LONDON (ICIS)--Pakistan faces delays with new LNG floating import projects as their developers have to agree a number of tax and local gas legislation issues with the government.
At least five different consortiums are working on floating storage regasification units (FSRUs) in Pakistan, with new companies seeking to get into the country which has significant LNG and gas demand potential.
None of the projects is likely to come online in the next two years, however.
The government still needs to advance its import and domestic tax regulation, update legislation on gas and power and approve additional capacity to flow gas from the south to the north.
Despite some success in negotiations between the government and the consortiums, there could be further delays as Pakistan will have its general election in July this year.
“One of the projects could start up after two years from now,” a local industry source said. “In the next four years, two projects should be launched.”
He added: “Getting an FSRU is easy, but policy and commercial issues delay their development. It takes time for [Non-Pakistan] companies to understand local tax issues and regulations.”
Potential projects include an FSRU developed by a consortium of terminal operator Engro, Anglo-Dutch major Shell and trading house Gunvor. US-based Excelerate said last year it is also working with the consortium. The terminal was originally scheduled for 2019.
The consortium is in talks with a fertiliser producer and a power company over regasified LNG supply.
The parties are also facing the issue of limited gas pipeline capacity to deliver the LNG to end-users.
The government is planning a new pipeline connecting the south and the north of the country, but the project still needs to be approved.
When approved, it will take around two years to build the pipeline, the source said.
Another consortium consisting of trader Trafigura and Pakistan GasPort Limited was expected to make final investment decision late last year, but funding has not been agreed yet, ICIS understands.
Total, Mitsubishi and ExxonMobil were part of a consortium dissolved late last year are working on separate projects.
US-based major ExxonMobil is partnering with Pakistani consortium Energas, while France’s Total is working with trading house Vitol.
Mitsubishi’s project is considered one of the frontrunners.
One source said the company is working with ship owner Dynagas. This could not be confirmed. Dynagas and Mitsubishi did not reply to a request to comment on the matter.
Italy’s Eni may also have an interest in developing its own FSRU project.
Sources in the country said that the company may eventually join one of the existing consortiums, however. Eni did not reply to ICIS request to comment.
Despite the delays, Pakistan is likely to see some of these projects coming online.
Kaleem Asghar, former business development manager at Engro said despite the development is going slow because of the elections, the new government will be supporting the projects.
“Anyone will support FSRU projects,” he said. “Pakistan is moving to a healthy energy mix, in which gas plays more and more important role.”
Pakistan LNG imports have already passed 3m tonnes so far this year, according to LNG Edge, This is almost double last year, with two FSRUs now in operation.