SNGPL to provide gas to fertilizer Plants amid gas crisis

Aftab Ahmed

Amid the looming gas crisis in Pakistan due to dry docking of the Engro LNG terminal, Sui Northern Gas Company Limited (SNGPL) says it could supply gas to industry and fertilizer plants.

Engro LNG company wants to replace the existing floating terminal with a new one with higher capacity. Its contract with the existing FSRU is expiring on June 30.

Due to dry docking, only 400 mmcfd RLNG shall be available and only industry, and fertilizer shall be kept operational. Power and CNG will need to be shut down.

It further said that suggested dry dock activity happening during peak gas demand season will cause a significant gas shortfall coupled with the annual turnaround (ATA) of various gas fields.

SNGPL raised concerns that the annual delivery plan for 2021 has been pre-locked with power plants and the power division. Disruption in gas supplies resulting from the dry dock will attract capacity payments and liquidity damages from power division for non or undersupply of gas.

The ADPs for GPPs for July need to be revised downward to avoid capacity payments under Gas Sales Agreements (GSAs).In the case of non-revision of ADPs by power division and gas-based power plants, capacity payment and liquidity damages (LDs) shall be borne by SSGC and EETPL.

SSGC

Sui Southern Gas Company Limited (SSGC) has reiterated to seek Qatargas and SNGPL before dry dock activity takes place. It has also stressed that formulating effective plans and strategies are required to mitigate risks related to upstream and downstream supply obligations are mitigated.

SSGC had pointed out that SNGPL had recently written a letter to SSGC regarding their disagreement on dry dock dates as it will severely impact their supplies to customers in peak demand seasons.

Therefore, SSGC reiterated that it could not proceed until and unless SNGPL consent is obtained on dry dock dates.

SSGC further stressed that all contractual requirements that are already defined in the LNG services Agreement (LSA) under the dry dock of FSRU need to be complied with, including the acceptance with the LSA but oppose any changes that are beyond the scope of the contract or many affect its content.

SSGC also said that it already explained that due to the complexity involved in the transaction related to dry dock activity, Engro needs to develop a pragmatic plan with the consent of all stakeholders. It will rescue subsequent issues like severe gas shortage in peak demand season, upstream and downstream financial obligations on stakeholders.