Pakistan is likely to face massive gas loadshedding very soon

ISLAMABAD: The country is likely to face massive gas loadshedding after September 5-6 because of expected shutdown of Engro LNG terminal if the government fails to retain the new Floating Storage Regasification Unit (FSRU) Sequoia, having capacity to re-gasify 780mmcfd, by August 30, 2021.

And the failure of the government in retaining the new FSRU will also cause maximum gas loadshedding in the winter season as it will not be able to use the additional capacity of 180mmcfd of FSRU Sequoia, said a senior official who attended the meeting held on August 19 in Islamabad on utilization of additional capacity available at both LNG terminals.

The meeting participants also discussed the worst scenario of Engro LNG terminal shutdown that is to emerge after the government’s failure. In the winter season, the demand swoops up to 5 bcfd (billion cubic feet per day) whereas the country’s local processed gas availability has squeezed by up to 2.8 bcfd. The government can import 1.2 bcfd under the contracts based on sovereign guarantees but if it manages to utilize the additional capacity of existing FSRUs at Engro and PGPCL (Pakistan Gas Port Consortium) that stands at 330mmcfd, then the PTI government will be able to manage the reduced intensity of the gas crisis that will hit the country in the forthcoming season.

Prime Minister Imran Khan, he said, wants to utilize the additional capacity of both the terminals to avoid political backlash in the winter season because of the expected massive gas crisis in the coming winter season.

The government functionaries are showing resistance in getting additional capacity of Engro LNG terminal because of NAB fears and to this effect, the Petroleum Division has written a letter to NAB seeking its nod for utilization of the additional capacity of both LNG terminals. And if NAB didn’t respond on time, then the government will not be able to retain the new FSRU at the Engro LNG Terminal.

The government wants to procure through Sui Southern additional capacity of the new FSRU at Engro LNG Terminal. However, the PGPCL terminal management wants to utilize 150mmcfd on a private-to-private model and is not interested in selling it to PLL (Pakistan LNG Limited).

Senior officials of the gas companies when contacted said that if the FSRU of 780mmcfd is not retained, then old FSRU Exquisite that left the Pakistan waters on June 28-29, 2021 to Qatar for dry docking will come back as on September 5-6 and will replace the existing FSRU.

With a view to completing the replacement process and making the old FSRU fully functional, the Engro LNG terminal will have to be shut down for three days, which will deprive the country about 680mmcfd gas supply. In the said three days, the government will have no option but to close down the supply to even export, non-export industry, CNG and fertilizer sectors and may be in some areas of the country there will be less supply of gas to the domestic sector.

However, after three days, the imported gas supply will be partially made and on the sixth or seventh day, the LNG terminal will fully come on stream.

However, sources in the Engro Terminal company say that the talks with the government over retaining the newly-installed FSRU are not over and more talks are expected this week which will help clear the future scenario. They said that the government has been asked to either retain the new FSRU by August 30, if it really wants to procure the additional capacity of 180mmcfd, and if not, then the old FSRU having the maximum capacity of 660mmcfd will come by September 5-6 from Qatar.

When asked if Engro will ensure to bring the old FSRU filled with LNG from Qatar to reduce the gas crisis in the country, he said that it depends on PSO which has an agreement with the Qatar Gas Company. However, the Engro official said that the terminal will be shut down for three days when the old FSRU will come and the existing one will leave the terminal.

This scribe sent a question to the PSO spokesman, asking: “The old FSRU of Engro LNG Terminal will replace the existing one on Sept 5-6 if the government fails to retain the existing one. Under this scenario, for how many days the country will face a dip in gas supplies. And what will be the volume of deficit in imported gas. And if the FSRU after dry docking having RLNG volume gets berthed at the terminal, then how much gas deficit for the transition period will stay?”

The spokesman replied: “It’s too early to say about any failure in negotiations as discussions are still underway. Having said this, in case of FSRU replacement, the max dip in regasification rate would be for 3 to 4 days. However, in our opinion, that can be managed through load management. It is equivalent to 50,000 tons of fuel oil consumption only. It would technically be the same as when the FSRU was replaced during dry docking but at that time power demand for gas was very high and has now dropped by 150 to 200mmcfd.”

The Petroleum Division officials, when contacted, said that the country has furnace oil for four days, which will be used for power generation when the Engro LNG Terminal is shut down. However, independent experts are of the view that during the shutdown, the government may request to utilize the additional capacity of 150mmcfd available at the PGPCL terminal and also arrange the arrival of old FSRU filled with LNG from Qatar, saying these both steps will reduce the gas crisis during transition period of 6-7 days.

Originally Published By The National News