Pakistan close to deal with Qatar over LNG supply

Deal would provide Islamabad lower-priced and efficient fuel

An agreement with Qatar is expected by early March.
An agreement with Qatar is expected by early March.

Pakistan is close to striking a long-term agreement worth potentially $22.5bn or more to import liquefied natural gas (LNG) from Qatar, Pakistan’s top energy official has said.

“We are negotiating with Qatar and a few other sources,” said Pakistani Petroleum Minister Shahid Khaqan Abbasi in an interview with The Wall Street Journal. “The deal will be very competitive and very beneficial for Pakistan.”

An agreement with Qatar is expected by early March, said other Pakistani officials, adding that the deal would provide the country with LNG supplies that could last over 15 years.

Pakistan is looking to import 3mn tonnes of LNG a year, beginning this year, with much or all of that coming from Qatar. 

Estimates suggest that the country’s overall LNG imports will rise to around 7mn tonnes annually within three years. However, it is not clear as yet how much of that higher total would be provided by Qatar, reports say.

Importing 3mn tonnes of LNG would cost around $1.5bn annually, or some $22.5bn over 15 years, given current global oil and gas prices, but that cost will fluctuate with the price of oil, which is also used to price LNG.

According to Pakistan's prime minister, LNG imports of 3mn tonnes would yield cost savings worth an annual $300mn. By using LNG, Pakistan will be able to generate between 7% and 9% more power, as a result of its greater efficiency and by bringing currently dormant gas-fired power stations back to work, he added.

“LNG is more efficient and cleaner for the environment than the alternatives,” Abbasi said. “This is a major shift in our energy mix.”

The Pakistani public company Engro, which has stakes in petrochemicals and terminal storage industries, has built a terminal to import LNG at Port Qasim, set to become operational at the end of March, according to officials.

Bidding is now under way to construct a second LNG terminal at Port Qasim.

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