By Staff Reporter
LAHORE: Pakistan plans to start selling excess liquefied natural gas on international markets from Jan. 1 as it grapples with a supply glut that’s swelled circular debt in the gas sector and inflicted losses of about Rs1 trillion since 2018-19.
The move comes after the South Asian nation canceled 21 LNG cargoes under a long-term contract with Italy’s Eni SpA last month to curb imports flooding its network. It’s also in talks with Qatar about deferring or reselling some supplies under existing clauses, according to people familiar with the matter.
“We were compelled to divert it to domestic consumers, due to which circular debt was increasing in the gas sector,” Petroleum Minister Ali Pervaiz Malik said at a press conference in Lahore on Sunday. The excess stems from reduced use of the fuel for power generation in recent months, even as imports continue from “our friend” Qatar and Eni. “From January 1, we will sell this excess fuel in international markets and reduce our burden while limiting the loss caused by it,” Malik said. The step will enable state-owned enterprises in the sector to run at full capacity and turn profits.
Pakistan’s gas surplus has built up amid fluctuating demand and import commitments, risking millions in annual losses for domestic producers. The government has been exploring resale options for months to alleviate the pressure.
Malik also highlighted a flurry of foreign investments poised to bolster the country’s petroleum sector and cut reliance on imports. A recent visit by Turkey’s energy minister has paved the way for Turkish Petroleum to join onshore and offshore exploration with Pakistani companies after a 20-year hiatus. “Turkish Petroleum will also open its office in Islamabad, where 10 to 15 Turkish nationals will be working,” Malik said, noting that Pakistanis would gain employment there.
Next week, a delegation from Azerbaijan’s State Oil Company of Azerbaijan Republic (SOCAR), is due in Pakistan to discuss collaboration on oil and gas exploration. SOCAR plans to open an office in the country and invest millions of dollars in building an oil pipeline from Machike to Thalian alongside Pakistan State Oil Co. and the Frontier Works Organisation. The pipeline’s construction is set to begin in a month or month and a half, according to the minister. “We are moving towards decreasing our reliance on imported oil and gas.”
Separately, private fundraising of $3.5 billion for the Reko Diq copper-gold project in Balochistan province has been finalised, with banks now wrapping up agreements. Local companies and Canada’s Barrick Gold Corp. will invest more than $3.5 billion in the venture. In total, $6 billion to $7 billion will flow into the project’s first phase, Malik said. “You will see the face of Chaghi changing.” A signing ceremony for Reko Diq is expected at the Prime Minister’s House in a month or two. Pakistan, which relies heavily on imported energy, has faced chronic shortages and mounting debts in its power and gas sectors.
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