Presentation on Gas Infrastructure Projects on Gas Infrastructure Projects... · Presentation on Gas Infrastructure Projects . ... China and MPNR-Pakistan. • China Petroleum Pipeline

LNG Outlook In Pakistan

PIP LNG Seminar

January 11, 2016, Karachi, Pakistan.

Presentation on

Gas Infrastructure Projects

Contents

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PAKISTAN ENERGY MIX

PAKISTAN NATURAL GAS DEMAND & SUPPLY

GAS INFRASTRUCTURE PROJECTS

Pakistan Energy Mix

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Oil, 34.4%

Gas, 46.8%

Coal, 5.4%

Electricity, 13%

“The economic growth of Pakistan demands higher

energy inputs and indigenous oil and gas production is

not enough to quench the energy thirst of the growing

economy.”

Gas Supply-Demand Gap Mitigation

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Ministry of Petroleum and Natural Resources (MPNR) is

pursuing a three-pronged strategy to abridge the widening gap

between supply and demand of natural gas:

1. Incentivizing the exploration and production companies for

enhanced domestic production;

2. Import of gas through transnational pipelines as well as

LNG in public as well as private sectors; and

3. Rationalizing economic use of gas in various sectors

through administrative (load management) and fiscal

(gradual price rationalization) measures.

Gas Supply-Demand Gap Mitigation

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Infrastrucure Projects include:

1. Turkmenistan-Afghanistan-Pakistan-India (TAPI) Gas

Pipeline Project.

2. North-South Gas Pipeline Project.

3. Gwadar-Nawabshah Pipeline & LNG Terminal Project

4. LNG Terminals

Gylkynish

Gas Field

TURKMENISTAN

IRAN

AFGHANISTAN

PAKISTAN

Herat

Char Rah

Kandahar

Quetta

Multan

Lahore

Fazilka

Nawabshah

Iran Shahr Asaluyeh

Sulaimanke

Iran Shahr to

‘Mile 250’= 250 Km

to be completed

Gwadar

North-South Gas

Pipeline

Segment-

1,200 MMSCFD

LNG

Terminal

2 LNG

Terminals

Projects Highlights

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Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline Project

Gas Volume: 3.2 bcfd (Pakistan Share 1.325 bcfd)

Estimated Cost: US $ 10 billion

Implementation Philosophy:

• A consortium Company - TAPI Pipeline Company Limited

(TPCL) with ISGS as its founding shareholder has been

incorporated to take project implementation activities.

• Tukmengaz is selected as Consortium Leader of TPCL.

Expected Gas Flow: December 2019

North-South Gas Pipeline Project (LNG Pipeline)

Gas Volume: 1.2 Bcfd

Estimated Cost: US $ 2.5 billion

Implementation Philosophy:

• Under Government-to Government arrangement with Russia.

• Inter-Governmental Agreement between the Governments of

Pakistan and Russian on cooperation signed on 16th Oct. 2015.

• ISGS is the nominated entity from Pakistan side responsible to

execute the project.

Expected Gas Flow: December 2017.

Projects Highlights

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Gwadar –Nawabshah LNG Terminal and Pipeline Project

Gas Volume: 1.5 Bcfd

Estimated Cost: US $ 2.5 billion

Implementation Philosophy:

• The project will serve as an Alternative Strategy for IP- Project.

• Will be Implemented under G-to-G arrangement with China.

• Framework Agreement signed on 20th April 2015 between NEA-

China and MPNR-Pakistan.

• China Petroleum Pipeline Bureau –CPPB is the nominated entity

from Chinese side and ISGS from Pakistan side.

• Pipeline System from Gwadar to Nawabshah is as already

planned and designed under IP Project (about 700 km).

• Remaining 80 Km along with additional required allied

infrastructure are planned to be built through local EPC

contractors when international sanctions on Iran are lifted .

Expected Gas Flow: December 2017.

