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Pakistani investors aim for LNG import terminal in early 2019

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Reuters are reporting that three Pakistani industrial groups plan to begin importing LNG through a private terminal due to be completed in early 2019, bringing the total number of potential LNG import projects in the country to eight.

Currently, Pakistan has only one active LNG import terminal at Port Qasim in Karachi but is seen by traders and suppliers as a major growth market key to soaking up a growing glut of the fuel on international markets.

Yunus Brothers Group, Sapphire Group and the private backers of Pakistan’s Halmore Power Generation Co are co-funding the Energas terminal to supply their power plants, cement, auto and chemical factories, and textile mills with about 2.1 million tpy of LNG.

The terminal at Port Qasim in Karachi will include a FSRU, converting the LNG back into gas for feeding into Pakistan’s pipeline grid.

Two further power generating companies are in talks to join the consortium, which expects to cut the running costs of its power plant fleet by switching away from burning diesel to cheaper, less polluting gas.

As electricity producers, Energas’ three investors hold long-term power purchase agreements with the government, potentially making them attractive for LNG suppliers wary of emerging markets’ heightened credit and non-payment risks.

Energas does not yet have government approvals.

A challenge facing some of Pakistan’s proposed import projects is a lack of end-user demand needed to underpin investments in terminal infrastructure and LNG supply.

As a result, Karachi utility K-Electric’s tender to secure 1 million t of LNG annually for 15 years drew heavy interest from competing terminal developers hoping to lock-in a major customer.

Last Friday K-Electric took bids from only three pre-qualified import project developers seeking to supply the utility with LNG.

The Engro-led project – due to start in late 2018 – comprising Royal Dutch Shell, Fatima Group and trading house Gunvor submitted a bid.

As did Pakistan GasPort (PGP), which opens in November. Trader Trafigura has access to a share of that project’s 750 million ft3 per day of regasification capacity, but it also plans to open another terminal alongside it.

The third K-Electric bidder was the Global Energy Infrastructure-led project – also set to start in late 2018 – made up of Exxon Mobil, Total, Mitsubishi and Qatar Petroleum.

Securing a utility customer would help underpin at least two of the projects. PGP has already locked in most of its demand via deals to supply three state-owned power plants.

K-Electric expects to pick a winner in October although this could be delayed pending a government decision to approve its tariff.

Two more terminal projects have been proposed – one near Karachi and another in port city Gwadar.

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