Pakistan's highest decision making body -- the Economic Coordination Committee -- has failed to take a decision on the award of a multi-billion dollar contract to import 400,000 Mcf/day of LNG over 15 years and has left the matter to the federal cabinet, an official from the Ministry of Petroleum and Natural Resources said Monday.
The federal cabinet is likely to convene a meeting early this week to resolve the controversy.
At a meeting in Islamabad last Friday, some ECC members questioned the summary submitted by the petroleum ministry which declared a consortium led by Pakistan GasPort as the lowest offer into state-run Sui Southern Gas Company's tender to buy LNG while pronouncing another offer as non-compliant, the official who attended the meeting said.
ECC members also said the offers into the LNG import tender needs approval from SGCC's board of directors, with the offers now currently undergoing the approval process.
They were also critical of the fact that being in its final week in office, the government should not commit sovereign guarantees for 15 years and that this decision should be left to the next government. Last week, SGCC received three offers into its tender to buy LNG. The offers came from a consortium comprising Pakistan GasPort, Shell, Eni, China Harbor; a group comprising ExxonMobil and Global Energy Infrastructure Pakistan; and a group comprising Elengy Terminal Pakistan and ConocoPhillips, Platts reported earlier.
The first consortium submitted an offer to supply the LNG at $17.7074/MMBtu, while the ExxonMobil-Global Energy group submitted an offer at $18.16/MMBtu.
The Elengy-ConocoPhillips group submitted a conditional and multi-priced offer, which does not comply with the terms and conditions of the tender and is not valid, the officials said.
The buy tender was first issued in December 2012, but was not awarded as only one valid offer was received -- from Engro Terminal Pakistan. Both Elengy Terminal Pakistan and Engro Terminal Pakistan are wholly owned subsidiaries of Engro Corporation.
Following a decision by the ECC at the end of January, the tender was re-issued mid-January and it closed on February 12.
SSGC has a second tender seeking 400,000 Mcf/d of LNG over 15 years. That was issued on March 1 and will close April 1, Platts reported earlier.
The company has said previously that the two tenders will be awarded to different companies to ensure diversity and avoid dependency on a single supplier.
The range of services to be provided by the winner of the tenders comprise LNG procurement, transportation, development and operation of terminal facilities as well as storage and regasification of LNG. The project will have sovereign guarantee from the Pakistan government and the selected company is required to have a firm gas offtake agreement in place for 15 years.
The start of the 15-year LNG import contract period will be decided after the tenders are awarded.
Pakistan is currently facing a gas shortfall of 1.2-1.4 Bcf/d and this is expected to worsen in the coming years. According to a central bank report, Pakistan's gas deficit could hit 3 Bcf/d by 2015-16 if the supply situation is not rectified soon. Gas output in the country currently stands at about 4.2 Bcf/d.
