December 20, 2021 [Tribune] – Pakistan must prioritise the expansion of existing liquefied natural gas (LNG) terminals under the approved third-party access (TPA) rules, while eventually transition towards onshore terminals for greater energy security.
Highlighting the achievements of Engro Elengy Terminal Limited (EETL), Chief Executive Officer Yusuf Siddiqui shared that the terminal had set new industry benchmarks in the past over five years through safe and essentially non-stop operations with availability factor of around 98%.
At present, EETL contributes around 15% of gas supplies to Pakistan and can be considered the country’s largest “gas field” (of 630-690 million cubic feet per day – mmcfd). As the most utilised regasification terminal in the world, according to the CEO, it has enabled Pakistan to save more than $3 billion through import substitution of furnace oil.
Since its inception, EETL has transmitted more than 1,200 billion cubic feet (bcf) of re-gasified LNG/ natural gas. The CEO stated that LNG imports, which now constituted around 30% of the total gas supply, had been instrumental in bridging energy shortfall as the production of gas in the country continued to decline drastically.
To mitigate the gas shortfall in future, the government has adopted a favourable policy of encouraging the private sector to enter the LNG sector, but there was a need to remove roadblocks that impeded the utilisation of additional capacity of the existing LNG terminals under TPA rules, as allowed under the LNG Policy 2011 and LNG Supply Agreement (LSA) with Sui Southern Gas Company (SSGC).
TPA will provide private players access to the terminal capacity and help bring LNG to the country, with no guarantee or liability on the government and state-owned entities. This step will facilitate LNG market development and curtail circular debt in the gas sector.
While the expansion of existing terminals offers a short-term and quickest solution to bridge the supply-demand gap, Pakistan must eventually shift focus from Floating Storage and Regasification Unit (FSRU)-based terminals to onshore terminals.
Based on the global experience, Yusuf stated that the deployment of first or second FSRU was followed by an onshore terminal to ensure energy security, longevity of gas market and creation of a strategic national asset for the country. With expected capital outlay of $500-600 million, Engro Corporation and Royal Vopak are evaluating the development of Pakistan’s first multifunctional onshore LNG terminal, which will offer regasification, bunkering and LNG trucking services.
If approved, the project will be built in a phased manner based on the concept of open access terminal. The onshore terminal will result in reduced foreign exchange outflow compared to the FSRU, create greater market competition, and help optimise the LNG supply chain.
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