ISLAMABAD: The four RLNG power plants — for which the RLNG pipeline, two LNG terminals were built and two long-term agreements signed with Qatar for imported gas supplies followed by one contract inked with Italian firm ENI on take or pay mode backed by sovereign guarantees — are not utilising the RLNG in breach of the contracts causing closure of local gas fields up to 400 mmcfd, according to the latest line pack data available with this scribe.
When the local gas fields are closed down to manage the line pack pressure, sometimes gas fields are not recovered with natural pressure and in the past, some gas wells sank on a permanent basis. More importantly, with the closure of gas fields, the LPG and crude oil production are also affected.
The Attock Refinery Limited, which uses the crude oil of the country, cannot run itself on the optimum level to produce the finished products and to this effect, ARL has many times agitated through its correspondence with Petroleum Division that the closure of local gas fields harms the crude oil production owing to which the refinery is not being operated at its full capacity, senior officials of Petroleum Division told The News.
As per the data, the power sector is currently using 600mmcf RLNG against 800 mmcf and massive decrease in usage of the imported gas by export sector by 250 mmcf to 100 mmcf from 350 mmcf, mainly because of its highest price of 3500 per MMBtu and 5 per cent off-the-grid levy (Rs791) per MMBtu, has once again caused the line pack pressure to surge to 5bcf—a danger mark when any time the national gas distribution system can burst putting the economic activities of the country at standstill as it would not only lead to the gas breakdown, but would also cause the substantial power outages in the country.
Sui Northern Gas Pipelines Limited (SNGPL) says the power sector is not utilising the imported gas as per its contracts, but is using less gas as a fuel for power generation which is why the local gas supply in the system has been curtailed to 400mmcf to handle the line pack pressure. “The gas consumption has decreased manifold. Under the latest scenario, 30 LNG cargoes have become additional per year despite the fact that one LNG cargo from ENI — an Italian-based trading company — is being diverted to the international market every month from February 2025 to December 2025. The government has diverted in FY25 the costly RLNG valuing Rs242 billion to the domestic sector,” the officials said.
The four RLNG power plants at the time of LNG supply agreements were declared must-run projects and they were supposed to use the 800 mmcf gas per day all the time, but now the Power Division runs the said power plants based on Economic Merit Order (EMO). The mantra the then government leadership used to market was that RLNG based power plants had 62 per cent efficiency and when they would be run at the optimum level their cost of electricity generation would be affordable.
Initially, the four RLNG power plants were bound to run under a 66 per cent take or pay obligation, meaning they were contracted to take 66 per cent of RLNG supply even if not used. This requirement was later eased in 2020, cutting it to 50 per cent by the Power Division through Economic Coordination Committee (ECC). This step has put the top mandarins of Petroleum Division on tight rope as the Pakistan State Oil, the state owned entity, is bound to import the 9 LNG cargoes from Qatar per month (5 cargoes on 13.37 per cent of the Brent and 4 cargoes on 10.02 per cent of the Brent) under 15 years and 10 years long agreements, respectively, based on take or pay mode to cater to the sustainable supply of RLNG to four RLNG power plants in Punjab.
The Power Division argues that the electricity generation cost is higher based on imported gas and when the electricity is generated through the RLNG-based power plants, the basket price of electricity increases which the political regime cannot afford and it runs them only when EMO allows it based on the demand of the electricity. The Power Division has asked the Petroleum Division to review the LNG supply contracts with Qatar instead of acting upon its own signed contracts.
The Petroleum Division’s team headed by Ali Pervaiz Malik, Federal Minister for Petroleum and Natural Resources, is currently working hard to carve out the modus operandi on how to tackle the situation by September 15. During the window from September 15 to October 15, the Annual Delivery Plan (ADP) on schedule of LNG cargoes for 2026 would be finalised and the authorities concerned have also made mind to ask Qatar for permission to divert 30 LNG cargoes to the international market ensuring the spot market price remains higher than the prices locked with Qatar on GtG basis under long-term agreements. And if the spot price stays lower, then under the clause of the Net Proceed Differential (NPD), the loss would be absorbed by the government and the said loss may go up to $10million on one cargo.”
