LNG import from Qatar raising questions in Pakistan

Eurasia News

LNG import from Qatar raising questions in Pakistan


LNG import from Qatar raising questions in Pakistan

Lahore, Pakistan: Pakistan Media reports are suggesting that its National Accountability Bureau (NAB) has started collecting information about recently signed contract of import of LNG from Qatar.

Interestingly, all important political parties of Pakistan including Pakistan People’s Party (PPP), Jamaat-i-Islami and Pakistan Tehrik-i-Insaf (PTI) are shy to comment over Qatar LNG deal because Qatar government enjoys very cordial relations with political cadres of Pakistan.

Media reports are claiming kickbacks in this huge deal and raising questions about the transparency in this deal.

The contract was signed on February 10, 2016 for supply of 16 billion USD worth of Liquified Natural Gas (LNG) to Pakistan. Transportation and storage costs of gas are not included in this amount.  This long term LNG Sales Purchase Agreement (SPA) was signed by Minister for Petroleum Shahid Khaqan Abbasi and Chairman of Qatargas Board of Directors Saad Sherida Al-Kaabi at a ceremony at Diwan-e-Emiri which was attended by Prime Minister of Pakistan Mian Nawaz Sharif.


According to sources in NAB, Bureau is collecting maximum information about the contract because it (contract) has an operative clause that Pakistan shall have to buy LNG from Qatar for 10 consecutive years.

Under the agreement the price for each LNG cargo in a particular month has been agreed at 13.37% of Brent, where Brent value is average of the preceding three months.

According to details of the long term LNG SPA with Qatar Gas, the Qatar Liquified Gas Company Limited would sell Pakistan State Oil Company Limited (PSO), LNG for a period from 2016-2031.

The annual Contract Quantity for 2016 has been agreed at prorate of 2.25 mt; for 2017 Q1, prorate of 2.25 mt and for 2017 Q2 to 2031 of 3.75 mtpa.

The LNG SPA also provides for annual upward and downward flexibilities of up to three LNG cargoes per contract year. Downward flexibility can be accumulated for two contract years.

The payment terms state that the PSO would make payment 15 days after completion of unloading.

Minister for Petroleum Abbasi says that LNG from Qatar is being purchased at the best available rates and will help start production of 2,000 MW of electricity from power houses that are currently not operational.

It may be mentioned that the Economic Coordination Committee (ECC) of Pakistan in its meeting held on January 13, 2016 allowed PSO as buyer to execute the SPA with Qatargas as the seller.

Under the agreement the two sides can review the price once after the 10th anniversary of the start date. This clause compels Pakistan to buy LNG for consecutive 10 years and termination of contract is possible in 11 years.

According to details, Qatargas has a put cap on port charges at $320,000 per shipment. Port charges over and above that amount would be paid by PSO. PQA charges are presently around $750,000.

Sources claim that secretary petroleum had already recorded his statement to NAB regarding LNG contract. However, nether Petroleum ministry now NAB officially accept that any such statement was recorded.