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LNG from Qatar: Govt going to import costly gas

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ISLAMABAD: Pakistan is pressing ahead with importing LNG from Qatar on government-to-government basis despite Doha's offered volumes being lower and price higher than those in the LNG tender recently scrapped by the Economic Coordination Committee (ECC).

The ECC, sources said, has directed the Petroleum Ministry to negotiate import of 500 mmcfd LNG from Qatar, which official sources is within the realm of impossibility as Qatar is unable to offer more than 300 mmcfd LNG to Pakistan.

In March 2013, Qatar offered to provide 250mmcfd to Pakistan at $17.437/mmbtu. But this offer did not include the cost of infrastructure necessary to receive and relay LNG in Pakistan. With the infrastructure cost of at least $200 million factored in, Qatar LNG works out at $19.521/mmbtu.

In comparison, the lowest-evaluated bidder in the just-scrapped LNG tender - the third in Pakistan - offered 400mmscfd of LNG at an all-inclusive price of $17.7074/mmbtu.

"The difference between the lowest tendered LNG price and the one offered from Qatar runs into hundreds of millions of dollars," said an industry insider, wishing not to be named.

Chief Minister Punjab Shahbaz Sharif, Federal Minister for Petroleum Shahid Khaqan Abbasi, and
Federal Minister for Water and Power Khawaja Asif will land in Doha on Monday to discuss LNG imports from Qatar.

"It is very unclear which public sector company will put up the $200-300 million investment required to accept Qatar LNG," he said. In case private sector declines to invest public sector company has the finances to do so.

The scrapped LNG tender envisioned 100 percent investment from the private sector.

Dr Asim Hussain, the petroleum minister and later advisor in the previous government had initiated LNG talks with Qatar and acknowledged that the Qatar offer was more expensive. "The prices offered in the last tender were substantially less than Qatar," he had revealed to Business Recorder. The last offer from Doha was received by the Foreign Ministry and tabled by then Foreign Minister Hina Rabbani Khar.

"Ironically, Qatar LNG was a People's Party project as well," says an insider. "The delegation, which expects they will get better terms, will come to the same conclusions that the previous government did. Why would Qatar sell gas to Pakistan at throwaway prices when it can get good market prices by selling it to countries that actually have LNG infrastructure?"

Dr Hussain signed a Memorandum of Understanding between Pakistan and Qatar on February 6, 2012, for 350mmcfd of LNG. Qatar is the world's largest LNG producer. In addition to the Qatar option, the new government is also considering importing LNG from India. The plan envisions using Indian LNG terminals in Gujarat and bringing the gas not to Sindh, which is adjacent to Gujarat state, but directly to the Punjab.

The Indians have offered a price of $22/mmbtu, which is the most expensive offer so far received. Pakistan wants India to waive off taxes to make the product more affordable. These discussions are ongoing and the process is allegedly being championed by a powerful businessman.

The LNG tender which was scrapped was overseen by London-based QED Consulting at the recommendation of USAID. Three parties put in their bids: Engro, Pakistan Gasport, and Global Energy of Turkey.

LNG from Qatar: Govt going to import costly gas

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Dedicated to the bloke who started a nobel prize thread for Nawaz Sharif & Co.
 
.... WASTE OF TIME


ECONOMICAL ANSWER IS IRAN

GET GAS FROM IRAN
OPEN AUTO IMPORTS FROM IRAN INTO PAKISTAN FUEL EFFICIENT CARS NEW MODELS
OPEN RAILWAY ENGINE IMPORT FROM IRAN
OPEN PETROCHEMICAL PRODUCT LINE TO COME FROM IRAN


>Bring in Iranian Engineering companies to help build projects in Pakistan
 
Iran should be a higher priority except for the embargo restrictions. Let us set up the infrastructure for LNG and we will import only what we need. Hopefully , with so many options to choose from we can improve our Negotiability power.

I want IP, TAPI and Qatar Options on the table so we can play these players against each other to get the best deal. This is business and as no one will give us a break, we need to protect our own interest and play them against each other.
 
.... WASTE OF TIME


ECONOMICAL ANSWER IS IRAN

GET GAS FROM IRAN
OPEN AUTO IMPORTS FROM IRAN INTO PAKISTAN FUEL EFFICIENT CARS NEW MODELS
OPEN RAILWAY ENGINE IMPORT FROM IRAN
OPEN PETROCHEMICAL PRODUCT LINE TO COME FROM IRAN


>Bring in Iranian Engineering companies to help build projects in Pakistan


No Dear The Solution Is To Price All LNG Imports With Henry Hub Indexation or Better Yet Spot Purchase From Henry Hub.Nov 2013 Prices Are $3.64/mmbtu Lower Than Our Sui Gas

