Pakistan’s Oil and Gas Discoveries

ISLAMABAD:

Pakistan has made the highest number of oil and gas discoveries in the current month as exploration companies found fresh hydrocarbon deposits in six wells that will add 50.1 million cubic feet per day (mmcfd) of gas and 2,359 barrels per day (bpd) of oil to the existing production levels.

Of these, major discoveries have been made in Sindh that already has a big share in total gas output in the country.

Gas utilities: World Bank recommends single Transmission firm: Petroleum and Natural Resources Minister Shahid Khaqan Abbasi, while speaking during a meeting of the National Assembly Standing Committee on Petroleum and Natural Resources chaired by Bilal Ahmed Virk on Tuesday, said four discoveries were made in Sindh and the remaining two in Khyber-Pakhtunkhwa.

Of these, Oil and Gas Development Company made two finds, MOL Pakistan two and Petroleum Exploration Limited and United Energy Pakistan one each. The discoveries have shown presence of 31.6 mmcfd of gas and 339 bpd of crude oil in Sindh and 18.5 mmcfd of gas and 2,020 bpd of oil in K-P.

Sui Northern Gas Pipelines Limited (SNGPL) Managing Director Amjad Latif warned that the country’s gas reserves were depleting and no gas was available for the domestic consumers in Punjab. He pointed out that the purchasing cost of gas for domestic consumers stood at Rs510 per million British thermal units (mmbtu) but the consumers coming under the first slab were receiving it at Rs110 per mmbtu.

Eighty-five per cent of domestic consumers were paying less than 50% of the cost of gas and the industrial and commercial consumers were cross-subsiding the domestic consumers, he said. However, now industrial and commercial consumers were being provided imported liquefied natural gas (LNG), so the burden of cross-subsidy had been shifted to SNGPL that was feeling the strain on its finances. Though the gas production was declining, Latif told the committee that the company would lay pipelines over 8,000 km in the current year. At present, 1.5 million applications for new gas connections are awaiting approval of the company.

The country was facing gas shortages as politicians were using it as a tool to win elections. During the meeting, National Assembly member Mian Tariq Mehmood, who belonged to the ruling PML-N, alleged that SNGPL had provided 100 gas meters in his constituency to please his political rival Imtiaz Safdar Warraich, though his requests for new meters were turned down repeatedly. He insisted that the provision of gas meters to his opponent had damaged his political image. NA Standing Committee Chairman Bilal Ahmed Virk accused Director General Petroleum Concession Saeedullah Shah of not responding to the committee for the last two years.

Sui lease extension: PPL to pay 10% bonus to Balochistan Describing Shah’s attitude as non-sense, he said he was not cooperating with the committee and sought the record of past meetings to show response of the director general of petroleum concession. The committee also took up for review the issuance of licences for liquefied petroleum gas (LPG) stations to the defaulters that were previously running CNG stations.

It recommended that rules of Oil and Gas Regulatory Authority (Ogra) should be amended to ensure the clearance of outstanding bills of SNGPL, Water and Power Development Authority and banks before issuing licences for setting up LPG stations.

Discovery of National Gas in Pakistan at various Location:



DISCOVERY OF GAS AT WELL MITHRI # 01, KHAMISO by OGDCL :





DISCOVERY OF GAS CONDENSATE AT GUNDANWARI # 01 by OGDCL :



China to build two RLNG terminals at Gwadar



ISLAMABAD:

In a major development, Pakistan has managed to get the two RLNG terminals deal at Gwadar done with China. With the change of the mode from built, own, operate and transfer (Boot) to engineering procurement construction-financing (EPC-F), the country will be exposed to a mammoth saving of one billion dollars in 25 years just in the head of tolling fee.

The RLNG terminals will re-gasify the LNG of 1.2 billion cubic feet gas per day (bcfd). The terminals will be installed at Gwadar under government-to-government mode.Under the EPC-Financing mode, tolling fee that also includes the re-gasification charges of each RLNG terminal will be reduced to 30-32 cents per MMBT from the tariff of 40-45 cents earlier worked out under the BOOT mode. This will provide a solace of $25 million a year and if it is calculated on 25 years, the benefit would last up to $500 million, Managing Director of Inter State Gas System (ISGS), Mubeen Saulat, told The News.

