Inside Financial Markets

SSGC plans Rs64.9bln pipeline project to transport 1.2bcfd gas

Sui Southern Gas Company (SSGC) has approved Rs64.9 billion worth of project to develop a 1.2 billion cubic feet/day (bcfd) capacity pipeline for the transportation of re-gasified liquefied natural gas to Lahore, it emerged on Thursday.

The SSGC’s board of directors approved the 370-kilometre long and 42-inch diameter pipeline project with an expected completion in October 2018, an official document said. The government wants to import more liquefied natural gas for the upcoming terminals in the country. Keeping in view the diminishing indigenous gas resources, there is an immediate need to develop addition pipeline capacity from Karachi to Lahore.

The country’s domestic production stands at four bcfd, while demand is six bcfd.  Industrial units, including textile mills and compressed natural gas filling stations in Punjab, are relying on LNG owing to the gas scarcity.

Three LNG-based power plants, with cumulative production capacity of 3,600 megawatts, are also being set up in Punjab, which would need continuous gas supply.  The pipeline project is subject to an approval by the regulator, Economic Coordination Committee as well as availability of letter of comfort from the ministry of petroleum and natural resources.

The document said SSGC will arrange financing as long-term loan from the federal government or through commercial borrowing backed by the sovereign guarantee by the government, including waiver of existing loan covenants from the concerned quarters.

Early this year, the government had tasked both the southern and northern gas utilities to install regasified liquefied natural gas- dedicated pipeline from Karachi to Lahore. Sui Northern Gas Pipelines has already taken up a Rs54.67 billion project and would lay pipeline within its jurisdiction.

The country’s first LNG terminal started operation in March 2015 to receive and process imported LNG.  Since January, Pakistan has started importing 600 million metric cubic feet/day (mmcfd) LNG under LNG services agreement between SSGC and Engro. Earlier the country was importing 400 mmcfd.

The government plans to have four floating storage re-gasification units (FSRU) terminals up and running by 2019 as the country rapidly expands its LNG import infrastructure to meet its soaring gas demand.

The petroleum ministry said the country’s LNG imports would reach three billion cubic feet/day by the end of 2019. Moreover, SSGC will soon be inviting tenders on engineering, procurement and construction basis for the establishment of 30 liquefied petroleum gas air mix plants, as approved by the Economic Coordination Committee, in Balochistan and Sindh having capital outlay of Rs14 billion. This is also subject to approval by the Oil and Gas Regulatory Authority or others.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)