Govt devises multi-pronged strategy to reform gas sector: Tabish

Efforts would be made to provide "CPEC-style" centralized security cover to the companies: SAPM

ISLAMABAD (APP) - Special Assistant to the Prime Minister (SAPM) on Petroleum and Power Tabish Gauhar Friday said the Pakistan Tehreek-i-Insaf (PTI) government had devised a multi-pronged strategy to reform the gas sector and meet the country’s energy needs in an efficient manner.

“Our government is determined to reform the gas sector and for this purpose we have devised a strategic work stream that is further divided into three parts; short term, medium term and long term,” he said in a series of tweets.

Under the short term plan of 6-12 months, the SAPM said excess capacity of 300 Million Cubic Feet per Day (MMCFD) gas of the two existing Re-gasified Liquefied Natural Gas (RLNG) terminals and additional LNG cargoes would be utilized to bridge the demand and supply gap especially in the next winter season.

“There could potentially be up to 300 MMCFD (3+ additional LNG cargoes per month) of “excess capacity” available at the existing two RLNG terminals (that may be utilized on a strictly private-to-private i.e. without any GOP “take or pay” payment obligation and on an open/third party access basis to further bridge the demand and supply gap, especially in the coming winters for the domestic gas consumers, under a ‘without prejudice’ arrangement sanctioned by OGRA,” he said.

Tabish said a few parties had proposed supplying up to 300 MMCFD of LNG, on private to private basis, to industrial customers via cryogenic road tankers from Gwadar, what he called the “Virtual LNG Pipeline”.

Aside from meeting the industrial gas demand in and around Karachi (without the need to physically access the Sui Southern Gas Company’s (SSGC) pipeline network, he said, “This proposal may potentially make available the 150 MMCFD of RLNG that SSGC is currently retaining in their system and accordingly release the same to meet the deficit up north (in the SGPL system).”

The SAPM said the Petroleum Division now had a comprehensive draft policy in place after discussion with key stakeholders, but it needed to get through the internal approval process by July end to enhance supply of the alternative fuel to domestic consumers and correspondingly reduce the burden on natural gas provision via the pipeline network.

He said to remove the price anomaly between the rates of indigenous and imported gas, and the associated adverse impact on the sector’s financial sustainability, the long awaited “political consensus” on Weighted Average Cost of Gas (WACOG) must be reached at the earliest, ideally before the year end.

Under the medium-term (2+ years) strategy, Tabish said the government hoped that two new “merchant” LNG terminal developers would achieve financial close and start construction this year. “We do need at least one additional import terminal (without any “take or pay” commitment on the part of the GOP) by 2023.”

Besides, he said, the funds collected under the Gas Infrastructure Development Cess (GIDC) would be utilized to start construction of on-ground LNG storage facilities at the Port Qasim to maintain 10-day reserves in Phase 1. Accordingly, the Oil and Gas Regulatory Authority was finalizing third party access rules, he said, adding, “GOP (51%) share can bring in the private sector (49%) later. [We] need to show substantial progress on this by 2023.”

He underlined the need for making substantive headway with the Russian consortium in the next couple of months on the additional Karachi to Lahore gas pipeline, which was of critical importance for Pakistan’s energy security. “As per the PM’s directive, this infrastructure asset needs to be completed as soon as possible, at a price affordable to the consumers, and with maximum involvement of our local companies, know-how and material.”

Whereas in the long term (3+ years) plan, the SAPM said, impediments to accelerated natural gas drilling activities in the frontier regions of Balochistan and Khyber Pakhtunkhwa would be removed.

Elaborating, he said all the available 2D seismic data (20% of all the basins) would be processed, while surveys for the remaining 80 percent areas would be carried out, which would be provided for facilitation of the interested exploration and production companies.

He said efforts would be made to provide “CPEC-style” centralized security cover to the companies operating in different areas.

He said upstream regulatory functions would be transferred from the Petroleum Division to an independent authority, the summary of which had already been approved by the cabinet.

The SAPM said frequent biddings for award of new E&P blocks would be conducted and the government would encourage “out of court” settlement on litigation.