The maritime business fraternity's dark night is finally over. Rear Admiral (r) Syed Hasan Nasir Shah's appointment as the chairperson of the Port Qasim Authority (PQA) has offered them a sigh of relief. The fraternity was waiting for such a moment with much desperation. They are now keeping their fingers crossed that the PQA would no more play the wheeling-and-dealing games and that the decisions taken purely on merit. There is a concrete reason for such high hopes. The new chairperson has honourably served in the Pakistan Navy for 41 years, with revolutionary developments witnessed during his tenure at the PN Dockyard and Karachi Shipyard. Under his command, Pakistan was able to build two Agosta Submarines and the first of many things, including a gunboat, frigate, fleet tanker, and a missile craft. Needless to say, it is natural to have such expectations from him now for his tenure at the PQA. The port caters to almost 50 percent of the seaborne trade requirements. A big chunk of that business deals in petroleum products.
There are chances that this business would further grow manifold as the country’s requirements are ever-increasing. In addition, winter is fast approaching and the government plans to make sure Pakistan does not face any gas shortages. The right approach is already adopted. Pakistan is considering giving the green signal to all the applicants — both national and international ones — that seek to develop LNG terminals. These include Pakistan GasPort Limited (PGPL), Engro Corp (Dutch firm Royal Vopak is a significant shareholder in ETPL), Global Energy Infrastructure Pakistan (GEIP), Tabeer (Mitsubishi), and Energas (an ExxonMobil partner). It was desperately needed considering that the country had earlier failed to hit the jackpot. After boosting hopes for a miracle, the government admitted that the offshore drilling at the Kekra-1 site near Karachi found no oil and gas reserves. With the current move at least, the smooth import of LNG is ensured. Once the good news is conveyed, the companies would have to take steps to conclude the implementation agreement with the PQA.
Next, they would complete the front end engineering design (FEED), officially secure the land, and apply for a construction license. The Letter of Intent (LoI) would also help them attract potential customers interested in buying gas. And, on that basis, the final investment decisions will be made. The measure would also become a source of foreign direct investment (FDI). Tabeer has shown its eagerness to inject $400 million, while the Engro terminal is estimated to cost $237 million. The Turkish GEIP project and Energas, on the other hand, are worth $200 million and around $130 million, respectively. Pakistan GasPort Consortium Limited (PGPC), a subsidiary of the Pakistan GasPort Limited (PGPL), already owns and operates the 750-million-standard-cubic-feet-per-day (mmscfd) LNG import terminal — inaugurated by former prime minister Shahid Khaqan Abbasi — at Port Qasim. Abbasi, the ex-PM, was pleased that the BW, FOTCO, Trafigura, and PGPC came together to develop the state-of-the-art terminal. Winning another terminal would surely be another feather in their cap.
Energas, another consortium, is putting all its efforts to become Pakistan’s leading LNG supplier and intends to forge partnership and alliances to ensure competitive and reliable energy. Interestingly, ExxonMobil has an agreement with this consortium. Tabeer, a subsidiary of the renowned Mitsubishi Corporation, is a Japanese giant. With a six-decade-long proven track record, it is vying to make inroads in LNG space. It seeks no sovereign guarantees or liabilities and claims that its capex — or capital expenditure — is higher owing to its plans to build a 23-kilometre pipeline to accommodate a full LNG cargo and not impact the busy port. Total, a major oil and gas player, is also interested in Port Qasim's LNG zone and intends to set up a terminal. Over the last few months, the PQA was blamed for the delaying tactics in issuing the LoIs; however, PQA officials claimed that the ground reality was different. As a matter of fact, the Pakistan Tehreek-e-Insaf (PTI) government wished to conduct a thorough survey to verify the claims of the local and multinational companies.
For that very reason, the services of reputed London-based firm, HR Wallingford, were hired. Once they gave a green signal some two months ago, the board of governors came together for a meeting, chaired by the Maritime Affairs Minister Ali Haider Zaidi, who reflected on the issue of awarding the LoIs to all the applicants. There was a consensus that all the applicants genuinely sought to develop LNG terminals, though a few members had cast doubts on some of the multi-national companies' big claims of planning huge investments in this sector. In spite of finding the claims to be a bit exaggerated, most of the members had nodded in affirmative. Yet, for one reason or the other, the government was unable to issue the LoIs. Earlier this month, the sudden development of awarding an LNG terminal took many in the industry by surprise. Some waiting for a final nod on their LoI took the extreme step of seeking legal opinion to file a suit and take a stay order from the court. However, such a step would have caused chaos. Now, national and multinationals have high hopes that there would be no more bureaucratic hurdles in this regard.
Giving the LoIs to all of the contenders would enable Pakistan to overcome its LNG shortfall in approximately a couple of years. At the moment, Pakistan only has two terminals with a regasification capacity of 1.2 billion cubic feet per day (bcfd). The gas deficit is ever more increasing. Pakistan is hardly able to meet even 50 percent of its energy needs with natural gas, with supply standing at 3.2bcfd, concerning as opposed to a forecast that the demand in the fiscal year 2019-20 is expected to shoot 6.9bcfd. It is evident that the country faces an acute shortfall, which is why new LNG terminals are need of the hour. Engro, which had built Pakistan’s first LNG terminal back in 2015, has projected to build another with a capacity of almost 4.5 million tonnes per year. Energas foresees processing 5.6 million tons of LNG annually, while Tabeer and GEIP both have a capacity of processing 750 mmscfd. Some applicants have even indicated their intention to start the development work as soon as all the formalities are over. Though practically unrealistic, one of them has gone to the extent of claiming to build its terminal in a year. Others have promised from 18 months to two years for the same job.
In any case, at least two terminals can become functional by 2021. These megaprojects will create thousands of jobs, both in infrastructure development and, later, in operating the terminals. Natural gas station owners and their workers will also breathe a sigh of relief. This is exactly what Prime Minister Imran Khan is trying to achieve. In the past few years, thousands of people have lost their jobs due to the unavailability of energy supplies to the industries. The successive governments' indecision had contributed to that. Zaidi, the incumber minister of maritime affairs, is determined to take every possible step to solve the problems accumulated over the decades. One of his most professional advisors, Mahmood Moulvi, also wishes to ensure the investors that they are dealing with a government that seeks no commission and believes in fair play for all.
Blog post Written by Nasim Haider and you can visit the original article at https://www.geo.tv/