Just Imagine If We Just Replace Our Furnace Oil Imports with Henry Hub Priced LNG Within an Year
Our BOP Savings Would Go Into Billions of Dollars and No IMF TO bug Us But Idiots In Oil and Gas Ministry Want to Import IP Pipleine Gas and LNG From Qatar with Prices Linked To Crude Oil Scnadalous I Tell You The Whole Oil and Gas Ministry Should Be Hanged For This
 
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No Dear The Solution Is To Price All LNG Imports With Henry Hub Indexation or Better Yet Spot Purchase From Henry Hub.Nov 2013 Prices Are $3.64/mmbtu Lower Than Our Sui Gas

Just Imagine If We Just Replace Our Furnace Oil Imports with Henry Hub Priced LNG Within an Year
Our BOP Savings Would Go Into Billions of Dollars and No IMF TO bug Us But Idiots In Oil and Gas Ministry Want to Import IP Pipleine Gas and LNG From Qatar with Prices Linked To Crude Oil Scnadalous I Tell You The Whole Oil and Gas Ministry Should Be Hanged For This

What about the above offered price by Qatar, is it good? How does it compares to the local gas price, is it less or more?
 
What about the above offered price by Qatar, is it good? How does it compares to the local gas price, is it less or more?


Qatar Is Offering at $17 to $19 per mmbtu But November 2013 Henry Hub Spot Prices Are $3.64 per mmbtu.This Is What The Idiots In Our Oil and Gas Ministry Do Not Understand.As Far As I Know Sui Gas Is Priced At $4-5 per MMBTU.


No The Above Price Is A Death Sentence For Our Economy.We should Negotiate LNG and Imported Gas Prices Which Is Linked To Henry Hub Not To Crude Oil
 
Qatar Is Offering at $17 to $19 per mmbtu But November 2013 Henry Hub Spot Prices Are $3.64 per mmbtu.This Is What The Idiots In Our Oil and Gas Ministry Do Not Understand.As Far As I Know Sui Gas Is Priced At $4-5 per MMBTU.


No The Above Price Is A Death Sentence For Our Economy.We should Negotiate LNG and Imported Gas Prices Which Is Linked To Henry Hub Not To Crude Oil


This is no less than treason... Why are they hell bent on linking it to crude oil prices when the world has moved on? We are still being the price of 90s disastrous energy policy and now this...
 
This is no less than treason... Why are they hell bent on linking it to crude oil prices when the world has moved on? We are still being the price of 90s disastrous energy policy and now this...


My Point Exactly That Is Why I Said The Whole Oil and Gas Ministry Should Be Hanged For This.

Look Up The Spot Prices For Henry Hub Yourself

Henry Hub Natural Gas Spot Price (Dollars per Million Btu)


Imported US LNG Cheaper Than Our Own Local Sui and Qadirpur Gas
 
Looks like the price we are agreeing to is significantly higher than the 2005 spiked prices....


Last Fiscal Year We Imported Furnace Oil Worth $15 Billion If We Just Import Henry Hub Linked Imagine The Massive Financial Benefits

1.We will Get Rid Of The Massive BOP Problems Plaguing Us and Forcing Us To Go To IMF Every Now and Then Thus Appreciating.Even If We Import Qatari LNG at $17-19 per mmbtu we get savings of $1.5 billion per year Imagine the Benefits if we import henry hub linked lng

2.We Produce Electricity from expensive oil.Power We Produce From deisel is Rs.24 per Unit and Rs.18
per Unit From Furnace Oil according To Statement Given By Secretary Oil and Gas Before Standing Committee of National Assembly.The Government Has To Set Aside More Than Rs 200 Billion For Subsidies.We Can Save On This
 
I Am Not A Big Fan Of Dr Farrukh Saleem But This Article Is Very Informative

LNG
Dr Farrukh SaleemSunday, August 04, 2013
From Print Edition

In 2008, the spot price of US-produced natural gas was $12/mmBTU. In 2012, the spot price crashed to less than $2/mmBTU before rebounding to around $4/mmBTU in 2013. According to The Economist: “The biggest breakthrough the energy industry has seen in decades, hydraulic fracturing combined with horizontal drilling, has released unprecedented quantities of gas from this shale.”

Over the past three years, technically recoverable US shale gas resources have gone up from 353 trillion cubic feet to 827 trillion cubic feet – that’s a 100-year supply of natural gas. Over the past two months, Asian LNG prices have plunged 25 percent. Conclusion: Natural gas prices are falling like ninepins.

From a historical perspective, the global price of natural gas “has been 10 times cheaper than crude oil”. Right now natural gas is “approximately 35 times cheaper”. Lesson: If we are going to buy LNG from Qatar, it will not be in Pakistan’s interest to peg LNG’s price to the price of crude oil.

