The officials said the CPP would construct an LNG terminal at Gwadar Port with a capacity to handle 600 Million Cubic Feet per day of the commodity as well as laying the 700 kilometres pipeline which at a later stage, would be added by another 70 kilometres to transport gas from Iran under Iran-Pakistan (IP) gas pipeline project.
"A top level delegation of the Petroleum Ministry from September 2 to 7 visited China to discuss the matters related to Gwadar-Nawabshah pipeline and LNG terminal in Gwadar. Both the teams decided to expedite work on the projects," the officials maintained. "CPP will submit proposals by the end of ongoing month to Inter State Gas System (ISGS), after that both the companies will negotiate the terms and conditions of the contract and in March 2016, formal work on the laying of pipeline as well as LNG terminal will start and by the end of 2017, the project will be completed," a senior official who attended the meeting told this correspondent.
"The project will cost estimated two billions dollars of which 85 percent of the expenditures will be invested by CPP and rest by Pakistan," the official added. Gwadar is also the starting point of the China-Pakistan Economic Corridor (CPEC) project which was formally inaugurated during the presidential visit. The CPEC will conclude in China's province Xinjiang which is already an energy hub from where imported gas from Central Asia is channelled to China's industrial heartland.
Sources also said that Economic Co Ordination Committee (ECC) of the Cabinet in the next meeting is likely to consider a summary of the Ministry of Petroleum and Natural Resources to approve construction of second LNG terminal at Port Qasim with a capacity to handle 500MMCFD of the commodity. "We are expecting that on October 6 Pakistan and Qatar will sign a long-term LNG Sales Purchase Agreement (SPA) of 400MMCFD on government to government basis," the officials added.
When the officials were asked why the government failed in inking final agreement with Qatargas to import the commodity on government to government basis, they said Port Qasim Authority (PQA) had failed in satisfying and clarifying the Qatargas officials on the depth of LNG channel. Officials said besides LNG channel depth the PQA was demanding $1.2 million port fee from each LNG ship which is highest in the world. They said the channel's depth should be 14 meters but PQA had a 13-meter deep channel.
The PQA authorities quoted $1.2 million for each cargo ship of LNG which is too high as compared to international standards as in Nigeria it costs $0.75 million, in Qatar 0.125 million and in India 0.12 million. Sources said besides PQA's failure in developing the required channel depth for LNG cargos, the deal is also not been finalised, as the Ministry of Water and Power failed to persuade furnace oil-based Independent Power Plants (IPPs) to open letters of credit (LCs) and establish a payment mechanism for the commodity suppliers.
The Petroleum Ministry's responsibility was to negotiate rates and terms for LNG import and provide gas to Ministry of Water and Power for replacing furnace oil in power production. Sources also said that as per plan of the government, power sector had to use the imported LNG but private power plants did not open any Letter of Credit (LC) accounts as the power sector also linked to purchase of LNG to certain conditions.