No capacity in existing pipelines: Two new LNG terminals approved

ISLAMABAD: The federal government on Tuesday approved two new LNG terminals at Port Qasim conditionalising them to NOCs from the defence ministry within 30 days, while the Petroleum Division will allocate the capacity to them in the existing pipeline on first come first served basis. This will help complete formalities, making the terminal operators able to set up new LNG terminals.

Pakistan is currently importing LNG through existing two LNG terminals; one is owned by Engro and other owned by PGPCL (Pakistan Port Gas Consortium Limited). In the existing LNG terminals, the government has provided the offtake guarantee of 1.2 billion cubic feet per day.

The summary was submitted to the federal cabinet that had met on Tuesday to discuss why the Ministry of Defence was earlier reluctant to issue NOCs to the new LNG terminals and what stance the state-owned gas companies, including Sui Northern and Sui Southern, had taken on the new terminals, which are to be built on private to private business model.

The federal cabinet has approved two new LNG terminals despite the fact that the Ministry of Defence was opposed to their establishment, pleading that the Pakistan Navy had certain reservations with respect to security of the project and was reluctant to grant NOC. The Pakistan Navy had also highlighted the aftermath of enemy attack on oil installations near Karachi in 1971, which had resulted in heavy fire and collateral damage, owing to which the Defence Committee of Cabinet (DCC) had imposed a ban on oil storages near port areas in 1984 giving the Pakistan Navy the lead role in preventing any such establishment in the port areas.

The need for a long term plan for relocating the energy facilities away from the port areas was also agreed in the meeting held on July 27, 2020, attended by the top officials of the ministries of energy and maritime, that had decided the Ministry of Energy would refer the issues to the National Security Committee for undoing the recommendations of the Pakistan Navy.

It is pertinent to mention that the gas companies Sui Northern and Sui Southern were of the view that in the existing gas pipeline structure, there is no capacity available at all for the new LNG terminals to transport their imported gas and more importantly, the Petroleum Division had also endorsed their viewpoint.

But the federal cabinet has allowed the capacity in the existing gas pipeline infrastructure for the new LNG terminals. The SSGC and SNGPL were of the view that the LNG pipeline-I and pipeline-II are currently enough to cater to the requirements of existing LNG terminals and there was no room for allocating more capacity to new LNG terminals in the existing infrastructure. It is not possible to operate the new LNG terminal without allocating more capacity in the existing infrastructure.