Qatargas to assess Pakistan preparedness before signing long-term LNG deal

Amid hiccups in the finalisation of financial arrangements for Liquefied Natural Gas (LNG) imports, a management delegation of Qatargas (QG) is expected to visit Islamabad next week for assessment of on-ground situation before committing a long-term deal.

The finalisation of LNG supply chain has become all the more important given the fast approaching winter when domestic gas supplies would be facing extreme shortages because of surge in consumption levels in the residential sector. Senior government officials told Dawn on Monday that a senior management team of the QG has volunteered a visit to Islamabad starting Aug 26. They have some other clients in waiting and want to have a fair assessment of Islamabad's preparedness for a long-term deal, he said. Pakistan, he said, had so far been unable to complete condition precedent for a long-term contract for import of LNG for 15 years.

"The situation is complex on ground," he said, adding that the basic requirement for opening of standby letter of credit (SBLC) to enable LNG import. Secondly, the two regulators - Oil and Gas Regulatory Authority and National Electric Power Regulatory Authority - have not yet finalised prices for sale of LNG and resultant power purchase price.

On top of that, the government has not yet put in place payment mechanism for LNG supply chain. As a consequence, the three major stakeholders to the LNG supply chain - Sui Southern Gas Company, Sui Northern Gas Pipelines and Pakistan State Oil - have not yet signed a tripartite agreement. Without this tripartite agreement, the gas price agreement between a Pakistani entity (PSO) and a foreign firm (QG in this case) cannot be inked, said the official.