Closure of Engro LNG Terminal: Law Division rejects postponement of dry docking

ISLAMABAD: The much-awaited legal opinion of the Law Division that has been submitted with the authorities concerned is not in favour of postponement of the dry docking of existing floating storage and regasification unit (FSRU) Exquisite at the Engro LNG Terminal till August, rather it is in favour of Excelerate Energy, which is a US company and owner of the FSRU. The government wanted the EETPL to defer the dry docking till the month of August.

The viewpoint of FSRU owner company was: “The certification by the Class Society is going to expire on June 30, 2021 and in the absence of the certification, beyond June 30, FSRU cannot be allowed to operate and re-gasify LNG at Engro Terminal without dry docking. And more importantly international marine lawyers also advocated the dry docking, opposing the postponement of dry docking.”

The Law Division, headed by Farogh Naseem, made up its opinion after listening to the inputs from legal teams of SSGC, EETPL, SNGPL, PSO, LNG, marine lawyers and lawyers of the US company Excelerate Energy, which is the owner of FSRU. The Law Division has suggested the dry docking as per plan suggested by EETPL and closure and opening of the terminal from June 29 to July 05, 2021.

It is pertinent to mention that the FSRU Exquisite is being operated 24 hours for the last six years and no dry docking has been done so far, knowing the fact it was due from 2019 and EETPL has been agitating the issue of dry docking through official correspondence with SSGC and Petroleum Division but no required action took place on behalf of Pakistan side. During the said period, the Class Society has extended exemptions on dry docking two times, also because of Covid-19 pandemic. The Class Society last time asked for dry docking in March 2021. However, SSGC did not allow dry docking of FSRU in Qatar and then it was decided that dry docking should be carried on the terminal. So when two chambers of FSRU were opened, it was felt that the LNG Terminal would have to be shut down for three months. The dry docking is possible only in Qatar where the dry docking facilities are available. However, the authorities in Islamabad still seem confused in letting the EETPL (Engro Elengy Terminal Private Limited) go for dry docking, saying the LSA (LNG services agreement) is strictly between EETPL and Sui Southern Gas Company (SSGC). "There are no restraining orders for EETPL in taking decision for dry docking and so much so, the Port Qasim Authority (PQA) has also promised to cooperate in dry docking through its letter to EETPL,” one of the relevant officials confided to The News.

The official said that the Law Division’s legal opinion was not binding on SSGC. However it is strange that the government is not asking the SSGC in clear terms to allow dry docking. When this issue surfaced, the Petroleum Division, Marine Ministry and CCOE became very active keeping in view the adverse impact on gas and electricity availability in the country when there is peak summer season. So much so, that the prime minister headed the meeting on the dry docking issue. Now the legal opinion of Law Division has been submitted with the government, saying dry docking cannot be postponed, rather it should be allowed as per plan from June 29, 2021.

When contacted, an Engro official said that the Law Division’s legal opinion was encouraging but SSGC with which the LSA was signed, was a state owned company and now it should allow the EETPL to go for dry docking.

“Yes, we received a letter from PQA but it will allow the existing FSRU to leave the port only when the SSGC allows it,” he said. He said that replacement FSRU Sequoia was to arrive on Sunday and Engro Company was quite perplexed as it was not easy to de-commission one FSRU and commission another FSRU. “We have to shut down the terminal for three days and if SSGC or the government delays the formal permission after June 29 even by four hours, then the LNG terminal shutdown period would increase from three to five days as the cooling process of one FSRU takes a lot of time after inventory is over.”

The official at the Energy Ministry says that CCOE has already approved the gas load management plan with an arrangement to run the power plants on furnace oil and diesel. “We have to manage a gas load management plan against the 12-15 percent shortfall. Because of closure of Engro Terminal, non-export industry, CNG and the fertilizer sector will not be provided gas. And when the replacement FSRU after its commissioning will come on stream, it will be able to re-gasify LNG up to 92 percent by July 05."