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News Headlines for the month of
MAY 2017

Pakistan to start importing 1.2 bcfd LNG from July 1

Islamabad Pakistan is to start importing huge quantum of 1.2 billion cubic feet per day LNG from July 1, 2017 ensuring the substantial relief to the masses of the country presentably experiencing unbearable gas load shedding. Currently Pakistan is importing LNG in the range of 400 mmcfd LNG, which is not enough to cater to the needs of the countrymen. “We are determined to increase import of LNG up to 1.2 bcfd from July 1, 2017 for which two international companies —— Gunvor and ENI have managed the biggest ever LNG supply deal for 5 to 15 years under which Pakistan will be having 240 LNG shipments. LNG supply under the said new deals will start from July 1, 2017,” the official source told. Pakistan LNG Ltd completed the international competitive bidding and declared the ENI for 15 years LNG supply contract and Gunvor for 5 years contract as winner parties. ENI has won the 15 years tender at the price of 12.29 percent of the Brent under which it will provide 180 LNG cargoes The ENI’s bid was found the lowest one among the five shortlisted bidders. Similarly, Gunvor has bagged five year LNG supply contract under which 60 LNG cargoes to be provided to Pakistan at the price of 11.6247 percent of the Brent which is the lowest one among the 10 bids. At present, Pakistan has only one LNG terminal owned by Engro which is being used to import LNG. The government and Engro company are in talks for handling the import of 200 mmcfd LNG more. If the 200 mmcfd deal is finalized then the existing LNG terminal will start re-gasifying the 600 mmcfd LNG and the government is hopeful that the country will start importing 600 mmcfd LNG from February 1, 2017. The second LNG terminal being erected by Pakistan GasPort Consortium Limited (PGPC) is scheduled to come on stream on June 30, 2017 and LNG of another 600 mmcfd will be supplied through the said LNG terminal enabling country to import of 1.2 bcfd LNG from July 1, 2017. For the second LNG terminal, LNG floating storage and re-gasification unit (FSRU) to be deployed in Pakistan has achieved completion and will sail to Karachi on schedule. In addition, the government is also going to establish two LNG terminals at Gawadar each having capacity to handle 600 mmcfd LNG meaning by that once the LNG terminals are set up at the port, the government will also start importing another 1.2 bcfd LNG in the country. This means that Pakistan would import LNG of 2.4 bcfd in to to.

Copyright PAKISTAN OBSERVER

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GOVT FINALLY ALLOCATES RS25B FOR GWADAR LNG PIPELINE

ISLAMABAD: The government has earmarked Rs25 billion out of gas infrastructure development cess (GIDC) collection for implementing the $2 billion Gwadar liquefied natural gas (LNG) pipeline project. The disclosure was made in a meeting of the Economic Coordination Committee (ECC) held on February 13. According to officials aware of the development, the government has received about Rs183 billion so far on account of GIDC meant for spending on different gas pipeline projects. The Ministry of Finance has been reluctant to release the cess. However, it is a good sign for the Ministry of Petroleum and Natural Resources that the government has now set aside Rs25 billion out of the collected cess for the Gwadar-Nawabshah LNG pipeline and terminal. According to the officials, other projects are being executed under the China-Pakistan Economic Corridor (CPEC) programme, but the petroleum ministry could not push the Gwadar LNG pipeline into the CPEC framework despite repeated attempts. In the ECC meeting, the Ministry of Finance insisted that besides the allocated Rs25 billion, more funds would be earmarked from the GIDC for the LNG pipeline. The Ministry of Petroleum recalled that while considering a summary on the revised implementation strategy for the Gwadar LNG pipeline and terminal, the ECC in its December 13 meeting had decided that since the Central Development Working Party (CDWP) and the Executive Committee of National Economic Council (Ecnec) approved PC-1 of the project, any amendment was also required to be placed before Ecnec. Later, a meeting was held on January 2 under the chairmanship of Planning and Development Minister Ahsan Iqbal to seek guidelines and the way forward for the Gwadar LNG project and the North-South LNG pipeline scheme. After Ecnec’s approval, Inter State Gas Systems (ISGS), a company set up by the government for gas import projects, would be authorised to give an engineering, procurement and construction (EPC) contract to China Petroleum Pipeline Bureau. It was decided that the petroleum ministry would submit a proposal to seek ECC’s approval for exemption from the Public Procurement Regulatory Authority (PPRA) rules in the award of EPC contract in a government-to-government arrangement. The Ministry of Finance would also be required to issue sovereign guarantees. The Ministry of Petroleum suggested that ISGS should be authorised to award the contract to China Petroleum Pipeline Bureau without inviting competitive bids. It also sought approval of government guarantees against a Chinese loan facility. The ECC directed the ministry to consult with the Law Division and PPRA in that regard. Though more than one and a half year is gone, the Gwadar-Nawabshah LNG terminal and pipeline project has remained on paper, upsetting China that has been waiting to kick off work on the scheme. The ECC has also not yet given the go-ahead to a commercial agreement, although the price negotiating committee finalised terms and conditions of it several months ago. A framework agreement was signed between Pakistan and China on April 20, 2015 for developing the LNG terminal and pipeline project. Under the arrangement, China will provide 85% of financing whereas Pakistan will contribute 15% of equity. Exim Bank of China will provide funds at London Interbank Offered Rate (Libor) plus 2%. During initial negotiations, the tolling fee for the Gwadar LNG terminal was estimated at 30 to 32 cents per million British thermal units (mmbtu).

