Pak is com­mit­ted to IP but fac­ing sanc­tions

Pakistan Observer - - ECONOMY WATCH -

Cur­rency Sell­ing Buy­ing

ZEE­SHAN JAVAID IS­LAM­ABAD—While terming the LNG as sus­tain­able so­lu­tion for en­ergy cri­sis, Petroleum Min­is­ter Shahid Khaqan Ab­basi said on Mon­day that Pak­istan was com­mit­ted to Iran-Pak­istan (IP) gas pipe­line but it was still fac­ing an is­sue of sanc­tions. “The trans­ac­tion of dol­lars has not been al­lowed and in­vestors are not will­ing to fi­nance due to ‘snap back’ clause which may lead to sanc­tions again on the pro­ject,” he said while ad­dress­ing a sem­i­nar on “LNG Mar­ket Anal­y­sis and Trends” here.

He said that IP gas pipe­line pro­ject re­quired $2 bil­lion in­vest­ment and in­vestors were not will­ing to in­vest due to two is­sues of dol­lar trans­ac­tions and ‘snap back’ clause which al­lows im­pos­ing sanc­tion again. He said that Pak­istan was com­mit­ted to im­ple­ment the pro­ject and was work­ing on al­ter­nate plan. Re­ply­ing to a ques­tion the min­is­ter said that in­ter­na­tional sanc­tions against Iran are still in place so un­der the cur­rent sa­ti­a­tion Pak­istan can’t build Iran-Pak­istan gas pipe­line pro­ject. How­ever, he said that Pak­istan and Iran are closely col­lab­o­rat­ing on all the sub­jects in­clud­ing IP and once sanc­tions against Iran are lifted work on the pro­ject would soon started.

He said that LNG was a short, medium and longterm so­lu­tion for gas cri­sis in Pak­istan. “LNG will lead to growth of the coun­try and re­duce oil im­port bill,” he said that it was cheaper than gas through IP and TAPI pipe­line projects. Link­ing gas prices with oil in­dex, he said that there was no other bench­mark avail­able in the world to link price of LNG. He said that In­dia had even linked gas price with al­ter­nate fuel oil and it was get­ting same price as Pak­istan in re­vised deal with Qatar. He said that con­sumers us­ing LNG would pick its price and do­mes­tic con­sumers would not be bur­dened.

He said that Pak­istan was cur­rently im­port­ing 450 mil­lion cu­bic feet of liq­ue­fied nat­u­ral gas (LNG) and it will be in­creased to 2.4 Bil­lion Cu­bic Feet per Day (BCFD) in the next two years. He said that un­in­ter­rupted gas is be­ing sup­plied to in­dus­tries and power plants adding that Pak­istan is im­port­ing LNG from Qatar at the cheap­est rate in Asia. He said that govern­ment was also fo­cus­ing on in­dige­nous ex­plo­ration of gas reser­voirs to over­come en­ergy cri­sis, but since 2000 lo­cal gas pro­duc­tion is hov­er­ing around 4 BCFD, while coun­try’s to­tal gas de­mand has reached 8 BCFD so to cater the de­mand/sup­ply gas im­port of LNG is only avail­able op­tion.

“Pak­istan’s per an­num crude oil im­ports are worth $15 bil­lion of which fur­nace oil im­ports are worth $9 bil­lion. Re­plac­ing fur­nace oil with LNG will save at least $2 bil­lion per an­num for the coun­try as it is clean­est and hav­ing best ef­fi­ciency as com­pared to other fu­els used in power pro­duc­tion” he added. He said the govern­ment is ex­pect­ing the pri­vate sec­tor to come for­ward as in­fra­struc­ture was avail­able to de­liver LNG based gas to cus­tomers. He said that Pak­istan en­ergy cri­sis could not be re­solved with­out in­ject­ing more gas in the sys­tem. “We hope lo­cal as well as in­ter­na­tional oil/gas ex­plo­ration and pro­duc­tion com­pa­nies op­er­at­ing in Pak­istan would ex­plore more lo­cal re­serves in fu­ture,” he added.

The min­is­ter said that Turk­menistan-Afghanistan-Pak­istan-In­dia Pipe­line (TAPI) was now be­com­ing a re­al­ity but it will take four to five years to come in the sys­tem. Mohsin Sid­diqui Con­sul­tant Granada Group of Com­pa­nies Inc USA said that low gas prices will stay in next 6-7 years. “In­vestors are look­ing at pos­si­bil­i­ties to sup­ply LNG to Pak­istan,” he said adding that long-term agree­ments should not be linked with oil as Ja­pan, Korea and China were con­cerned about their long-term con­tracted linked with oil. “These coun­tries sign ev­ery­thing in con­tracts and Chi­nese were now des­per­ate to sell these con­tracts,” he said adding that even Ja­pan was work­ing on gas bench­mark to link LNG prices. “Link­age be­tween oil and gas is go­ing to fade away due to ad­vance re­new­able tech­nol­ogy,” he said. Ra­hat Ka­mal Pro­ject Di­rec­tor Gas­port said that the govern­ment was work­ing on sec­ond LNG ter­mi­nal and Pak­istan Gas Port Lim­ited had been de­clared suc­cess­ful bid­der. “We are hope­ful that LSA will be signed by end of this month,” he said adding that pro­ject will be com­pleted in 12 months. “LNG is short and medium term so­lu­tion,” he added.

IS­LAM­ABAD: Fed­eral Min­is­ter for Petroleum and Nat­u­ral Re­sources, Shahid Khaqan Ab­basi ad­dress­ing at a sem­i­nar ‘LNG Mar­ket Anal­y­sis and Trend’.

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