ISLAMABAD – Engro Elengy Terminal Limited (EETL) intends to set up onshore LNG terminal with an estimated investment of $500 to 600 million.
If approved, the project will be built in a phased approach on open access terminal concept, Ammar Shah, General Manager Engro LNG Terminal Limited said Friday. The onshore LNG terminal will offer regasification, bunkering and LNG trucking services, the EETL official said. Amid fast depleting local gas reserves, ‘strategically’ the onshore LNG terminal is much needed to ensure the country’s energy security, longevity of gas market in country and create a strategic national asset.
With the proposed onshore terminal gas storages capacity can be increased like the oil marketing companies, which are maintaining the oil stock for around 20 days. Under the existing FSRU-based arrangement, the LNG cannot be stored to be used in coming days or weeks.
However, he said that the commissioning of two new proposed offshore LNG terminals may delay the onshore plan.
The federal government has also asked the company to review its expansion plan for adding another 150 mmcfd to the existing capacity of the company’s Floating Storage Regasification Unit (FSRU), Ammar Shah said. He said that the company will not need the government commitment to buy the additional quantity of RLNG as it will be their responsibility to monitize the additional capacity. Earlier talking to media, Yusuf Siddiqui, Chief Executive Officer (CEO) of EETL said that to curtail the gas crisis, Pakistan must prioritise the expansion of existing terminals under the approved Third-Party Access (TPA) rules on an immediate basis, while eventually transitioning towards onshore terminals for greater energy security.
Highlighting the achievements of Engro Elengy Terminal, Yusuf Siddiqui shared that EETL has set new industry benchmarks in over five years of its safe and essentially non-stop operations with an availability factor of around 98%. EETL now contributes around 15% gas supplies to Pakistan and can be considered the country’s largest “gas field” (630-690 mmscfd). As the most utilized regasification terminal in the world, it has enabled Pakistan to save more than $3 billion through import substitution of furnace oil. Since its inception, EETL has achieved send-out of more than 1200 billion cubic feet (BCF) of RLNG/natural gas. Further, its partnership with world-class organizations like Royal Vopak of Netherlands has brought global expertise and foreign investment to Pakistan for the development of LNG sector.
He stated that LNG imports, which now constitute around 30% of the total gas supply mix, have been instrumental to bridge energy shortages as the production of indigenous gas continues to decline drastically. To mitigate gas shortfall in future, the government has adopted a favorable policy of encouraging private sector involvement in the LNG sector, but there is a need to remove any roadblocks that impede operationalization of additional capacity of existing LNG terminals under TPA rules, as allowed under the LNG Policy 2011 and LNG Supply Agreement (LSA) with SSGC. The TPA will allow private players to have access to the terminal capacity and bring LNG in the country, with no guarantee or liability required by the Government or state-owned entities. This step will facilitate LNG market development as whole and mitigate circular debt in the gas sector.
While the expansion of existing terminals offers a short-term and quickest possible solution to bridge the supply-demand gap, Pakistan must eventually shift its focus from FSRU-based terminals to onshore LNG terminal. Based on global experience, Yusuf stated that the deployment of first or second FSRU is followed by an onshore terminal to ensure energy security, longevity of gas market and creation of a strategic national asset for the country.
With an expected capital outlay of $500-600 million, Engro Corporation and Royal Vopak are evaluating the development of Pakistan’s first multi-functional onshore LNG terminal that will offer regasification, bunkering and LNG trucking services. The onshore terminal would result in reduced foreign exchange outflow compared to FSRUs, create greater market competition, and help optimize the LNG supply chain.
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