Government Viewing Alternatives due to Impending LNG supply Disruption.
The liquefied natural gas (LNG) supply disruption is looming. Consequently, the government is looking for legally sound and commercially viable alternatives to support the “larger replacement regasification terminal” in Port Qasim.
They want it to continue its operation as planned, avoiding major power outages and ensuring greater gas availability during the winter months.
Engro Elengy Terminal Limited (EETL) has informed government bodies that there will come a disruption in the regasification process for 60 to 90 hours between September 7 and 11. It will happen due to the exchange of its Floating Storage and Regasification Unit (FSRU).
On June 28-29, EETL removed its original FSRU, Exquisite. It is done for unavoidable maintenance and replaced with Sequoia, a slightly larger replacement terminal, creating LNG interruption for a few days.
The EETL has asked the Sui Southern Gas Company Limited (SSGCL) and the government to allow a giant ship to replace Exquisite. It will improve its regasification capacity with additional capacity for sales to the other LNG consumers.
The SSGCL and petroleum division resisted permission that was not part of the original service or supply agreements. Their hesitance was due to ongoing investigations by the National Accountability Bureau (NAB) and related court cases on account of capacity enhancement from 400 to 600 million cubic feet per day.
A significant disruption in gas supplies twice results in a negative public perception of a political government.
However, the scenario on the ground is that EETL has provided two urgent possibilities.
“Complete regasification standstill for 60 hours (creating a 1.6 billion cubic foot gas shortage)” if the Exquisite Vessel returns LNG-laden, or 91 hours (producing a 2.445 billion cubic foot gas shortage) if it returns unladen.
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Sui Northern Gas Pipelines Limited (SNGPL) has mentioned that it had firm downstream agreements with three major LNG-based power plants totaling about 4,000MW. It includes planned terminal outages, as per a pre-approved Annual Delivery Plan (ADP).
Drops in RLNG to these power plants that are not in ADP are legally viewed as non-supply, resulting in significant capacity payments and liquidity losses.
Additionally, in the second-third week of September, two gas fields with a combined capacity of around 100 mmcfd will undergo a yearly turn roughly.
The alternative fuels — furnace oil and diesel — are costly. As a result, they promote public outcry during the electricity regulator’s public hearings on fuel pricing adjustments. On the other hand, the two gas companies — SSGCL and SNGPL — are suffering from financial problems due to the lack of LNG delivery.
The government requires extra LNG terminal capacity to satisfy increasing demand during the winter months. It is now met by the two terminals but not contracted.
In this regard, the second terminal of Pakistan Gasport has roughly 150mmcfd capacity. It has another 150-180mmcfd capacity available for the ENGRO’s replacement vessel Sequoia.
In the case of ENGRO’s original Exquisite terminal, however, it lowers to 60mmcfd. Again, the emphasis is to ensure that this increased capacity is not detrimental to the government, organizations, or the general public. In addition, it is “legally permissible, commercially feasible, and unrestricted by any court decision.” As a result, the re-gasification tariff should be going down.