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• As stated following projects are being pursued by MPNR

Liquefied Natural Gas (LNG)- Terminals

Name of Project Status Completion Capacity

*Fast Track LNG

Terminal at PQA

Completed

Mar 2015

400 MMCFD

Second LNG

Terminal at PQA

Bidding process

Mar 2017

600 MMCFD

Gwadar Nawabshah

LNG terminal &

Pipeline

G to G framework

signed, Contract

negotiation under

process

Dec 2017

600 MMCFD

Cumulative Capacity of Terminals by 2017 1.7 BCFD

*Pakistan’s private sector has built the world’s fastest LNG regasification terminal in a period of less

than 11 months; the contract was signed after a completely transparent PPRA-compliant bid process

on April 30, 2014, and the first LNG based gas flowed into the system on March 26, 2015.

Tolling details

Year MMCFD MMBTU/ Capacity Charges Per

Annum Utilization Charges

Per Annum Tolling Fee 1 200 69,400,000 94,550,213 4,353,462.00 1.4251

2 400 138,800,000 79,121,552 8,706,924.00 0.6328

3 400 138,800,000 79,121,552 8,706,924.00 0.6328

4 400 138,800,000 79,121,552 8,706,924.00 0.6328

5 400 138,800,000 79,121,552 8,706,924.00 0.6328

6 400 138,800,000 79,121,552 8,706,924.00 0.6328

7 400 138,800,000 79,121,552 8,706,924.00 0.6328

8 400 138,800,000 79,121,552 8,706,924.00 0.6328

9 400 138,800,000 79,121,552 8,706,924.00 0.6328

10 400 138,800,000 79,121,552 8,706,924.00 0.6328

11 400 138,800,000 79,121,552 8,706,924.00 0.6328

12 400 138,800,000 79,121,552 8,706,924.00 0.6328

13 400 138,800,000 79,121,552 8,706,924.00 0.6328

14 400 138,800,000 79,121,552 8,706,924.00 0.6328

15 400 138,800,000 79,121,552 8,706,924.00 0.6328

Total 2,012,600,000 1,202,251,941 126,250,398

Levelized tolling tariff (US$/MMBTU) 0.660

As per the financial bid, Capacity charges of US $ 272,00 for the first year

and US $ 228,016/- and variable charge of US $ 0.06273 was quoted.

Detailed working of the tariff is as under;

Pakistan’s First LNG Terminal

Commissioned on

March 29, 2015

Handled 17 cargoes till date

Allied Benefits of Gas Import Projects

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With the availability of about 4 Bcfd of Gas, these projects will help a great deal in meeting the energy requirements of the country’s economy.

Will help to preserve declining indigenous gas reserves of Pakistan

Support power generation capacity, which will help in overcoming the crippling power shortage crisis

Displaces liquid fuels in power generation and consequently contributes to reduction of emission of green house gases

The construction of pipeline will also create job opportunities in backward areas of Balochistan and Sindh.

Pipeline infrastructure can serve as a Trunk lines for following of gas from Southern to Northern region of the country and reduce line losses.

Transnational Pipeline projects shall also be instrumental by serving as a tool and starting point for regional harmony, establish a corridor for Economic Connectivity

THANK YOU

BIDDING PROCESS (LNG Terminal)

Pre-Bid Meeting

Bid Submission

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Evaluation of Technical Proposals

Technical Evaluation Announced

Opening of Financial Bid

Price Evaluation August 2013

March 2014

Board Approvals

LSA Negotiation

Award of Contract

Performance Bond

Terminal

Commissioning

335 days

after signing

of LSA

Fully compliant with PPRA rules and regulations

Allied Benefits of Gas Import Projects

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Transnational Pipeline projects shall also be instrumental by serving as a tool and starting point for regional harmony, establish a corridor for Economic Connectivity.

Will be the first step towards establishing an energy corridor and can be connected to neighboring countries.

Provides an infrastructure to stimulate further foreign investments like Roads, Railway etc.

By serving as Energy Hub this will work as economic integration of the region and provides a foundation to facilitate regional economic growth and development.

Pakistan can earn transit fee if the pipeline is extended to third country.

An assured natural gas supply would attract new industry and boost economic diversity.