November 29, 2021 [dawn.com] – The Competition Commission of Pakistan (CCP) on Tuesday cleared state-run Qatar Energy’s bid to acquire 49 per cent stakes in an upcoming private sector LNG terminal, paving the way for Qatar’s first direct investment in Pakistan’s energy market.
“The proposed transaction is hereby authorised,” said the country’s competition regulator in an order issued here saying the proposed transaction did not meet the presumption of dominance in the market because the target entity’s — Energas Terminal — share in the market would be no more than 33pc.
Proposed transaction doesn’t meet presumption of market dominance, says CCP
Energas, a merchant terminal yet to come on ground, is currently owned by three local business groups — Lucky, Sapphire and Halmore. Qasim Terminal Holding LLC (QTHL) is a subsidiary of Qatar Energy formerly known as Qatar Petroleum which has two long-term LNG supply contracts with state-run Pakistan State Oil (PSO).
The Qatari firm had filed a pre-merger application before the CCP for proposed acquisition of 49pc shareholding of Energas under section 11 of the Competition Act 2010 read with regulation 6 of Competition (Merger Control) Regulations 2016.
The CCP said it examined the documentation, the market situation and conducted an independent research of the terminal market that the ultimate acquirer – Qatar Energy – had business related to exploration, production and sale of crude oil, natural gas and gas liquids and refined products, fertiliser, investments in its local market and board including in bunkering and underwriting insurances and had entered into a subscription agreement with Energas for over Rs757 million to take over 49pc shareholding.
It noted that the there were overlaps between the merger entities but the acquisition would create a synergy for efficient development of LNG sector in Pakistan.
Energas is one of the two parties currently engaged with Pakistan government and its entities for development of additional LNG terminals on “merchant model” as against existing two terminals set up under government guarantees and processing fees.
Qatar is the largest producer and exporter of LNG and has been increasing its production and making further inroads in LNG export markets in recent months.
Last month, the Cabinet Committee on Energy (CCoE) approved allocation of pipeline capacity to two new LNG terminal developers — Energas and Tabeer Energy — to facilitate their investment in the additional gas infrastructure.
Tabeer Energy is a subsidiary of Japan’s Mitsubishi Corporation.
While discussing a summary of the Ministry of Maritime Affairs on the report of the Inter-Ministerial Committee (IMC) on the establishment of new terminals, the CCoE “approved the allocation of pipeline capacity and directed to fast-track the work on setting up new LNG terminals”, according to an official announcement.
The meeting was informed that Petroleum Division and Sui gas companies continued to resist pipeline capacity to new terminal developers of the private sector – Energas and Tabeer Energy.
The report said the federal cabinet on Sept 8, 2020 “directed the Petroleum Division to allocate pipeline capacity in the existing and the new planned pipeline within 30 days”. The Oil & Gas Regulatory Authority also directed Sui companies to allocate 300-350mmcfd of pipeline capacity to the two terminal developers each in May this year. It said the Sui companies were “reluctant to allocate pipeline capacity”.
The report said there was 600mmcfd of gas pipeline capacity available for the new LNG terminal developers and the regulator also confirmed the same situation. It said SNGPL had total pipeline capacity of 1200mmcfd and long term contract of 1,000mmcfd till 2024 while 150mmcfd gas was shifted to K-Electric and 250mmcfd to SSGC — leaving spare capacity of 600mmcfd.
The summary noted that Sui companies were averse to deregulate the gas market despite losing substantial gas quantities to pilferage and adding to circular debt of billions of rupees. The summary advocated deregulating the gas sector like aviation, telecom and banking sectors to reduce burden on exchequer and save taxpayers money.
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