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Outlook in Pakistan
Petroleum Institute of Pakistan
January 11, 2016
LNG - Why?
LNG is today the ONLY cost-effective solution for Pakistans Energy problems
Engro Elengy built the 400 MMCFD SSGC LNG Regasification Terminal in 11 Months
BOOT Model No Public Funds No Sovereign Guarantee
Year 1 200 MMCFD/$ 1.43 per MMBTU Year 2-15 400 MMCFD/$ 0.63 per MMBTU
This is the lowest regasification rate for any FSRU based terminal worldwide
Pipelines - $ 6 Billion
Pipeline Augmentation 1,200 MMCFD $ 1.5 Billion
North-South Pipeline 1,200 MMCFD $ 2.5 Billion
Gwadar-Nawabshah Pipeline 1,200 MMCFD $ 1.5 Billion
Other Smaller Pipelines 600 MMMCFD $ 0.5 Billion
LNG - Price Dynamics
2 fundamental differences between the Oil market and the LNG market
Oil is produced first and then sold LNG is sold first and then produced
Unlike Oil, there is no international price benchmark for LNG
Supply-Demand factors + Geographical Pricing based on alternate fuel in the market
Most LNG Contracts in the world are priced at a Direct linkage to Oil
LNG price at 14% Brent of $40 would be $5.6 per MMBTU
20 LNG Spot Cargoes Procured by PSO
Brent Linkage 11.9% to 18.9% $ 6.7 to $ 8.8/MMBTU
5 Year Term Contract with Gunvor by PSO through Open Tender
Brent Linkage 13.37% 0.75 MTPA Current Price < $ 5.5/MMBTU
LNG Supply Contract between PSO and Qatar Gas finalized through G2G Process
15 Year Term Year 1-3 Min 1.5 MTPA Year 4-15 Min 3.5 MTPA
LNG - Demand
DES LNG Cargo Regas Terminal SSGC System SNGPL System Customer
Deregulation of LNG?
RLNG - Power Generation
Regasified LNG (RLNG) is the most cost-effective fuel for Power Generation
Greater Efficiency
Lower Maintenance costs
No Storage costs
Ease of Transportation
No pilferage or adulteration
Minimal environmental impact