A consortium of United States companies, reported to have the backing of the Trump administration, is proposing an integrated liquefied natural gas (LNG) project in Pakistan worth up to $4.4 billion, the Pakistani newspaper Dawn reported on Monday, citing documents it had seen.
Source: Dawn (via OilPrice)
Yaani: $4.4 billion means about $440 crore — and the first phase alone, at $1.7 billion, means about $170 crore.
The plan covers LNG imports, storage, regasification, gas transmission and sales to large customers on a merchant basis. The consortium includes Global Vision Energy Partners (GVEP) and Khanjee Holdings — described by Dawn as related firms — together with Luxembourg-based General Mediterranean Holding and strategic co-investors from other countries.
Two phases: a terminal first, then a 1,100 km pipeline
In the first phase, costing an estimated $1.7 billion, the sponsors would build an LNG import and storage terminal at Port Qasim near Karachi, with four storage tanks of 140,000 cubic metres each — 560,000 cubic metres in all. That would give Pakistan its first large onshore LNG storage; its existing terminals rely on floating storage units, leaving gas supplies exposed whenever cargoes are delayed.
Source: Dawn (via KhabarWire summary of the Dawn report)
The second phase would lay a pipeline of about 1,100 kilometres, 42 to 48 inches wide, able to carry around 1.2 billion cubic feet of gas a day upcountry, taking the total project cost to $4.4 billion.
A proposal, not a done deal
According to Dawn, the sponsors have obtained consent from the Port Qasim Authority for the proposed site, have applied to the Oil and Gas Regulatory Authority (Ogra) for a provisional licence, and have set up a special-purpose vehicle for the project. Government facilitation has been conveyed through the Ministry of Energy's Petroleum Division and the Ministry of Maritime Affairs, Dawn reported.
Source: Customs Today (reporting Dawn)
The project has been approved for consideration under the US Trade and Development Agency's project-preparation programme, and Dawn reported possible partial financing from the US Development Finance Corporation backed by Export-Import Bank guarantees. But none of that is a confirmed funding commitment: no final investment decision has been announced, no licence has been granted, and Dawn reported that no binding equity commitments had been confirmed.
Why now: the Hormuz shock and a costly winter
The proposal surfaced days after Energas — a consortium of QatarEnergy and Pakistan's Lucky Group — abandoned its own long-planned LNG terminal at Port Qasim, citing fundamental changes in Pakistan's energy policy and unresolved policy and fiscal issues.
Source: OilPrice
Pakistan is heading into winter short of gas. Qatar declared force majeure on its LNG exports in March after Iranian strikes damaged its Ras Laffan export hub, and few Qatari cargoes have moved through the Strait of Hormuz since. Term supplies from Qatar are cheaper than spot cargoes, for which Asian and European buyers compete ahead of winter, and OilPrice reported Pakistan may have to pay in excess of $1 billion — yaani more than $100 crore — to secure LNG for the winter months.
Port Qasim sits outside the Strait of Hormuz, which the sponsors see as part of its strategic value: a storage hub there could hold US and Middle Eastern gas and cushion Pakistan against exactly the kind of supply shock it is living through now. Whether the proposal survives licensing, financing and Pakistan's policy disputes — the same issues that sank the Energas plan — remains to be seen.