KARACHI: The government and Engro Elengy Terminal Pakistan
Ltd (EETPL) have reached an agreement for the supply of about 230
million cubic feet per day (mmcfd) of additional liquefied natural gas
(LNG) at a re-gasification tolling rate of 17 cents per million British
thermal unit (mmBtu).
This brings down the average
tolling tariff at 47 cents per unit for firm LNG supplies of 630mmcfd
through Engro’s floating storage and re-gasification unit (FSRU) that is
now the largest source to the national transmission system, said EETPL
Chief Executive Officer Jahangir Piracha on Tuesday.
He
told an Asian Development Bank (ADB) press tour that Engro was partly
compelled by public and media pressure to offer its spare
re-gasification capacity at a significantly lower rate than its original
tolling rate of 66 cents per unit and partly because of a clause in the
agreement. The clause bound the LNG terminal operator to obtain
government permission for the utilisation of this additional capacity.
ADB provided a $30 million loan to EETPL.
‘Country saving $1.5bn per year in fuel substitution’
He said the agreement had been finalised and was in the
process of approval by respective boards of directors. Under the terms
of long-term service agreement (LSA), the government had guaranteed
processing of 400mmcfd of LNG against terminal’s total capacity of about
630mmcfd for 15 years. He said the 17 cents per unit tolling tariff for
additional LNG regasification was required for Engro’s additional
expenditures.
After commercial operations of Engro’s FSRU, the
government was able to secure a significantly lower bid of about 42
cents per unit from Pakistan Gas Port Limited (PGPL) for second LNG
terminal now in final stages of commercial operations.
Mr
Piracha said Pakistan was now saving around $1.5 billion per annum in
fuel substitution through 630mmcfd of LNG instead of furnace oil even
though the government was conservatively putting the furnace oil
replacement saving at $1.2bn per year.
Responding to a
question, he said the actual savings would be significantly higher when
seen in the context of efficient LNG based plants now being lined up for
commercial operations and would run at up to 62 per cent efficiency
compared to a maximum of 45pc plant efficiency a few best maintained
furnace oil-based projects could run at. “It is like shifting
corroborator based car engines to EFI (efficient fuel injection) engines
that make the big difference,” he explained.
Responding
to another query about Engro’s plans for another terminal, Mr Piracha
said the four member consortium was still working on the modalities but
the project was moving ahead.
He said a consortium
comprising oil major Shell, international fuel trader Gunvor, Fatima
Group and Engro Corporation would be a totally private sector project
and involve no government guarantee, financing, or support and would
deal with private sector investors and businesses.
Head
of EETPL Operations, Adil Mushtaq said the terminal had so far processed
a total of 126 LNG cargos since its inception in March 2015 including
six initial consignments supplied by the FSRU itself when Qatargas was
working through the safety and security mechanism. All these shipments
have together injected a total of 7.4m tonnes of LNG into the system.
He
said Qatargas had been operating Q-Flex vessels – medium sized ships –
at sub-par capacity because of port constraints. He explained the Q-Flex
vessels were bringing 151,000 cubic meters per trip against its
capacity of 210,000 cubic meters. The Port Qasim authorities need to
improve the channel and create birthing pockets (space) for allowing
crossing of multiple ships to ensure maximum capacity utilisation of
142,000 cubic metre per ship that would enhance supply from the FSRU to
690mmcfd.
The port operator is charging a fee to ship
and terminal operators to raise funds for additional dredging which
should take place at the earliest. Responding to a question, he said
Qatargas has been supplying LNG through 74 conventional ships having
lower capacity due to port constraints and inducted only 26 Q-Flex
carriers, at sub-optimal capacity, after these constraints were party
overcome early this year. The remaining 20 ships were arranged through
spot purchases.
Talking about the terminal availability,
Mr Mushtaq said EETPL operating the FSRU at 98.5pc availability factor
against 95.5pc required under the agreement.
He said
Engro was one of the top 15 global companies operating such an advanced
FSRU developed in a record 330 days- five days ahead of schedule in a
high risk sector despite security concerns.
LNG is a
cleaner fuel substitute to the expensive alternates like diesel, furnace
oil, LPG and kerosene. Recent domestic prices for different fuels,
according to Engro executive stood at LPG $15.13 per mmbtu, HSD $17.7
per mmbtu, petrol $18.23 per mmbtu and RLNG $6.74 per mmbtu.
