SSGC asks Engro to delay FSRU dry docking until August
Shaukat Tarin says someone is trying to fix the PTI government.
Aftab Ahmed
Sui Southern Gas Company Limited (SSGC) has approached the Engro LNG firm to delay the dry docking of the floating terminal (FSRU) till August 2021 to avoid a looming energy crisis.
The SSGC had written a letter to Engro firm, following energy policymakers had raised issue different forums of cabinet and energy committee.
Engro is to blame for the delay
The government has discovered that Engro has been blackmailing SSGC into bringing in a larger capacity FSRU with a capacity of 900 mmcfd.
However, SSGC refused because it was already facing a NAB case for using the additional capacity of the Engro FSRU without a tender.
The PML-N government had forced the SSGC management to utilize Engro FSRU’s additional capacity of 200 mmcfd despite the fact both entities had an agreement for 400 mmcfd.
Engro used a delaying tactic to notify the SSGC that the FSRU needed to be replaced for dry docking. It was due in March 2020 but it got an extension for one year till March 2021.
Read More: CCoE again fails to decide the issue of Engro LNG dry docking
Engro also failed to move the FSRU for dry docking in March 2021. As a result, its extension expired in March 2021. Meanwhile, it was notified in March this year to move the FSRU for dry-docking without submitting an alternate plan.
Engro is bound to submit a plan and notify one year before dry-docking. However, it failed to do so, instead of putting pressure on SSGC to allow for the replacement of a larger FSRU with a 900 mmcfd capacity. Its existing capacity is 650 mmcfd.
In the meantime, SSGC has constructed a pipeline to transport gas from the Engro terminal. SSGC was of the view that Engro would offer additional capacity to third parties and would force it to allow the use of the pipeline.
If SSGC does so, it would have to amend the entire LNG services agreement with Engro, an official said.
Inquiry on SSSGC, LNG terminal
In addition, the government has launched an investigation into Engro and SSGC for the delay.
During a meeting of the cabinet committee on energy, Finance Minister Shaukat Tarin stated that someone was attempting to fix this government.
It has formed a committee to fix responsibility for a delay in the dry docking of the Engro LNG floating terminal.
The dry docking is due in March 2020. However, it was delayed due to issues with Engro replacing the existing LNG terminal with another one with a bigger capacity of 900 mmcfd.
Sources said that finance minister Shahukt Tarin had attended a meeting of the cabinet committee on energy held on June 18, 2021.
Read More: Cabinet decides Engro replace LNG terminal in August
He said that someone had tried to fix the government by involving in a delay that could lead to a looming energy crisis in the country.
Tarin further said that why was a delay in dry-docking when it was due in March 2020 and then in March 2021.
The CCoE formed a committee under the chairmanship of Minister Azam Swati and presented a report to it.
During a meeting held on Thursday, the law division was informed that the LNG services agreement was between SSGC and the Engro LNG company. Therefore, nobody could stop the ship from moving for dry docking. Therefore, it said that SSGC and Engro should settle the issue.
Meanwhile, Sui Southern Company Limited (SSGCL), in a last-ditch effort, sent a letter to Engro on Wednesday to delay the dry docking of the FSRU until August this year to avoid the energy crisis.
The CCoE will meet again following a response received from Engro in this regard.
Amid fears of a looming energy crisis, the Cabinet Committee on Energy (CCoE) on Thursday entered into a deadlock again regarding the decision to allow the Engro LNG floating terminal to be replaced with another one for dry docking.
The cabinet body informed Engro was to move FSRU in March 2020 for dry-docking. However, Engro got an extension for one year and now it is due in March 2021. However, Engro also expired at this time and informed the cabinet body in March of this year that it wanted to move the FSRU for dry docking, which shook the cabinet body’s confidence.
The majority of members of the cabinet committee on energy opposed allowing the Engro firm to move the FSRU from Karachi for dry docking.
They were of the view that government should allow Engro to move to dry docking in August this year when the demand for gas would be less compared to other months.
Sources said that dry docking of the Engro LNG terminal was due last year. However, Engro delayed and began putting pressure on SSGC to allow the replacement of the existing FSRU with a 900 mmcfd FSRU. The existing FSRU has a capacity of 650 mmcfd.
Drydocking is common practice in the LNG industry. However, officials say that Engro was responsible for the entire mess as it continued building the SSGC to replace the existing one with a bigger handling capacity.
Engro also got a one-year extension and now its dry docking is due in March this year. However, it further delayed in March 2021 to move its FSRU for dry-docking without consulting with the gas utility.
Now, a crisis has emerged as the government has no plan in place to manage the energy crisis after the FSRU leaves Karachi for dry docking.
If it moves now, Pakistan State Oil (PSO) would face the entire burden of supplying furnace oil to power plants. If FSRU moves, there will be only 400 mmcfd LNG available, it lacks the capacity to supply furnace oil to all of Punjab’s power plants.