However, the cost of one RLNG terminal is likely to be finalised soon somewhere between $280-$300 million. The Chinese company will construct another RLNG terminal at the Gwadar Port. In this way, the cost of two terminals is to hover at $315 to $340 million, which will be really a great achievement.

“At the outset, only one RLNG terminal was negotiated with the Chinese company, but the second RLNG terminal will also be built under variation order of 15 percent and this is very much allowed under the PPRA rules.”

He said in case, the second RLNG terminal was built separately, then the cost would certainly surge by 50 percent. Interestingly, Engro RLNG per MMBTU on re-gasifying 400 MMCFD LNG and LNG terminal-2 that is to commission by June 2017 will be charging 41.77 cents per MMBTU on re-gasifying 600 MMCFD, but the Gawadar RLNG terminals are to charge 30-32 cents per MMBTU, meaning by that each will re-gasify 600MMCFD LNG. This shows that the Gwadar RLNG terminal deals are the best ones in terms of competitiveness. To a question Saulat said that ISGS not only will arrange the Explaining the deals’ salient features, both the countries are earlier negotiating the installment of RLNG terminal at Gawadar under BOOT basis, but Chinese side argues that project will take time under BOOT basis. However, Chinese company said it had no objection in erecting the terminal even under BOOT basis. Just with change of mode from BOOT to EFC-Financing mode, on each terminal, there will be a mammoth saving of half a billion dollars. However, if second one is built by the same Chinese company under variation order, it would cost just $30 million.

China Pipeline Petroleum Bureau (CPPB) that has been assigned to build the 700 kilometers LNG pipeline from Gwadar to Nawabshah will also construct the two RLNG terminals.

Saulat also says that the 700 kilometers RLNG gas pipeline from Gwadar to Nawabshah will now 1.950 bcf per day (1.2 bcfd from two RLNG terminals and 750 mmcfd from Iran when it is to be connected to Iranian border). However, in the pipeline, now four gas compressors will be installed as against the three for smooth transpiration of almost 2 bcfd gas per day.

The price negotiating committee has finalized the cost of RLNG pipeline project at $1.353 billion. The price is more competitive even than the project of argumentation in gas network pipeline carried out by both Sui Southern and Sui Northern. In addition to 700 kilometers of the LNG pipeline, another 12 kilometers pipeline will also be constructed from the main pipeline to RLNG terminals.

Pakistani Gas Company set to emerge as key player on world energy map.

ISLAMABAD:

Inter State Gas Systems (ISGS), a company established by the government to work on gas import projects, is striving to secure energy resources to make Pakistan self-sufficient and it is expected to emerge as a key player on the world’s energy map after regional pipeline projects are executed.

Pakistan is eyeing gas imports from countries holding vast deposits and has entered into some key agreements with Iran and Turkmenistan to meet its energy security plan.

Pakistan’s $2 billion LNG pipeline project hits a snag

ISLAMABAD:

Pakistan’s two-billion-dollar LNG pipeline project has hit a snag with Washington slapping a set of sanctions on the Russian firm designated to work on the scheme.

Earlier, Pakistan was unable to execute the Iran-Pakistan (IP) gas pipeline project because of sanctions slapped on Tehran by the United States and the European Union.

Karachi to Lahore pipeline: Pakistan, Russia seal $2 billion energy deal The Russian government had signed a deal with the Pakistani administration to lay a $2bn North South Pipeline from Karachi to Lahore to transport imported LNG, nominating the firm RT Global Resources (RTGR) to execute the project. Russian President Vladimir Putin was to visit Pakistan to perform the ground-breaking ceremony of the project.

“Now we have found out that the US has imposed sanctions on RTGR, causing bottlenecks in executing the LNG pipeline project,” a Pakistani official said, adding that the US had also stopped Pakistan from executing the IP gas pipeline project.

After the latest development, Pakistan and Russia are facing an uncertain situation as regards awarding the contract to RTGR. The two countries had signed a government-to-government deal, and RTGR and Pakistani firm Inter State Gas Systems were to sign a commercial agreement to execute the project.

