After having legal opinion from Law Division CCOE will decide closure of Engro LNG terminal till August

The Cabinet Committee on Energy (CCOE) will decide in the next 72 hours to either delay shut down of Engro LNG Terminal by pending the dry docking of FSRU (Floating Storage Regasification Unit) for one and a half or two months or go as per plan after having opinion of Law Division, Secretary Petroleum Dr Arshad Mehmood, told The News.

Dry-docking is the process under which FSRU is taken to the service yard and brought to dry land, so that submerged portions of the hull can be cleaned and inspected. This work is both preventative as well as a regulatory requirement within the industry. The class society has already given an extension three times till March 2021. And after June 30, 2021, the current FSRU at EETPL will have no insurance cover and will not be able to sail through sea. It has warranted a tricky as well as serious situation. In simple words, dry docking means that Engro LNG Terminal will be dysfunctional for seven days.

The Class Society (which governs international law for FSRUs) has said that FSRU at EETPL needs dry docking immediately as it has already given three extensions since 2019 up to March 2021 and after June 30, 2021, FSRU will have no insurance cover and will not be able to sail through sea. So its dry docking is vital as it is now prone to any mishap.

Due to the compelling and unavoidable situation, EETPL wants the dry-docking of existing FSRU (Exquisite) by replacement by FSRU (Sequoia)and the Petroleum Division wanted to ensure coordinated efforts and measures to be taken to ensure that the risks are well managed and supply chain disruption is minimal.

However, the Petroleum Division will re-pitch summary in the CCOE that may meet on Tuesday about dry docking of FSRU after having legal opinion from the Law Division. Under the plan, there will be no re-gasification process on Engro Terminal for two days and in next five days the re-gasification will start remapping up and go up to 100 percent.

In case, the Law Division comes up with opinion in favour of planned dry docking of FSRU at Engro LNG terminal for a week, then there will be some disruption in gas supplies. The Engro LNG terminal fulfills 10 percent of the total gas that country needs. The supply of RLNG will continue to RLNG based power plants and export industry. However, CNG, fertilizer and non-export industry will be affected for 7-10 days. Under gas load management plan, stock of furnace and diesel has been arranged to meet the electricity demand. The official said if the Law Division comes up with the decision to pend the dry docking till August, it will provide relief to the government. In the month of August, the maximum hydrogenation will be available and it will be easy for the government to close down the Enrgo Terminal for a week.

The official brushed aside the impression that the CCOE has refused to allow EETPL to go for dry docking and to this effect CCOE has ordered an inquiry against the Petroleum Division for moving a ‘questionable’ summary seeking dry-docking of FSRU at Engro LNG Terminal, which will result in huge gas outages for 7-10 days at least in peak summer also causing massive power loadshedding.

He said under the CCOE decision, the Law Division will come up with its law opinion about the dry docking as per the plan suggested by Petroleum Division or after one and a half or two months after reviewing every clause of LNG Service Agreement and having input from legal teams of stakeholders such as EETPL, SSGC, PLL, PSO, SNGPL and OGRA.

Asad Umar, Federal Minister for Planning and Special Initiatives, wanted to pend the dry docking for two months, arguing dry docking will plunge the country into gas and electricity loadshedding. “Mr Umar wanted the legal due diligence by Law Division in case the government keeps Engro LNG terminal operational for two months.” The dry docking facility at Qatar remained closed for one year due to COVID-19 Pandemic.

He said that FSRU at EETPL needed dry docking two times in 15 years and the first dry docking was due in 2019, which has not been so far done by EETPL.

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