Some government high-ups are allegedly exercising their influence to clear the way for a liquefied natural gas (LNG) terminal to enhance its capacity, a move that may spark some controversy. Engro Elengy Terminal Private Limited (EETPL) is making efforts to replace its existing Floating Storage and Re-gasification Unit (FSRU), which handles LNG imports, with a bigger one to enhance its handling capacity to 900 million cubic feet per day (mmcfd).
At present, EETPL’s terminal has LNG handling capacity of 690 mmcfd, of which the government has been allocated 600 mmcfd. The terminal is operating at full capacity due to LNG imports from Qatar under a long-term contract. The previous government had put the onus of dealing with the EETPL’s demand for a bigger FSRU on Sui Southern Gas Company (SSGC) – a public utility.
However, SSGC did not back the proposal. Earlier, SSGC officials have faced an investigation and the grant of permission to the terminal for enhancing its capacity may cause more trouble to the gas utility, sources said. Besides EETPL’s terminal, Pakistan has another such facility being run by Pakistan GasPort Consortium (PGPC). However, it is receiving only around 200 mmcfd of LNG, or two cargoes a month, due to the failure of Pakistan LNG Limited (PLL) to book more cargoes. On the PGPC terminal, the government has been allocated six LNG cargoes in a month.
“This means the country has surplus LNG handling capacity and there seems to be no need to add more capacity,” an official remarked. At present, EETPL and SSGC are working under the LNG Services Agreement and both parties would have to open the deal if the former is allowed to enhance its terminal capacity, sources said. This may land the policymakers in trouble. Furthermore, Energas and Tabeer Energy are setting up two new LNG terminals. Apart from this, the government has recently relaxed rules for third-party access to LNG terminals to bring investment.
Qatar has also announced its intention to invest in an LNG terminal with Energas. These investment plans may take a hit if the existing LNG terminal is allowed to enhance its capacity, sources said. There are some other issues as well. EETPL is demanding a waiver from the option and direct rights over its FSRU for a period of around four years during which the option and direct rights over the new FSRU will be finalised. According to sources, this will pose a risk to all LNG stakeholders due to the absence of any collateral and will also result in a higher option price for the FSRU. If the government depends only on one terminal due to its increased capacity, it will create a monopoly.
It will also put the country’s energy security at risk in case disruption occurs at the terminal, they said. EETPL did not respond to a request for comments. On its part, SSGC said “SSGC is bound to comply with the LNG Services Agreement and will follow whatever is allowed under the agreement. SSGC is a public sector listed company and bound to follow the relevant rules applicable to it by law. SSGC did it in the past and will follow it accordingly in futur