ABU DHABI: Pakistan is still in negotiations to finalise a multibillion-dollar liquefied natural gas (LNG) import contract with Qatar and expects to reach a price for the deal by end of this month or the next, its petroleum minister said on Wednesday.
The 15-year deal was struck last year and will be for 1.5 million tonnes a year of LNG.
“The price has not been finally agreed yet; the only thing left is price right now,” Minister of State for Petroleum Jam Kamal Khan told Reuters in Abu Dhabi.
“I think the final agreement will be either this month or in February,” he said, adding that he expects the deal to be finalised during a visit to Qatar by Pakistan’s Prime Minister. He did not give a date for the visit.
“The price will be linked to Brent crude so the current price environment is quite suitable for Pakistan,” Khan said.
Gas is used to generate nearly half of Pakistan’s electricity. It produces about 4.1 billion cubic feet per day but needs around 6 billion cubic feet per day, depending on the time of year.
Khan put Pakistan’s deficit figure higher saying it amounted to 2.5 billion cubic feet per day and another 2 billion cubic feet per day of constrained demand adding up to more than 4 billion cubic feet per day.
“This is why we are in need of a long term contract,” he said.
Pakistan has already been importing LNG through spot buying in the past eight months, with twelve vessels already received.
Imports from the Qatari agreement are expected to flow within weeks of signing the final deal on price, he said.
Pakistan is receiving the LNG shipments through its terminal at Port Qasim in the southern city of Karachi where a second terminal is also being added to expand capacity.
A third terminal at Port Gwadar will raise total capacity to 1.8 billion cubic feet per day, according to Khan.
The Gwadar terminal, which is close to the border with Iran, will be linked to a $1.7 pipeline being built by the China Petroleum Pipeline bureau.
Once complete and should economic sanctions on Iran be lifted, Pakistan would be able to easily link that pipeline to Iran to receive gas.
“Its a 700 km pipeline linking into our main network system and at the same time if things improve with Iran in the coming year we will be adding a 70 km link to Iran,” Khan said.
Apart from long term contracts and spot buying, Pakistan also launched a tender for a medium term contract for 3-5 years.
“That tender should be finalised within the coming month and a half,” he said.
Volumes for the tender are unspecified.
India’s biggest gas importer Petronet LNG will buy
LNG from Qatar’s Rasgas at almost half the original price, in a renegotiated deal that will save it about $605 million a year.
REUTERS
