SSGC, EETPL sign historic LNG Services Agreement

A ground-breaking Services Agreement was signed between Sui Southern Gas Company (SSGC) and Engro Elengy Terminal Pakistan Ltd. (EETPL) for import of 400 mmcfd re-gasified LNG into the national network in order to overcome gas shortage in the country. Zuhair Siddiqui, MD, SSGC and Sheikh Imran-ul-Haque, CEO, EETPL signed the agreement on behalf of their respective organizations at SSGC’s Head Office, Karachi.

Shahid Khaqan Abbasi, Federal Minister for Petroleum and Natural Resources (P&NR), Jam Kamal Khan, Minister for State for P&NR and Abid Saeed, Secretary, P&NR witnessed the signing ceremony.

Speaking to the media persons, the Federal Minister explained that a floating storage re-gasification unit/vessel will dock at this terminal on which merchant LNG carriers will unload their cargo, after which LNG procured by Pakistan State Oil (PSO) will be provided to SSGC for re-gasification and onward distribution. Mr. Abbasi also added that the project structure follows a tolling model, with an estimated annual fee of $100 million.

The Minister said that as per contractual obligations, although EETPL is required to construct an LNG import terminal, within the 335-day implementation deadline, it will attempt to complete the construction within this year. Mr. Abbasi pointed that the agreed LNG service fee is very competitive as compared with international tolling fee.

The Federal Minister further added while natural gas meets around 50% of the energy needs, with the establishment of the LNG terminal, 10% more gas will be added to the system since the terminal has the capacity to deliver more gas than Sui and Qadirpur gas fields combined. The end result will be substantial GDP benefits for Pakistan, he said.

The Minister said that the second step for the Government of Pakistan now involves a 2-pronged LNG import strategy involving government to government negotiations and international competitive bidding.

In reply to a question, Mr. Abbasi said that in case any side fails to fulfill contractual obligations, the liability will be borne by that party in the form of penalties. The Minister said that given its past experience of managing supply chain for liquid fuels, he remained confident that PSO will be able to operate the entire supply chain efficiently.

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