ISLAMABAD: Because of major lawful dangers, the board of supervisors of the state-run Sui Southern Gas Firm (SSGC) on Friday denied Engro Elengy Terminal (EET) upgrade to a bigger floating storage space and also regasification device (FSRU) and also rather recalled initial unit– Exquisite– back to function.
The Splendid FSRU operated by Excelerate Power of U.S.A. had gotten on completely dry docking because June 29 for fixing and was changed by a bigger FSRU Sequoia since then to guarantee LNG supply.
The Petroleum Division as well as the EET had been attempting to preserve the Sequoia terminal, having better re-gasification capability, on the facility that this would minimize gas shortage in coming winter season. However, this did not materialise as the SSGC board and management were not prepared to approve demands to surrender lawful civil liberties under old contract and also rise economic exposure because their previous experience that landed most of its executives in National Liability Bureau protection.
” The board of directors after due deliberation taking into consideration the lawful, industrial as well as financial direct exposures chose that this deal can not be undertaken instead of the prospective exposure as well as dangers,” announced the SSGC after the board meeting.
Turns down replacement of old FSRU with larger system
Board chairperson Dr Shamshad Akhtar recused to go to the meeting for conflict of rate of interest as she was likewise on Engro’s board. A couple of various other board members were reportedly asked by significant government officials to likewise excuse however they participated in.
When come close to for remarks, Engro stated it was “still waiting for an official reaction on the issue. No matter the feedback, Engro is prepared and will certainly work with all stakeholders for a smooth means onward for all”, adding it would certainly not comment better.
The SSGC said that Ministry of Power had suggested it to “examine the alternative to change FSRU Elegant with a larger size FSRU Sequoia in order to have added regasification capability. However, the SSGC after undertaking a proper due diligence has issues as this would lead to serious exposure and risks for SSGC”.
It also validated that the EETL was asking the SSGC to forego its step-in right in case of operators’ default and likewise waive its option to purchase the FSRU yet put on record that “this would be an infraction of the LSA (LNG supply agreement) and expose SSGC to possible future risks”.
It also noted that clearance of NAB would certainly be important. Also the PPRA is not being followed which as well can aim in the direction of preferential treatment to one terminal driver whereas the other terminal as well has surplus capability offered.
Furthermore, SNGPL and PSO have actually not yet committed for using the additional capacity and availability of additional LNG freights, the SSGC stated. “It was agreed that clearance from cupboard to initiate negotiations would certainly be needed besides NAB’s clearance. These issues were described SSGC board for support”, it stated, including the board had chosen that this deal could not be taken on due to the above pointed out threats.
A senior government official stated the Exquisite FSRU, after repair service, was laden with LNG to move from Qatar as well as was anticipated to dock at Port Qasim on Sept 10-12 to replace Sequoia. Till then Sequoia would proceed regasification.
In action to Engro’s letter to the government for extension of Sequoia with the conditions kept in mind above, the Petroleum Division independently contacted Engro that LNG operations as well as Provider Agreement (LSA) was performed in between the EETOL (driver) and SSGC (the client) which was related to the operation of LNG services framework as well as provision of LNG solutions.
“Considering that it is a bi-party business as well as efficiency connection where both parties have actually specified civil liberties and also commitments, for that reason, subject demands to be mutually resolved in between the celebrations,” the Oil Department informed Engro.
At the same time, a government official stated Pakistan LNG Ltd (PLL) had approved three bids for LNG freights for shipment between Oct 28 to Nov 12, all at rates over $20.3888 per mmBtu, obtained through urgent tender.