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Traders oppose limitless capability improve to LNG terminals

by Pakistan Latest News Update

ISLAMABAD: The sponsors of an upcoming new ‘integrated’ liquefied pure gasoline (LNG) terminals have opposed limitless capability enhancement to government-guaranteed present ‘un-bundled’ LNG terminals, saying such a transfer would monopolise the market and discourage new funding to arrange service provider terminals.

In a letter to the Oil & Fuel Regulatory Authority (Ogra), Tabeer Vitality Pakistan Restricted (TEPL) — a 100 per cent subsidiary of Mitsubishi Company of Japan — warned that the draft LNG Terminal Entry Guidelines and Codes would “discourage new LNG terminal investors seeking to build integrated projects” with none authorities assure at Port Qasim.

Tabeer is one in all two upcoming built-in LNG terminals at present on the final leg of ultimate funding choice. The draft LNG terminal entry guidelines and code wouldn’t successfully promote competitors when it comes to the contracting of terminal capability and subsequent gross sales of regasified liquefied pure gasoline (RLNG) from such terminals and wouldn’t be aligned with the present and deliberate navigational entry to Port Qasim, Tabeer stated.

Fundamental channel is alleged to be already underneath stress when dealing with vessels with present terminal capability

It stated the draft guidelines have been inconsistent with the LNG Coverage 2011 of the federal government and Ogra’s LNG Guidelines 2007 as they haven’t differentiated between initiatives which were awarded development or operation licences on both an “integrated” foundation or an “unbundled” foundation. The Ogra had additionally beforehand issued licences to terminal operators primarily based on this categorisation.

Tabeer stated LNG terminals constructed up to now have been arrange on an “unbundled” foundation underneath which throughput and thus the capability tariff had been assured by the federal government. Nonetheless, the brand new “integrated” LNG terminals which were awarded licences of the identical title by Ogra needed to undertake the complete throughput threat with none type of governmental assist or assure.

It will, subsequently, be vital that any spare or extra capability on “unbundled” initiatives, which have been established on tenders from the federal government, ought to be allotted underneath a bidding course of that’s compliant to the general public procurement guidelines to extend transparency and competitors in allocation of terminal capability. The spare or further capacities on “unbundled” present terminals ought to be capped, in order to not additional threat the navigational entry to the port, and as a substitute be topic to bidding course of which may also improve competitors within the RLNG market of Pakistan.

This could additionally stop monopolisation of terminal capability as terminal homeowners have been additionally potential sellers of RLNG to prospects and be certain that a distinction was nonetheless utilized between unbundled challenge and the built-in initiatives as per the LNG Coverage 2011. Furthermore, this can be certain that the principles have been according to the Ogra Third Social gathering Entry Guidelines 2018 for pipeline capability entry, which require transporters to observe an analogous allocation mechanism.

It stated that if an “unbundled” challenge established on a young from the federal government was granted the correct to allocate such capability and on the identical time, be concerned within the sale of RLNG, this might end in a battle of curiosity scenario the place the customer and the vendor have been the identical entity.

Furthermore, such a state of affairs would discourage new LNG terminal buyers looking for to construct built-in initiatives utilizing a Floating Storage Regasification Unit can simply be chartered or ordered bearing bigger capacities. If Ogra have been to permit capability enhancements on present terminals to proceed with no ceiling, present terminals in the primary channel may probably increase perpetually and with out limitation, which may in flip consequence within the choking the primary channel at Port Qasim and stressing the LNG provide chain.

Permitting terminals to increase past what their development or operation licences allow and with no ceiling would even be inconsistent with each the present and the deliberate navigational entry on the port. “It is well known and documented that the main channel at the Port is already under considerable stress when handling LNG vessels at the current terminal capacities,” Tabeer stated.

TEPL stated it required to pay $10 million as a concession charge to the Port Qasim Authority and already expended hundreds of thousands of {dollars} in the direction of technical research to make sure its terminal was in compliance with LNG Coverage 2011, OGRA Guidelines 2007 and different relevant regulatory statutes.

The proposed “rules and/or policies have not envisaged that “Integrated” initiatives are required to reveal materials/proprietary data similar to toll expenses, capability use agreements, and many others, particularly when the supposed terminal use is for captive functions.

Revealed in Daybreak, August 19th, 2021

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