SNGPL, SSGC told to address LNG operators’ concerns

ISLAMABAD: The Prime Minister Office has directed the two gas utilities to immediately engage with two new liquefied natural gas (LNG) operators who have complained about roadblocks and apathetic responses to setting up of their terminals.

Informed sources said the sponsors of two coming LNG Terminals — Tabeer Energy and Energas — had in recent weeks reached out to all key stakeholders, including the prime minister, to report difficulties they were facing in bringing their investments to fruition.

In these engagements, the sponsors appreciated maximum support extended by the relevant government forums, like the Cabinet Committee on Energy (CCoE) and the Economic Coordination Committee (ECC) of the cabinet in taking policy decisions. At the same time, however, they complained that there were some entrenched quarters within the line ministries, regulatory agencies and companies concerned who were creating problems, instead of implementing decisions of the CCoE and the ECC duly endorsed by the federal cabinet.

The sources said the displeasure was expressed at the highest level and conveyed to the top brass at the petroleum division for its inability to address minor issues that should not have cropped up in the first place after the CCoE and ECC had taken clear decisions.

Sponsors speak about roadblocks in way of making terminals

The sources said the oil crisis was the ultimate reason for removal of the special assistant to the PM on petroleum and the petroleum secretary but issues relating to the LNG terminals had also played a critical role.

The sources said the Sui Northern Gas Pipelines Limited (SNGPL) and the Sui Southern Gas Company Limited (SSGCL) had been asked to immediately engage with the sponsors of both coming LNG terminals and submit regular reports to the PM Office on discussions, decisions taken, timelines set and implementation status. The companies have also been asked to report if they have any operational difficulties or any other reasons for delays in implementation of decisions of the cabinet bodies.

Earlier, the Ministry of Maritime Affairs had asked the LNG terminal sponsors, on the basis of minutes of cabinet decisions, to convey their timelines for setting up their terminals and required capacity in existing pipeline system, including the 17-km new pipeline from Port Qasim, and commit to take it on firm basis from their indicated completion dates. The cabinet had also asked the Oil and Gas Regulatory Authority (Ogra) to allocate spare pipeline capacity until proposed completion date of the first of the two LNG terminals, for short term only, on three month rolling basis to any applicant, including CNG sector, meeting the necessary criteria.

The sponsors were required to convey in writing if their LNG terminals had been delayed on account of any reason and give revised dates three months in advance. The cabinet had noted that on completion of North-South pipeline there would be enough capacity that could be allocated by Ogra on long term basis.

Tabeer Energy – a subsidiary of Mitsubishi Corporation – which has also been given permission and licence to set up a new LNG terminal, reported its proposed completion date and the date for commencing the commissioning test to be targeted for second quarter of 2023.

However, it said the dates were on a non-commitment basis and subject to its timely final investment decision on the basis of a few conditions where the government agencies were involved. These included obtaining all approvals from the relevant authorities, including the execution of the implementation agreement with Port Qasim Authority and construction and transmission licences from Ogra.

It said some problems also related to execution of agreements for tie-in and transportation service agreement and gas transportation agreement with the SSGC and the SNGPL for supplying RLNG from the port to gas system and then to customers and for capacity allocation for RLNG supply up to Lahore. It sought capacity allocation for minimum 250 MMCFD to a maximum of 1,000 MMCFD over the period.

It asked the petroleum division, maritime affairs division and other government departments and the regulator “to clarify and confirm whether the proposed mechanism for allocation of pipeline capacity falls within the existing regulatory and legal framework” as prescribed by Ogra Ordinance and Ogra gas third party access or natural gas regulated Third Party Access Rules 2012.

It also wanted clarification whether the cabinet, under the OGRA ordinance and the Third Party Access Rules, was the competent authority to issue directives to Ogra regarding allocation of pipeline facility. It also asked the regulator to issue a notification of available capacity and the process to grant the firm allocation of capacity defined in the applicable rules regarding the existing transmission pipeline between SMS Pakland, Karachi, and Lahore.

The other company – Energas Terminal – is also reported to have conveyed similar concerns to the government saying it was awaiting discussions on gas transportation agreement with the SSGCL and the SNGPL, allocation of area for RLNG injection to the main gas network and construction and transmission licences from the regulator. Based on these approvals, the company promised its terminal completion in the fourth quarter of 2022.

Published in Dawn, March 29th, 2021

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