Pakistan to resume talks with Qatar on 20-year LNG imports

03 July 2013 12:12  [Source: ICIS news]

KARACHI (ICIS)--Pakistan is resuming negotiations with Qatar for the import of 500 million cubic feet per day (mmcfd) of liquefied natural gas (LNG) over 20 years, a Pakistani government official said on Wednesday.

“Pakistan’s oil ministry will be responsible for imports from Qatar and for the time being private companies would play no role in imports of LNG,” the official said.

LNG import talks with Qatar will start as early as next week, following a decision by the newly-elected government in Pakistan to cancel two import tenders worth $46bn (€35bn) earlier this week after finding irregularities in the awarding processes.

The Pakistani Supreme Court last week had ordered the government to re-initiate the process, the official said.

In 2009, the previous government of the of slain leader Benazir Bhutto’s Pakistan Peoples’ Party had signed a memorandum of understanding with Qatar for LNG import, but the plan got stuck on a price row.

The Qatari government had then offered LNG at around $18 per million British thermal units (mmbtu), but revised the price down to $17.437 mmbtu in March this year, just before the PPP’s five-year tenure ended.

The lower LNG price would have saved Pakistan $1bn over the 20-year life of the project.

However, this price did not include capital cost of LNG terminal and its charges, import expenses, re-gasification, wastage and shipping costs. These additional charges would add about $2.084 to the quoted price.

“If all charges are included, then Qatar LNG will finally cost $19.521 per mmbtu and Pakistan will have to spend another $200m to lay infrastructure for handling imports,” the official said.

Pakistan is currently facing huge shortfalls in its energy demands and is desperately exploring all options to meet the needs. The country’s demand for gas stands at 8 billion cubic feet, while the current production is 4 billion cubic feet.

($1 = €0.77)

By: Aamir Ashraf

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