Pakistan inks $16bn LNG deal with Qatar: Report

Pakistan's state-owned company PSO would receive 1.5mn tonnes of LNG per year from QG2; supply would be raised to 3mn tonnes per year from the second year

The period of contract will last till December 2030.
The period of contract will last till December 2030.

Pakistan and Qatar have inked a government-to-government (G2G) deal for the award of a $16bn contract for supply of LNG from a Qatargas, without going through the mandatory bidding process, according to a local media report.

“The [Pakistani] Petroleum Ministry has now provided details regarding G2G deal with Qatar to import LNG which was effective from March 2015,” officials told The Express Tribune newspaper.

The details of the deal were revealed by Pakistan’s Petroleum Ministry officials to a committee constituted by the country’s Economic Coordination Committee (ECC).

Earlier, the petroleum ministry had sought ECC approval for Pakistan State Oil (PSO) to execute the sales-purchase agreement with Qatargas 2 (QG2) as seller following the deal. But the approval was deferred following a question raised by the law secretary about the deal with Doha.

Officials said the law secretary would present a report regarding the LNG deal with Qatar on government-to-government basis in the upcoming meeting, enabling the economic decision-making body to approve the General Sale Purchase
Agreement (SPA), a commercial contract to be signed between PSO and QG2.

They said that PSO had also imported six cargoes of LNG from Qatar in line with the G2G deal.

Officials said that price of LNG had been linked with a direct percentage of brent crude oil and under current price of brent the value of potential LNG supply under SPA amounted to around $16bn.

The period of contract will last till December 2030. However, a price review provision - which allows the two countries to seek a price review after ten years - has been built in the contract.

The two countries also maintain the right to terminate the Sales Purchase Agreement (SPA) in case they fail to reach consensus on price revision.

Under the agreement, PSO, a state-owned company designated by Pakistan’s government, would receive supply of 1.5mn tonnes of LNG per year from QG2 and the supply would be raised to 3mn tonnes per year from the second year.

Economic decision making body was expected to allow PSO to sell the LNG to the gas utility companies including Sui Northern Gas Pipeline Line Limited (SNGPL) and Sui Southern Gas Company (SSGC).The PSO may also be authorised to sell LNG to third party consumers.

Qatar in its original plan sought that Qatargas would supply LNG through their company Qatar Liquefied Gas Company 3 (QG3) under the SPA. However, Qatargas had now proposed for LNG supplies under SPA through QG2.

The new proposed arrangement had deprived US-based firm ConocoPhillips to capture Pakistan’s market as shareholder in QG3, which is a joint venture between Qatar Petroleum, ConocoPhillips and Mitsui.

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Oil & Gas Middle East - November 2019

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