Copyright EXPRESS TRIBUNE, MAY 2017

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SHIKARPUR-JACOBABAD: GAS PIPELINE TO BE LAID BY AUGUST

ISLAMABAD: Sui Southern Gas Company (SSGC) will complete the laying of a gas pipeline from Shikarpur to Jacobabad in Sindh, covering a distance of 34 kilometres, in August this year, officials say. Talking to APP, they said after completion of the project, natural gas supply to Quetta and other districts of Balochistan would improve. The company is executing a number of projects to augment its transmission network, under which eight gas pipelines are being laid in different areas of Sindh and Balochistan. These supply lines will be spread over 126 km in various localities. These included a 12-inch diameter pipeline from Palijai to Tando Allahyar covering a distance of 27 km, eight-inch diameter pipeline from Sinjhoro gas field to Sanghar over 14 km, eight-inch supply line from Khairpur to Khairpur city covering a distance of 11 km, six-inch pipeline from upstream Halani to Kandiaro over 11 km and other few routes. These were being laid to ensure uninterrupted gas supply to the consumers.

Copyright APP (Associated Press of Pakistan), 2017

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ENI TO DELIVER 180 LNG CARGOES TO PAKISTAN

The Italian energy company Eni won a 15-year contract to supply one cargo of liquefied natural gas per month to the state-owned Pakistan LNG. Under the contract, Eni will deliver a total of 180 cargoes over the period of the next 15 years, amounting to 11 million tons of LNG. The quantities of liquefied natural gas Eni will deliver to Pakistan correspond to 25 percent of the country’s imports in 2016. Pakistan is one of the fastest growing LNG markets, Eni notes, adding that this contract will contribute to covering the country’s energy demand. Pakistan LNG issued two tenders at the end of October last year, seeking a total of 240 cargoes. With Eni winning the tender to supply 180 cargoes over the period of 15 years, Pakistan LNG is left to name the winner of the second tender seeking 60 cargoes to be delivered over a period of five years. Eni said a significant part of the LNG volumes will be sourced from Indonesia and delivered to the new FSRU moored in Port Qasim. The 170,000-cbm FSRU has been chartered under a 15-year agreement Singapore-based BW signed in August last year with Pakistan GasPort Limited (PGPL) that will operate the terminal. According to the tender documents, the deliveries are scheduled to begin in July this year.

