MoE blames Engro for installing old FSRU

Aftab Ahmed

The Ministry of Energy has blamed Engro for installing an old FSRU on a new terminal that has damaged due to shut down for seven days.

A new controversy has surfaced as Engro had installed the old FSRU on the new terminal causing a shutdown for seven days now.

Ministry of Energy in a statement said that the FSRU used in the previous government was installed in March 2015. It was developed in 2009 and was installed in Pakistan after hauling. The new FSRU requires 2 times overhauling in 15 years.

When experts came to Pakistan for the Engro terminal in March 2021 and inspected the FSRU of the terminal, they declared it unsustainable in Pakistan. The real damage came from installing the old FSRU on the new terminal, which now has to be shut down for 7 days.

As many as 70% of the country’s LNG imports are due to the previous government’s 15-year expensive contracts. Only 30% of gas can be taken at the spot, whose prices fluctuate regularly in the international market.

Read More: SNGPL disconnects gas to CNG, Cement, Fertilizer

Therefore, it is not correct to say that the present government is buying expensive gas because 70% of it is the same gas that is coming thanks to the long-term agreements of the accusers.

If some power plants are running on furnace oil and diesel, it is because of the severe water shortage in Tarbela this year, which has led to a shortfall of 3,500 MW.

Sui Northern Gas Pipeline Limited (SNGAPL) has recently announced to suspend gas supply to CNG, cement, and fertilizer plants following the shut down of the Engro LNG terminal.

The power outages also started on Tuesday following the suspension of LNG supply due to dry docking of Engro FSRU that was old.

Ministry of Energy said that that it was an old FSRU that Engro had installed on a new terminal. Therefore, it had resulted in a shutdown.

Engro had acquired FSRU on lease and it is also interesting that Engro was charging a higher rate of tolling fee. However, it installed an old FSRU.

RLNG Shortfall Mitigation Plan during Dry Docking

According to the Ministry of Energy, the Floating Storage Regasification Unit (FSRU) at the First Terminal will be dry-docked beginning June 29.

The Petroleum Division has taken mitigation measures. During dry docking from June 29, to May 5, 2021, there will be a reduction in LNG supply from the first terminal.

However, supplies from the second terminal will continue to be at their contracted capacity of 600 mmcfd.

During the first two days of complete closure of the first terminal, the second terminal will provide maximum supplies. The total supply from both the LNG terminals will gradually ramp up to 824 mmcfd from July 4, 2021.

The normal supplies from the first terminal will resume from 5° July, 202l and the total supply from both terminals will be 1,152 mmcfd.

During the limited availability of the RLNG period, the gas companies are authorized to manage their loads as per the government’s approved gas supply priority order whereby uninterrupted supplies will be made to the domestic, commercial, power, and export industries.

To make up the difference, gas companies are reducing supplies to industry (non-export), fertilizer, CNG, and cement in the order of approved priority until July 5, 2021.

Some additional indigenous gas supplies are also being injected into the system during this period.

The power generation demand during dry-docking will also be catered to through Furnace Oil (LSFO/HSFO) and High-Speed Diesel (HSD).

The Petroleum Division has directed the refineries to maximize their production capacity in this period and they have increased their regular supplies for the power plants. The PSO/oil industry has been asked to maximize supplies to the power sector.

In order to augment indigenous supplies, the PSO has been directed to float tenders for 2 cargoes of HSFO, which are expected to be delivered on 12-20/7/2021 and on 12-31/7/2021 respectively. PSO has also tendered two cargos to LSFO, with products expected to arrive on 7-15/7/2021 and 16-25/7/2021, respectively.

Oil and gas exploration and production (E & P) companies have been asked to enhance production within possible limits.