Utilisation of additional capacity of new FSRU in doldrums

ISLAMABAD: The US-based company, Excelerate Energy (EE), has refused to extend for a few weeks its deadline of August 31 for the government to retain the FSRU (Floating Storage Regasification Unit) Sequoia currently functional at the Engro LNG terminal, saying it is committed to its new deal for regasification of LNG in Brazil, so it needs the government’s response by the last days of the current month. The response of the US firm has left the government on a tight rope putting the utilisation of new FSRU at Engro LNG Terminal in doldrums.

Informed sources confided to The News that Energy Minister Hammad Azhar on Saturday held talks through video conference with the top management of Excelerate Energy, which owns both FSRUs (Sequoia, the new one having storage capacity of 900mmcfd and regasification ability of 780mmcfd and Exquisite, the old one with capacity up to 650mmcfd). The energy minister tried to seek an extension in deadline for a few weeks up to November 30, arguing more time is required to complete certain approvals and contractual arrangements, but the top management of the US company didn’t agree to extend the deadline as required by the minister, arguing that it has to take one of its FSRUs to Brazil under a new deal as soon as possible and it wants the government to come up with the decision to retain the FSRU or not by August 31.

Now intense discussions between the government (Petroleum Division, SSGC) and Engro Elengy Private Terminal Limited (EEPTL) are taking place and Engro is in contact with Excelerate Energy. “And under the new scenario, the stakeholders have geared up efforts for the government to make a decision by August 31.”

When asked if the US company Excelerate Energy will extend the deadline by three to four days more depending upon the progress in the ongoing discussions, the official said it seems difficult. However, Engro sources say: “There are 50:50 chances for the government to retain the new FSRU as discussions are in a positive direction and we feel that there is a genuine push from the Petroleum Division towards the SSGC to retain the new FSRU.”

However, the same sources also said that the SSGC officials are hesitant to retain the new FSRU as many of them are already facing NAB investigation. So far, the NAB has not responded to the letter of the Petroleum Division seeking a go-ahead for the utilisation of additional capacity of 330mmcfd available with the existing FSRU at the Engro and PGPCL terminals.

In case the government fails to retain the new FSRU, then under the existing contract, the earlier FSRU Exquisite, which went to Qatar on June 28-29 for dry docking, will come back on September 5-7.

And under this scenario, the Engro LNG terminal will be shut down by three days, meaning that the system will have no 680mmcfd gas flow which will trigger huge loadshedding in the country. Then after three days, the old FSRU will start ramping up the gas in the system gradually and will fully come on stream on the sixth to seventh day.

However, top officials said that the government wants the US-based company Excelerate Energy (EE), which owns both FSRUs Exquisite and Sequoia, to extend its deadline till November 30 as more time is required to complete approvals and contractual arrangements. On top of it, the Petroleum Division has not yet received the response of the NAB, the anti-graft agency which is already in the investigation process against the Engro LNG terminal for increasing the regasification from 400 to 600mmcfd.

The government, under the directives of the prime minister, wants to utilise the additional capacity of both FSRUs currently functional at the Engro LNG terminal and PGPCL terminal. Both the FSRUs have additional capacity of 330mmcfd which will provide much solace to the government in the forthcoming winter season. The local gas production has reduced to 2.8bcfd (billion cubic feet gas per day) and the government has contracted deals to import 1.2 bcfd through two LNG terminals.

So the current gas availability at the maximum is at 4bcfd, whereas the demand goes up in the winter peak season up to 5bcfd. The government wants to utilise the additional 330mmcfd capacity to reduce the intensity of the gas crisis in the winter season. The PGPCL top management wants to utilise its additional capacity of 150mmcfd on private-to-private model and to this effect the PGPCL and Pakistan LNG Limited (PLL) are in discussion.

Discussing the possible way forward, the informed sources said, the SSGC may issue a letter of request to the EETPL stating that, subject to all the required regulatory and governmental approvals, the SSGC wishes to retain Sequoia for the remaining period of the contract. And to complete the approvals and contractual arrangements, the SSGC may request the EETPL to extend the validity of the offer to retain Sequoia, upto November 30, 2021.