Copyright LNG WORLD NEWS

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QATAR JOINS RACE TO WIN PAKISTAN’S LNG PIPELINE CONTRACT

In a meeting with Prime Minister Nawaz Sharif, Al-Thani expressed Qatar’s interest in building the Karachi-Lahore pipeline for LNG transportation. ISLAMABAD: Qatar has joined the race to tap the growing energy market of Pakistan as it expresses interest in the $1.5 billion pipeline project for the supply of imported liquefied natural gas (LNG) to feed gas-starved consumers in Punjab. Qatar has already taken the lead in LNG supplies and signed a multibillion-dollar contract for gas export to Pakistan. It also has the potential to win the Karachi-Lahore gas pipeline contract. The Prime Minister’s Office has offered the signing of a state-to-state deal without bidding. Major oil and gas companies of the US and European Union have a big presence in Qatar and they have even partnered with the Middle Eastern country in LNG supply to Pakistan. ConocoPhillips, headquartered in Houston (Texas) with operations in about 30 countries around the world, has a 30% stake in the oil and gas reserves being explored in the North Field near the Iranian border from where LNG is being supplied to Pakistan. “Qatar is likely to enhance the volume of gas exports to Pakistan if it succeeds in getting the pipeline contract,” said a senior government official while talking to The Express Tribune. “The proposal of laying the gas pipeline was taken up during the visit of Qatari Emir Sheikh Tamim bin Hamad bin Khalifa Al-Thani in January this year.” In a meeting with Prime Minister Nawaz Sharif, Al-Thani expressed Qatar’s interest in building the Karachi-Lahore pipeline for LNG transportation. The official revealed that the Prime Minister’s Office had been dealing with the pipeline project and the very next day, after the meeting with the emir of Qatar, a letter was sent to Doha, suggesting the signing of a government-to-government deal for the award of project contract without bidding. Apart from this, more pipelines are being built from Karachi to Lahore. State-run gas utility Sui Northern Gas Pipelines Limited (SNGPL) has already completed work on a pipeline augmentation project that will carry 1.2 billion cubic feet of LNG per day. The company has been asked by the Ministry of Petroleum and Natural Resources to lay another pipeline from Karachi to Lahore that will carry a similar volume of LNG. SNGPL board of directors has given the go-ahead for the project. Pakistan has also signed a government-to-government contract with Russia for another gas pipeline called North-South pipeline. Russian company RT Global has been designated to execute the project. However, the official said SNGPL would take four to six months to start work on the pipeline. The company has already borrowed Rs130 billion from local banks for laying the first pipeline and it requires another Rs150 billion for the second pipeline. It is believed that the company will face difficulty in getting this huge financing and it may eventually be out of race in implementing the project. In a bid to fill the void, Russia and Qatar may compete to win the second pipeline contract. Russia can begin work in two to three months, but its designated company faces the threat of US sanctions. Qatar, on the other hand, seems to be the favourite as it can kick off work in one to two months and that is the reason why the Prime Minister’s Office has taken keen interest in the project.

Copyright EXPRESS TRIBUNE, MAY 2017

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KPOGCL, AWT SIGN MOU FOR JOINT EXECUTION OF OIL & GAS PROJECTS

RAWALPINDI: Army Welfare Trust (AWT) has signed Memorandum of Understanding with KP Provincial Holding Company Khyber Pakhtunkhwa Oil & Gas Company (KPOGCL) for joint execution of projects in oil & gas upstream to downstream business. The ceremony was held in Rawalpindi, AWT Headquarters and MoU was signed by Raziuddin CEO KPOGCL and Major General (retd) Hamid Mehmud COO AWT in the presence of AWT Managing Director Lt. General (retd) Khalid Rabbani. AWT Managing Director Lt. General (retd) Khalid Rabbani expressed his keen interest in the exploration & production to cater for energy needs of fast-growing economy, according to press release. AWT Managing Director said : "We are committed to take every essential step in the right direction and this step to enter into energy sector by AWT will surely give a win-win situation to all the stakeholders, involved directly or indirectly." Speaking on the occasion, Nouman Akbar DGM KPOGCL expressed the views that this strategic alliance with AWT, will pave way for investments in exploration and production of the natural resources and hydrocarbons. CEO KPOGCL Raziuddin lauded the efforts and thanked the AWT management for trust in shaking hands with KPOGCL. "We are committed to our vision that is "To Make Pakistan a self-sustainable country in energy-producing needs". He said KPOGCL plans to start detailed seismic in KP Province and stressed for regulatory clearances to proceed further. He said "We jointly urge leading multinational/national E&P companies, groups, trusts etc. to come forward and make investments in the energy sector of Pakistan."

