Elengy Terminal Pakistan Bids for LNG Import Contract

With the energy crisis that is severely affecting Pakistan, Engro Corporation subsidiary Elengy Terminal Pakistan Limited (ETPL) has bid for the fast track LNG contract to import up to 3MTPA of LNG or 400MMSCFD of RLNG (Natural Gas) for the next fifteen years.

Over the last 7 years Engro’s investments in Pakistan have exceeded the USD 1.8 Billion mark with the Company continuing to make strategic investments in sectors that can help avert the looming energy crisis. The LNG issue – one of the most controversial issues in Pakistan’s energy space – has been delayed several times, much to the detriment of the progress of the country, where the energy deficit has increased alarmingly, consequently limiting economic growth and power supply to the nation. Gas shortage is estimated to be between 1.5bcfd to 2bcfd and two tenders for LNG import – that could have helped the aggravating energy sector – have already been scrapped this year.

ISGS had issued a tender on August 15 for the development of LNG Import Infrastructure on a fast track basis. On October 14, only two bidders had submitted their techno-commercial proposal in a single stage two envelope process, which saw ETPL gaining a technical score above the threshold limit as per vetting of their technical proposal by a third party international consultant, QED (It is pertinent to mention that in previous LNG rounds, QED was approved by competitors who cited no objection.) The other bidder, PGPL (Pakistan GasPort Limited), has been disqualified as their technical proposal did not meet the requirements of the RFP which requires:

• A 42-inch branch pipeline (required by the RFP) which has not been mentioned in the proposal. This has significant cost and timeline impacts in terms of first gas date which is 11 months from signing of the LSA
• The EPC contractor by PGPL does not have the capacity and the experience to undertake projects of such nature and complexity

The ETPL tolling price for importing LNG is $0.66 (usd) per mmbtu is an extremely low price relative to international benchmarks – nowhere close to the US$2.5 per mmbtu quoted by TIP and consultant of PGPL Mr Munawer Baseer. 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 2010) in North America was $ 0.73 per mmbtu, $0.87 in China, $0.81 in Europe, $0.89 in South Korea and Japan and $ 0.72 in the Middle East. This cross section analysis shows that ETPL’s price is extremely competitive and reflects ETPL’s focus on ensuring affordable LNG to the nation.

Furthermore it is important to highlight that Engro takes health, safety and environment as an important core value in all business transactions. Accusations have been made that ETPL’s site is not conducive to importing LNG. However, a quantitative risk assessment was conducted by Lloyd’s Register UK which reviewed hazard identification, navigational simulations and dispersion modeling in 2011. It has not only approved the site in terms of LNG operations and safety, but cites certain operational advantages of it.

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LNG World News Staff, November 12, 2013