FACTS: No natural gas imports for Pakistan before 2014-15

Christopher E. Smith
OGJ Pipeline Editor

HOUSTON, Aug. 20 -- LNG will not reach Pakistan before 2015, with pipeline gas from Iran not expected before 2014, according to the new brief “Iran-Pakistan Pipeline Deal: Future Role of Gas and LNG in Pakistan’s Power Sector,” by FACTS Global Energy Group, Honolulu.

Moving proposed Pakistani LNG projects forward will require active government participation, according to FACTS. Such participation would include loan guarantees and domestic price increases designed to make Pakistan a more attractive destination for international suppliers.

FACTS said financing is the primary obstacle to having the Iran-Pakistan pipeline done any sooner, the 750-km Pakistani leg alone costing more than $1 billion.

The economic downturn also created financing difficulties for Pakistan’s leading proposed LNG terminal project, according to FACTS. The Pakistani government approved Sui Southern Gas Corp.’s Mashal LNG project at Port Qasim, Karachi, in early 2007, choosing a development consortium led by 4Gas. The brief said two other projects proposed for Port Qasim have not advanced as far as Mashal LNG.

The Iran-Pakistan pipeline would be an extension of Iran Gas Trunkline 7, currently under construction and expected to be completed in 2010. Running 900 km from Assaluyeh to Iranshahr in Iran’s Sistan-Baluchestan province, the 56-in. OD line will have a capacity of 5.3 bcfd. A 400-km branch line from Iranshahr to the Pakistani border would have an initial capacity of 750 MMcfd, according to FACTS, expandable to as much as 2.1 bcfd. Contracts for this connecting pipeline, likely running through Chahbahar in southeast Iran to the Pakistani border, have not yet been awarded.

FACTS said the pipeline will enter Pakistan in southern Balochistan, running to Sindh province where the country’s main pipeline hub lies. From Sindh, gas would travel through SSGC’s existing distribution network.

Iranian gas entering Pakistan will be used by independent power producers, according to FACTS, as they have the greatest ability to pay. Iranian gas could replace more costly liquid fuels in power generation in the more remote parts the country, at the same time reducing its fuel oil and naphtha imports.

Iran and Pakistan agreed in June to a price formula linked 79% to the Japan crude cocktail (JCC) price. At JCC of $60/bbl Pakistan would pay around $8.20/MMbtu, said FACTS.

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