Pakistan Thinks Bigger on LNG

Credit: Excelerate Energy
Credit: Excelerate Energy

Published Sep 22, 2019 7:57 PM by The Maritime Executive

Pakistan's Minister for Petroleum has selected five companies to build LNG terminals as it aims to triple imports and ease gas shortages. The terminals could be in operation within three years, says the minister, Omar Ayub Khan.

Reuters reports the groups selected to build terminals are Tabeer Energy, a unit of Mitsubishi Corp; Exxon and Energas; Trafigura Group and Pakistan GasPort; Shell and Engro Corp; and Gunvor Group and Fatima. Details of plans are expected to be submitted by November 5.

According to the EIA, Pakistan's natural gas production rose substantially in the early 2000s and reached a peak of 4.2 billion cubic feet (Bcf) per day in 2012. Since then, production has declined because of regulatory challenges, security concerns and insufficient investment. According to a report by the Pakistani government, Pakistan faced a natural gas shortfall of roughly 730 Bcf/y, or one-third of its constrained gas demand, in 2015. Natural gas shortages have forced citizens to use firewood for heat, leading to vast deforestation issues.

Pakistan's government prioritized resolving the energy crisis by proposing to boost domestic hydrocarbon production, increase natural gas imports and diversify the installed capacity portfolio of electricity generation. As a result, Pakistan currently has two LNG terminals and a third expected to come on line next year.

Excelerate Energy operates the nation's first floating LNG storage and regasification unit (FSRU), co-owned with Nakilat, at Port Qasim in Karachi. The Exquisite currently fulfills as much as 15 percent of Pakistan's domestic daily gas requirements. It is recognized in the industry as the most utilized FSRU worldwide, and consistently sends gas into Pakistan's network at levels above its guaranteed capacity. Last week, the Exquisite performed its 250th ship-to-ship transfer of LNG in Pakistan – an industry record for the shortest amount of time to achieve this milestone. It has been stationed at Port Qasim since March 2015, under a 15-year lease with Engro Elengy Terminal. 

The Engro Elengy Terminal is a collaboration between Engro and Excelerate Energy, and investment partners World Bank Group and Royal Vopak. Located adjacent to the Engro Vopak terminal on the mainland side of the channel into Port Qasim, the Engro Elengy Terminal was a fast-track LNG import solution built to alleviate the energy shortage facing the country. The terminal was built in a world record time of 330 days and has emerged as the largest gas source in Pakistan. 

Now, Excelerate plans to expand the Exquisite's LNG import capacity to meet Pakistan's growing gas demand in cooperation with the Government of Pakistan and Engro. 

Since LNG was introduced in the country, Pakistan has imported over 19 million tons of LNG and saved about $5 billion, because LNG replaced the import of more expensive furnace oil. Pakistan has reduced its gas deficit, revived the CNG sector so people no longer face long queues at CNG stations to fill gas in their cars, revived the fertilizer sector where Pakistan went from importing one million tons of urea to being an exporter of urea, and revived more than 500 industrial units because gas availability to industry is now uninterrupted. With LNG, Pakistan’s households no longer face winter gas load-shedding as there is now swapping between LNG and domestic gas with no price increase, says Engro.