Karachi: The Pakistan State Oil (PSO) has signed a long-term LNG Sales and Purchase Agreement (SPA) with Qatar Petroleum (QP). Qatar will provide Pakistan three million tonne Liquified Natural Gas (LNG) for 10 years as the two countries entered into an agreement on Friday. The new agreement will help the government to save $3 billion in 10 next years
Prime Minister Imran Khan witnessed the signing of agreement that took place here at the PM House. Federal Minister for Energy Omar Ayub Khan and Qatar’s Energy Minister Saad Sherida al-Kaabi inked the agreement. Qatar’s Minister al-Kaabi termed as “historic” the agreement with Pakistan and expressed confidence that it would open up new vistas of development. He said Qatar would also promote bilateral cooperation in other areas of mutual interest.
Special Assistant to the PM on Petroleum Nadeem Babar after the signing ceremony in a press briefing said the agreement would prove helpful in fulfilling Pakistan’s energy needs. He said on the official level that the cheapest LNG purchase agreement by any country. He said through this agreement the country will get 31 percent cheaper LNG compared to the agreement done by the previous PML(N) government with Qatar. He pointed out that as per the new agreement LNG priced at 10.2 percent of Brent crude oil whereas in the old agreement it was priced 13.37 percent of the Brent crude oil. “If we calculate at Brent price which is $65 dollar per barrel the cargo ship of LNG which cost us $28 million now will come down to $21 million via new agreement,” he remarked.
He said according to the new agreement price of LNG will be renegotiated after four years. He said the government started working on this agreement 20 months back and Prime Minister Imran Khan also discussed this issue with Emir Qatar Tamim bin Hamad Al Thani. Whereas military leadership, which enjoys very cordial relations with the Qatar government, also assists us in removing the bottlenecks, he added. He dispelled the impression that the government tried to keep the terms and conditions of the agreement secret.
He also mentioned that just like the previous agreement Pakistan State Oil signed a purchase agreement with Qatar. However in the new agreement there is a condition added that apart from PSO, Pakistan LNG Limited (PLL) could also purchase cargo from Qatar. Nadeem Baba said the government will gradually replace expensive purchase agreements through cheaper agreements and will also use the option of spot buying when the prices of LNG will be low in the international market. He said the government gives a Letter of Credit of $170 million for the purchase of LNG. However after implementation of the new agreement, the government will give a Letter of Credit of $80 million. He said right now two LNG terminals are operational and among which the second terminal is underutilized and it will be used for additional cargoes. He said the cost of electricity produced by LNG will further reduced by 15 percent.
The long-term LNG Sales and Purchase agreement (SPA) was negotiated, finalised, and approved by the federal government wherein PSO is the nominated entity as the aforementioned government to government agreement, a notice of the PSO said.
The decision has been taken pursuant to the Federal Cabinet’s approval of a bilateral government-to-government agreement dated February 25, 2021, augmenting cooperation in the Energy Sector between Pakistan and the State of Qatar.