LNG import: SSGC to get PPRA’s approval for gas terminal contract

When approached, Petroleum Secretary Abid Saeed denied that the ministry had asked SSGC to get PPRA’s approval for the award of terminal contract. PHOTO: FILE

ISLAMABAD: 

The Ministry of Petroleum and Natural Resources has refused to seek approval of Public Procurement Regulatory Authority (PPRA) for award of liquefied natural gas (LNG) retrofit terminal contract to 4Gas Asia and has instead asked Sui Southern Gas Company (SSGC) to approach the PPRA for its nod.

“The petroleum ministry has asked SSGC to seek clarification of PPRA rules as it is going to award the contract to 4Gas Asia,” a source said, pointing out that an SSGC board member had objected to any extension in bid validity, saying it was against PPRA rules. Maximum allowable extension in bid validity had ended on August 18, 2012.

According to sources, the SSGC board of directors has given the go-ahead to the LNG retrofit terminal project for import of 500 million cubic feet of LNG per day (mmcfd) and has also agreed on giving the contract to 4Gas Asia – a Dutch company – depending on PPRA’s approval.

The board has also recommended to the federal government to approve the project which will bring LNG to the country to meet its growing energy needs. Earlier, a board member raised questions over the project, which the board overrode with majority vote.

Sources said SSGC had also sought legal opinion from experts who declared that the project structure was in line with PPRA rules. This is a unique project in which SSGC would not have to make any investment.

A senior government official said the present government had approached Qatar to strike an LNG import deal on government-to-government basis. In response, Qatar asked Pakistan to commit to setting up an LNG terminal before signing the import deal.

“Now, the LNG retrofit project will be tabled before the Economic Coordination Committee (ECC) of the cabinet for approval of the award of contract to the qualified bidder for establishing the LNG handling facility at Progas Terminal owned by SSGC after seeking clarification of PPRA,” the source said.

When approached, Petroleum Secretary Abid Saeed denied that the ministry had asked SSGC to get PPRA’s approval for the award of terminal contract. “We have received the minutes of the SSGC board meeting and are examining them,” he said.

The SSGC board considered the price offered for the project to be competitive. The terminal will be completed in 22 months at an estimated cost of $163 million. The qualified bidder has quoted tolling tariff at 80 cents.

In India, LNG tolling price ranges from $0.605 for 1,400 throughput to $1.106 per mmbtu for land terminals. In Indonesia, tolling price is $1.8 per mmbtu for handling LNG at a floating terminal and $1.2 per mmbtu for a land terminal.

Average tolling price based on the year 2010 was $0.73 per mmbtu in the US and Canada, $0.87 in China, $0.81 in Europe, $0.89 in South Korea and Japan, $0.72 in the Middle East and $0.71 in Southeast Asia