LNG pipeline, terminal: Govt to decide on Chinese firm’s bid in a month An official said the Russian government was evaluating the sanctions imposed on the Russian firm while Pakistan was yet to make a decision. The two governments had signed a deal in October 2015 to construct a pipeline to transport liquefied natural gas from Karachi to Lahore. Moscow had agreed to lend Islamabad $2 billion for the project. In return, Islamabad would award the contract of laying the pipeline to RTGR without holding a bidding process.

The firm, which is a Russian state corporation, would lay the 1,100km pipeline with a capacity of 12.4 billion cubic metres per annum to connect LNG terminals in Karachi with those in Lahore.

Pakistan has worked on a similar model with China under which a Chinese firm would lay an LNG pipeline from Gwadar to Nawabshah and build an LNG terminal at the deep-sea port at a cost of $2.5 billion.

Liquefied natural gas: Govt seeks to negotiate Gwadar pipeline cost The financing for the LNG pipeline had come as a prelude to Russia’s offer to sell LNG to Pakistan. Russia is the second-largest producer of natural gas in the world, and was seeking to diversify its export markets after a spat over Ukraine with the EU, its main buyer.

The pipeline would be laid on the basis of build, operate and transfer. The Russian company would transfer it to Pakistan after 25 years. Under the agreement, Pakistan would provide 15% equity while 85% funding would be provided by the Russian firm. The first phase of the project is expected to conclude by December 2017.

Pakistan awards $2 billion LNG pipeline contract to sanction-hit Russian firm.

ISLAMABAD:

The Ministry of Law has given the go-ahead for the award of $2 billion liquefied natural gas (LNG) pipeline contract to the energy firm designated by Russia, though the US has slapped sanctions on the company, officials say.

The approval comes after the Russian government signed a deal with Pakistan last year for laying a pipeline from Karachi to Lahore, called the North-South pipeline, to transport imported LNG. It nominated RT Global Resources for executing the project.

ECC approves strategy for North-South pipeline Russian President Vladimir Putin was due to visit Pakistan to perform the ground-breaking of the project, but the signing of a commercial contract between RT Global Resources and Interstate Gas Systems was delayed due to US curbs on the company.

At the time of signing the deal in October 2015, Russia had agreed to lend $2 billion for the project. In return, Pakistan would award the contract of laying the pipeline to RT Global Resources without inviting bids.

The Ministry of Petroleum and Natural Resources had tabled a plan for building the LNG pipeline with the help of the Russian firm in a meeting of the Economic Coordination Committee (ECC) in April this year. However, the ECC referred the matter to the Law Division for its opinion on whether the US sanctions could cause problems for the project. According to officials familiar with the development, the Russian government had suggested that a special purpose vehicle (SPV) could be set up in Pakistan to implement the project in order to avoid the impact of US restrictions.

In its legal opinion, the Ministry of Law agreed that the Russian proposal was workable and would help execute the pipeline project. There was no legal bar on awarding commercial contract to the Russian firm that would set up an SPV in Pakistan, it said.

Officials said the SPV would also be listed on the Pakistan stock market to float its shares for generating funds.

SSGC asked to utilise idle capacity of LNG terminal The case of Russia is different from Iran that had faced global sanctions as a country. Washington has imposed only some restrictions on the Russian firm, barring it from doing business with US companies. However, the company would be registered in Pakistan to implement the project, they said.

The pipeline that will be built by RT Global Resources, a Russian state corporation, will be 1,100km long and will have the capacity to carry 12.4 billion cubic metres of LNG per annum.

Pakistan has worked on a similar model with China according to which an LNG pipeline will be laid from Gwadar to Nawabshah and a terminal will also be built at the deep-sea port.

Russia is the second largest producer of natural gas in the world and is seeking to diversify its export markets after a standoff over the Ukrainian dispute with the European Union, its main buyer. It has also offered LNG export to Pakistan.

The pipeline will be laid on build, operate and transfer basis. The Russian company will hand it over to Pakistan after 25 years. Pakistan will provide 15% of equity while the Russian firm will contribute 85% of financing. First phase of the project is expected to be completed by December 2017.