Talks on LNG from Qatar under way

ISLAMABAD: Qatar has offered sustainable supply of LNG to Pakistan for 15 years at 14.5 percent of Brent, but Pakistan wants to ink the agreement for 10-12 years, top official sources at ministry of petroleum and natural resources told The News.
Pakistan is currently in talks with the Qatar authorities in Doha on Sales Purchase Agreement (SPA) for LNG and federal minister of petroleum and natural resources will leave for Doha today (Thursday).
Minister Shahid Khaqan Abbasi confirmed to The News that he is going to join the talks to finalise the SPA. Managing directors (MDs) of PSO and Inter State Gas Company along with relevant officials are already in Doha. “We are close to finalising the Heads of Agreement (HoAs). However, both countries are yet to resolve the issues such as price of LNG, terms of the agreement, volume of gas and mode of payment to Qatari authorities.”
The minister confirmed that Qatar wants to supply LNG to Pakistan for 15 years, but Pakistan wants the agreement to last for 10 years. The minister brushed aside the impression that Pakistan will lock in the price of LNG at 14.5 percent of Brent. He said talks on LNG price have not yet been initiated as both sides are discussing other parts of the agreement.
Official sources, however, claimed that Qatar wants to fix the value of Brunt at $80 as lower cap keeping in view of the dwindling petrol prices. In case the Brent price in the international market goes above $80 then price over $80 will be used in the formula to be agreed with Pakistan. However, the minister says both sides have not yet discussed the LNG price, as this issue will be finalised in the last stage. On the question of payment to Qatar, Mr Abbasi said that back to back L/Cs will be opened for any LNG ship from Qatar and the amount will be provided by the IPPs identified by ministry of water and power and MoWP will be ensuring the back to back L/Cs for every LNG ship that will bring LNG under SPA with Qatar.

The officials said that Prime Minister Nawaz Sharif will intervene to seek lower price once the ongoing SPA dialogue is over. In case Qatar continues to insist on 14.5 percent of Brent and does not show flexibility then the prime minister will intervene in a bid to get lower price of 12.5 or 13 percent of the Brent.
The government wants to import 400 million cubic feet of gas per day that will mostly be supplied to power sector in Punjab. The government is now going to establish LNG Power Park in Punjab that will help reduce the electricity tariff. It may not be out of place to mention here that Nawaz government has already shelved its flagship 6600 MW coal-based power project at Gaddani Power Park.
The government is bound to ensure the LNG supply before March 31, 2015 as the fast track LNG terminal by Engro will be operational by that time and under the agreement with Engro, LNG import will start from April 1, 2015 and in case the government fails to arrange the LNG supply, then it will face the huge penalty from Engro, the owner of LNG terminal at Port Qasim.’