Page 5 - GLNG Week 38

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The other LNG import project that is already operational in the country is also located at Port Qasim. The project is operated by Paki- stan GasPort – one of the companies selected to develop one of the new plants, in partnership with commodity trader Trafigura.
Pakistan’s third LNG terminal was only granted approval in July this year, spurred by a $6bn, three-year loan from the International Monetary Fund (IMF). Construction of the terminal – which is also set to be located at Port Qasim – has already been beset by delays, lead- ing to its start-up date being pushed into next year from the previous target of the end of 2019.
Delayed approvals
Project approvals have been delayed owing to Pakistani Prime Minister Imran Khan’s anti-cor- ruption drive, which has seen former prime min- ister Shahid Khaqan Abbasi arrested on charges of improper conduct during the award of an LNG import and distribution contract to Engro Elengy in 2013. Abbasi was serving as Petroleum and Natural Resources Minister at the time.
Islamabad’s crackdown on corruption is arguably part of a much-needed clean-up of Pakistani politics, with Transparency Interna- tional ranking the country 117 out of 180 in its Corruption Perceptions Index 2018. At the same time, however, officials and civil servants have been reluctant to sign off on the third terminal for fear of where the hammer will fall next.
As such, being able to announce plans for five new import terminals is something of a coup for the administration. Khan said last week that for- eign investor interest in the projects was a “ring- ing endorsement” that Pakistan’s policies were clear and transparent. He added: “It’s a compet- itive market.”
The rapid expansion of LNG import capacity does raise some questions over the long-delayed import pipeline from Iran.
What next
Pakistan and Iran recently signed a revised deal for the construction of the proposed Iran-Paki- stan (IP) pipeline.
The new deal is understood to omit a clause that allows Iran to fine Pakistan for not sticking to the project deadline, something stipulated in the previous version. The cost of the pipeline is estimated at around $3.5bn, with $2.5bn of this having already been invested in the completed 900-km stretch on Iran’s side. Pakistan’s 780-km section has yet to be started.
The pipeline has been longed delayed, with various Pakistani governments procrastinating over the project since the original pipeline agree- ment was signed in 1995. Pakistan is now look- ing to complete its section by 2024, after which it would buy 750 mmcf per day (7.75 bcm per year) of gas from Iran.
Whether it goes ahead is now in doubt, given that the government has secured external inter- est in potentially tripling the country’s LNG import capacity by 2023.
Further dallying over the IP pipeline will only drive Pakistan’s fertiliser manufacturers further into a corner. The industry is already complain- ing that LNG is too expensive, and has pushed for greater investment in the local upstream. But interest in Pakistan’s upstream is limited to local investors, with continued militant violence hav- ing scared away foreign companies.
With the upstream seemingly a lost cause and Iran’s gas supplies a geopolitically risky option, LNG projects appear to be the safest way forward regardless of the economic cost.™
Further dallying over the IP pipeline will only drive Pakistan’s fertiliser manufacturers further into a corner.
Pakistan’s two existing LNG import terminals, and one that is currently under construction, are located at Port Qasim.
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