IP gas pipeline still under jaws of sanctions: Khaqan

ISLAMABAD:  Petroleum Minister Shahid Khaqan Abbasi said on Monday that Pakistan is committed to Iran-Pakistan (IP) gas pipeline but it is still facing sanctions.

“The transaction of dollars has not been allowed and investors are not willing to finance due to ‘snap back’ clause which may lead to sanctions again on the project,” he said while addressing a seminar on ““LNG Market Analysis and Trends” here.

He said that IP gas pipeline project required $2 billion investment and investors were not willing to invest due to two issues of dollar transactions and ‘snap back’ clause which allows imposing sanction again. He said that Pakistan was committed to implement the project and was working on alternate plan.

To a question the minister said that international sanctions against Iran are still in place so under the current situation Pakistan can’t build Iran-Pakistan gas pipeline project. However, he said that Pakistan and Iran are closely collaborating on all the subjects including IP and once sanctions against Iran are lifted work on the project would soon be started.

He said that LNG was short, medium and long term solution for gas crisis in Pakistan. “LNG will lead to growth of the country and reduce oil import bill,” he said adding  that it was cheaper than gas through IP and TAPI pipeline projects.

Linking gas prices with oil index, he said there was no other benchmark available in the world to link price of LNG. He said that India had even linked gas price with alternate fuel oil and it was getting same price as Pakistan in revised deal with Qatar. He said that consumers using LNG would pick its price and domestic consumers would not be burdened. 

He said that Pakistan was currently importing 450 million cubic feet of liquefied natural gas (LNG) and it will be increased to 2.4 Billion Cubic Feet per Day (BCFD) in the next two years.He said that uninterrupted gas is being supplied to industries and power plants adding that Pakistan is importing LNG from Qatar at the cheapest rate in Asia.

He said the government was also focusing on indigenous exploration of gas reservoirs to overcome energy crisis, but since 2000 local gas production is hovering around 4 BCFD, while country’s total gas demand has reached 8 BCFD so to cater the demand/supply gas import of LNG is only available option.

“Pakistan’s per annum crude oil imports are worth $15 billion of which furnace oil imports are worth $9 billion. Replacing furnace oil with LNG will save at least $2 billion per annum for the country as it is cleanest and having best efficiency as compared to other fuels used in power production” he added.

He said the government is expecting the private sector to come forward as infrastructure was available to deliver LNG based gas to customers.

He said Pakistan energy crisis could not be resolved without injecting more gas in the system. “We hope local as well as international oil /gas exploration and production companies operating in Pakistan would explore more local reserves in future”, he added.

The minister said that Turkmenistan-Afghanistan-Pakistan-India Pipeline (TAPI) was now becoming a reality but it will take four to five years to come in the system.Mohsin Siddiqui consultant Granada Group of Companies Inc USA said that low gas prices will stay in next 6-7 years. “Investors are looking at possibilities to supply LNG to Pakistan,” he said adding that long term agreements should not be linked with oil as Japan, Korea and China were concerned about their long term contracted linked with oil. “These countries sign everything in contracts and Chinese were now desperate to sell these contracts,” he said adding that even Japan was working on gas benchmark to link LNG prices. “Linkage between oil and gas is going to fade away due to advance renewable technology,” he said.

Rahat Kamal Project Director Gasport said that government was working on second LNG terminal and Pakistan Gas Port Limited had been declared successful bidder. “We are hopeful that LSA will be signed by end of this month,” he said adding that project will be completed in 12 months.  “LNG is short and medium term solution,” he added.