Copyright APP (Associated Press of Pakistan), 2017

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APCNGA TO START IMPORTING LNG IN THREE MONTHS AFTER OGRA NOD: PARACHA

ISLAMABAD: All Pakistan Compressed Natural Gas Association (APCNGA) will start importing Liquefied Natural Gas (LNG) in three months after getting final nod from the Oil and Gas Regulatory Authority (OGRA) to provide cheap and environment-friendly fuel to motorists. "The final approval from OGRA is getting delayed as its' board quorum was not complete, but now the authority is in process to complete the quorum and APCNGA will hopefully start importing LNG soon," APCNGA Chairman Ghiyas Abdullah Paracha told APP Wednesday. He said the association has finalized modalities with all stakeholders including Sui Northern Gas Pipelines Limited (SNGPL) to import LNG and inject in its transmission network for supply to CNG stations. "Although, the government has allowed the association to import LNG, but we have the plan to get it through SNGPL, for which almost all modalities have been finalized with the company," he said. He said around 1,300 CNG stations operating in Punjab had so far shown willingness to get LNG through SNGPL's distribution system and expressed confidence that the CNG sector would achieve 'complete revival' with pouring in the imported gas. The chairman, who is also heading the Universal Gas Distribution Company (Pvt.) Limited which secured LNG sale and marketing licence, was of the view that the LNG price for CNG sector should be market-based to run the sector effectively and on long-term basis. APCNGA, Paracha said, had negotiated with SNGPL as per vision of Prime Minister Muhammad Nawaz Sharif that private sector should also come up for LNG import, and promote the trend in industrial sector for creating an atmosphere of competitiveness. He said CNG was an environment-friendly fuel and claimed that it was 30 per cent cheaper as compared to petrol at the existing rates.

Copyright APP (Associated Press of Pakistan), 2017

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POLISH COMPANY POISED TO TAKE OIL, GAS EXPLORATION TO RS100BN PER YEAR

ISLAMABAD: PGNiG - a Polish oil and gas company, operating in Pakistan since 1997, has planned to step up its exploration and production activities and take the business volume to Rs 100 billion per year. "We have the intention to take the company's production to $100 million per year in the coming days," President PGNiG Management Board Piotr Wozniak said while addressing a ceremony held here to celebrate the company's 20th anniversary. Polish ambassador to Pakistan Piotr Opalinski, Managing Director PGNiG Pakistan Branch Andrzej Kaczorowski and General Manager (Commercial) Shahid Karim were also present on the occasion. The PGNiG President said the company would drill 14 more oil and gas exploration wells in hydrocarbon potential areas and play an important role in meeting Pakistan's growing energy needs. Before acquiring the current Kirthar Concession (Block 2667- 7), he said, the company operated and carried out exploration activities in four other Concessions namely Khanpur West, Sabzal, Mekhtar and Sabzal South. He said the Rehman Gas Field was discovered in the Kirthar Block in 2009 which started production in 2013. "This was the first- ever gas produced from a "Tight Gas" reservoir in Pakistan," he claimed. In 2015, Piotr said, the company discovered the Rizq Gas field which was the second Tight Gas Field in Kirthar Block and commissioned the Rehman Production Facility with a capacity of processing up to 40 million standard cubic feet of gas per day (mmscfd) gas. "PGNiG more than doubled its production from the Kirthar block when gas from Rizq Gas Field was added to the national grid in November 2016, which helped to reduce the increasing demand-supply gas for natural gas in the country," he remarked. Piotr said two more development well have been planned at the already mature Rehman Gas field, an appraisal well on the new Rizq gas Field and an exploratory well to test a potential prospect in the northern side of the block. He said the company has so far invested more than 125 million dollars in Pakistan, adding that current daily production from the Rehman field stood at 24 mmscfd from four producing wells, which would be increased up to 90 mmscfd gas with full field development. He said the increase in production requires advanced technologies (horizontal wells, multiple transverse hydraulic fracturing, etc) for which an investment of more than $ 300 million would be made. "PGNiG is in active pursuit to increase its footprint in the Pakistani's upstream oil and gas sector and is also interested to develop the shale gas deposits here," he remarked. Polish ambassador Piotr Opalinski also spoke on the occasion and highlighted different aspects of bilateral relations between Poland and Pakistan. The envoy astonished the participants when he started speaking in Urdu language after delivering some introductory remarks in English. He said Poland was keen to have good relations with Pakistan in diverse field and expressed confidence that the bilateral ties would further strengthen in the coming days. The ambassador said the environment was conducive for foreign investment in Pakistan and expressed the firm resolve that Poland would accelerate oil and gas exploration activities to meet energy need of Pakistan.

Copyright APP (Associated Press of Pakistan), 2017

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