Delay in the grant of construction licenses by the Oil and Gas Regulatory Authority [OGRA] and finalization of the Gas Transportation Agreement [GTA] by the state-owned Sui gas companies are holding up progress on the development of the two new liquefied natural gas [LNG] terminals.
Ogra has already issued LNG marketing licenses to Energas and Tabeer. However, the companies claim that the regulator is now delaying the grant of construction licenses which is preventing them from taking final investment decisions on their respective projects.
Ener-Gas is formed by a consortium of companies including Lucky Cement, Sapphire, and Halmore Power while Tabeer is supported by Mitsubishi. Both companies plan to import gas on a take-and-pay basis for their customers in the private sector but are struggling to obtain regulatory and other approvals for the last five to six years, according to the management of the two firms.
Industry sources say the terminal tariff of the projects being set up for import of gas by private sector for sale to private industrial and other consumers would potentially be substantially lower than the two existing operators whose capacity is underwritten by the government on a ‘take-or-pay’ basis.
Both the companies are also trying to negotiate with the government to auction the existing spare terminal and pipeline capacities to them to enable them to start importing LNG cargos for their power and industrial customers.
On the other hand, both the existing terminals operated by Engro and Pakistan Gasport are seeking permission from the gas utilities to expand their existing regasification capacity from 690mmcfd and 750mmcfd to 900mmcfd each to bring more LNG cargos for direct sale to their industrial and other customers without any government guarantees.
“The rising gas shortages in the country require significant expansion in the existing RLNG capacity. The new terminals will take two to three years to develop; in the interim, the government can boost the LNG supplies by allowing us to increase our capacity,” an Engro Energy executive said.
The executive said gas companies were not permitting expansion in their existing RLNG capacity despite approvals from the Economic Coordination Council (ECC) back in October.