Gas Authority of India Limited (GAIL), the state-owned enterprise, has contracted to buy 3.5 million tons per year of LNG from the US at a landed cost of $10.50/mmBTU (price is pegged to Henry Hub). GAIL has also contracted to buy 7.5 million tons of LNG from RasGas of Qatar at around $13/mmBTU.

For the record, world LNG estimated August 2013 landed prices are: India $14.10, UK $9.46, Spain $10.08, Korea $15.75 and China $15.25. The spot LNG price now hovers around $14/mmBTU.

LNG is fuel of the future. Pakistan must not miss the boat; we must get into the LNG game right away. To begin with, we need to invest in developing a world-class LNG supply chain. In the US, the number of unconventional natural gas wells has gone up from 18,485 in 2004 to over 35,000 in a matter of just two years. By 2016-2017, the US is going to glut the global LNG market.

GAIL has become the first Asian entity to have contracted US LNG. For Pakistan, importing Qatar’s LNG at $18/mmBTU (plus $2.50/mmBTU for Engro) will make Pakistani products highly uncompetitive when India’s cost for US LNG would be $10.50/mmBTU.

In Australia, Chevron and Exxon-Mobil are pouring in $160 billion to liquefy coal-seam gas into LNG-and then export it to the world. By 2018, Australia would be the largest exporter of LNG. LNG producers in Qatar are dying to lock in long term buyers. North America, East Africa and Australia are all looking for buyers. It’s a buyers market out there.

Pakistan needs a short-term and a long-term LNG strategy. Over the past decade, LNG spot and short-term market “has increased exponentially”; the spot market now stands at around 30 percent of the total global market. The UK, Japan, Korea, Taiwan and China have all been buying LNG spot cargoes at around $14/mmBTU. Over the short term, Pakistan ought to do the same. Over the long haul, LNG at or under $10/mmBTU is the trend.

LNG - Dr Farrukh Saleem
 
Will these stupid journalists realize that Pakistan does not have much Gas production capacity of it's own, and thus it needs to import to meet the demand of the local industry.

The Company (Engro i believe) will import the gas and then sell it to the customers. The customer has to bear the cost directly, like in most countries. The customer can then transfer that cost to the consumer who purchases his product. Simple. That's how business works.

Now if LNG from Qatar is expensive, then that cost gets transferred. Just like if the cost of petrol goes up, so does the cost of items like fruits and vegetables.
 
There is hardly any alternative. LNG infrastructure just has to be built. It should not be factored into the price at all. We need multiple options. LNG, IP, TAPI, etc...

The cost of not making a decision is far greater than price differentials. LNG terminal should have happened in '90s.

A sensible strategy would be to:

1. Ask Qataris to finance excess capacity LNG terminal while negotiating prices at the same time.

2. Use excess capacity to import on spot market prices.

3. Accelerate own sources exploration and exploitation.

5. Renegotiate with Iran for IP price.

We have few choices in the coming few years. The neglect of last 10 years has to be faced.
 
I Am Not A Big Fan Of Dr Farrukh Saleem But This Article Is Very Informative


Gas Authority of India Limited (GAIL), the state-owned enterprise, has contracted to buy 3.5 million tons per year of LNG from the US at a landed cost of $10.50/mmBTU (price is pegged to Henry Hub). GAIL has also contracted to buy 7.5 million tons of LNG from RasGas of Qatar at around $13/mmBTU.

For the record, world LNG estimated August 2013 landed prices are: India $14.10, UK $9.46, Spain $10.08, Korea $15.75 and China $15.25. The spot LNG price now hovers around $14/mmBTU.
There is hardly any alternative. LNG infrastructure just has to be built. It should not be factored into the price at all. We need multiple options. LNG, IP, TAPI, etc...

The cost of not making a decision is far greater than price differentials. LNG terminal should have happened in '90s.

A sensible strategy would be to:

1. Ask Qataris to finance excess capacity LNG terminal while negotiating prices at the same time.

2. Use excess capacity to import on spot market prices.

3. Accelerate own sources exploration and exploitation.

5. Renegotiate with Iran for IP price.

We have few choices in the coming few years. The neglect of last 10 years has to be faced.
The Qatari LNG is expensive even for India.
Alternatively Pakistan can tie up with GAIL to supply US sourced LNG to Pakistan via Sindh(instead of Punjab). That would probably be the cheapest option short of Pakistan building LNG terminals.
 
The Qatari LNG is expensive even for India.
Alternatively Pakistan can tie up with GAIL to supply US sourced LNG to Pakistan via Sindh(instead of Punjab). That would probably be the cheapest option short of Pakistan building LNG terminals.

The problem is two-fold.

First, we need to have infrastructure and somehow find a way to finance it.

Second, we need gas supply ASAP.

Both ways Pakistan has to compromise somewhere.

We need LNG terminal regardless.
 

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