s position on the matter was also handed to US Secretary of State John Kerry during his visit. Under the IP gas project, 21.5 million cubic meters (mcm) per day of Iranian natural gas would be exported to Pakistan for electricity generation up to 5,000 megawatts.
The PML-N government has repeatedly dispelled the impression that it had abandoned the project due to pressure from the US, Saudi Arabia and some other oil-rich states.
In a statement on Tuesday, the Foreign Office said Pakistan and Iran had decided to speed up implementation of the IP Gas Pipeline Project, devise a roadmap to counter the challenges and have an effective coordination on this significant project.
It also said a meeting would be held shortly between the experts of both the sides to review parameters for accelerating work on the IP gas project.