ISLAMABAD – Only a day after the state minister of petroleum Mir Jamal Kamal has announced to abandon Iran-Pakistan gas pipeline project, the Pakistan Muslim League-Nawaz (PML-N) led federal cabinet approved Liquid Natural Gas (LNG) deal with US favorite Qatar.
The federal cabinet hold an important meeting on Friday which was presided by the Prime Minister Nawaz Sharif which approved the national LNG Policy subsequently.
According to the deal, a special terminal was established in Pakistan to import LNG from through Engro Paktank Terminal Limited (EPTL).
However, media reports and statements from the Petroleum Ministry suggest a price $17/ MMBTU for Qatari LNG. Additional costs of re-gasification and charges of SSGPL & SNGPL and other taxes will likely push up its price to not less than $ 18 /MMBTU.
The most compelling argument offered by the Ministry in favor of buying LNG has been that it is a cheaper fuel for electricity. But at anything more than $ 14/MMBTU, LNG loses its competitive advantage against oil.
EPTL incorporated in 1995, was a joint venture company of Engro Chemical Pakistan and Paktank Asia Pacific Limited, a subsidiary of Royal Pakhoed of the Netherlands.
EPTL signed an Implementation Agreement with Port Qasim Authority which gives EPTL the right to handle and store liquid and gaseous Chemicals/Petrochemicals at its terminal.
Qatar had asked Pakistan to have a terminal in place before striking any LNG deal.
Though the US opposes the IP pipeline due to the standoff with Iran, it is pleased with Pakistan’s efforts to strike an LNG import deal with Qatar. Doha holds a stake in an LNG terminal in America.
However, the Iranian side of the $7.5-billion project is almost complete, but Pakistan has run into repeated problems paying for the 780 kilometre (485 mile) section to be built on its side of the border.