Deal signed for supply of LNG to transport sector – Newspaper

ISLAMABAD: The Singapore-based Trafigura firm signed an agreement with Universal Gas Distribution Company (UGDC) on Thursday to use its excess capacity at the Pakistan Gas Port Limited (PGPL) terminal to supply liquefied natural gas (LNG) to transport sector

Trafigura, a multinational commodity company, had a five percent shareholding in the terminal and acquired a surplus regasification capacity of 150 million LNG in the PGPL terminal approximately two years ago. The government through its subsidiary Pakistan LNG Terminal Limited (PLTL) had reserved a maximum processing capacity of 600 mmcfd (millions of cubic feet per day) of the PGPL terminal.

Last week, ExxonMobil, the largest publicly traded oil and gas company, had signed an agreement with UGDC to supply LNG to the country's transport sector. The LNG imported by ExxonMobil would now be stored and re-gasified in the PGPL terminal before entering the gas network according to the country's third-party access rules (TPA).

Trafigura and UGDC reached an agreement on the cooperation agreement last year, but could not update it due to lack of an LNG supply and import agreement. With ExxonMobil's commitment to supply at least four LNG shipments per year, the two firms have now formalized the agreement for the supply of 50-80mmcfd.

The Singapore-based company will use its excess capacity in the PGPL terminal for the purpose

“Trafigura has a long presence in Pakistan and has excess capacity, which is the capacity not contracted by PLTL, at the Pakistan Gas Port Consortium Limited (PGPC) terminal. Trafigura will use part of its capacity to import LNG and sell gas to UGDC, ”said a statement issued by UGDC.

The agreement was signed by the Executive Director of UGDC, Ghiyas Abdullah Paracha and Fadi Mitri, Business Development and Origination, LNG and Gas, Trafigura. Present were the officials of both companies and the Managing Director of BW LNG, Yngvil Eriksson Asheim, whose company had provided the Floating Storage and Regasification Unit (FSRU).

Trafigura had been looking for private LNG clients to use its capacity for quite some time. UGDC and Trafigura have formally signed an agreement for a minimum supply of 50 mmcfd of LNG on a "take or pay" basis.

Paracha said the CNG (compressed natural gas) sector in Punjab was using approximately 65 mmcfd of LNG and anticipated an increase in the requirement of 80 mmcfd in three to six months as supplies became predictable and reached 100 mmcfd in About a year.

He said UGDC had completed the predictable LNG supply supply chain to CNG stations and formally requested the oil division on Thursday to send the recent decisions of the federal cabinet to Sui gas companies for the formal implementation of the rules of TPA. He said the CNG sector had been a long-standing consumer of the gas network and also won additional capacity allocations in order of arrival.

Paracha said the oil division was glad to observe the LNG import and processing agreements by UGDC with ExxonMobil and Trafigura because their ships would be completely consumed in about two months, which would provide a buffer to the government to compensate for any breach in its LNG imports, both in terms of storage capacity and use of the quantities of LNG from UGDC, in case of shortage.

He said that cooperation between Trafigura, UGDC and ExxonMobil was an example of how the private sector could effectively meet the needs of the gas sector in Pakistan, adding that according to the ECC decision of July 2019 and the decision of the cabinet August 2019, the private sector sector could use additional private capacity of LNG terminals.

"This will help the government save foreign exchange and reduce risk while encouraging the private sector and foreign investment," he added.

Paracha said that UGDC would not only buy Trafigura gas but also planned to import LNG from other sources with Trafigura's support and welcomed the government's recent decision to allow the construction of five LNG terminals in the private sector to open the sector to its full potential.

He said arrangements were being made to ensure the first shipment in late October or early November, when domestic gas demand began to increase against declining supplies, adding that four charges will be available in the first year that will increase gradually overtime depending on the reactivation of the CNG sector.

Paracha said the agreement would allow the sale of CNG at least 30{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} cheaper than the price of gasoline. "Based on this price differential, we expect two million new vehicles to be converted to CNG in two years," he said, adding that this would result in an import bill savings of approximately $ 1 billion a year.

Posted on Dawn, September 27, 2019



Please enter your comment!
Please enter your name here