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Pakistan to revise LNG policy

Procurement Nation
The energy ministry has invited proposals from stakeholders to improve the policy which has been in place since 2011
by TR Pakistan

The news: Pakistan’s ministry of energy has recently made the decision to revise the liquefied natural gas (LNG) policy. The petroleum division of the ministry is seeking proposals from stakeholders in the LNG industry to improve the current policy.

New and improved: Directorate General Liquefied Gases, Petroleum Division of the ministry of energy instigated the process to make changes in the LNG Policy which has been in place since 2011. The aim for these revisions is to improve the policy structure in a way that reflects compliance with international standards but also bodes well for the local needs. The new policy will also be in line with the latest developments in the LNG sector. An official letter asked for thorough and detailed comments and suggestions by stakeholders on the LNG Policy 2011 with the ministry providing three weeks for the industry’s input.

Involvement of stakeholders: While the letter was primarily addressed to the director general of petroleum concessions and gas, Pakistan State Oil Limited, Sui Northern Gas Pipelines Limited, Sui Southern Gas Company Limited, Pakistan LNG Limited, and Oil and Gas Regulatory Authority, the petroleum division has also sought similar proposals from stakeholders in the private sector. These include heads of Engro Elengy Terminal Limited, Pakistan Gasport Consortium Limited, Universal Gas Distribution Company Limited, Trafigura Pakistan Limited, Gaseous Distribution Company, Tabeer Energy, Energas Marketing Private Limited, LNG Easy and Daewoo Gas Pakistan Limited.

Effects of lockdown: After lockdowns were imposed in Pakistan due to the coronavirus outbreak in March, consumer demand for LNG reduced and industrial manufacturing was stopped. The oil ban was put in place to help the oil marketing companies and refineries with filled up storages. After a six-month pause, lockdown restrictions are being lifted and the demand for LNG has increased. Accordingly, Pakistan has resumed spot buying of liquefied natural gas (LNG) from the international market.

Third-party buyers: In July, a proposal by the ministry of energy for the provision of third-party access to LNG terminals was approved by the cabinet’s Economic Coordination Committee. This approval will allow third party companies to use excess capacity or the government contracted-unutilized capacity of LNG. Reduction in the spot rates of LNG has provided an opportunity to get cheap imported fuel. Allowing private buyers to buy LNG will also help in its import at competitive rates by utilizing excess capacity of terminals.

LNG industry: By substituting the expensive oil imports, LNG imports have saved Pakistan over $5 billion in the past five years. The import of LNG began in 2015 and has contributed to a huge growth in the industry. Currently, LNG contributes 22 percent in the country’s energy mix, while its share in energy imports stands at 24 percent.