Shell, Exxon Close Deal To Build Five LNG Import Terminals

Shell and Exxon are among the companies picked by the Pakistani government to build five LNG import terminals as part of efforts to boost natural gas imports to deal with shortages in supply.

Reuters reports that the terminals could be operational in two to three years, quoting the country’s oil and power minister, Omar Ayub Khan.

With a fast-rising population, Pakistan has been plagued with power outages largely resulting from a shortage of fuel necessary to keep its power stations going. Though there is some local production, in financial year 2017/18, demand exceeded this supply by about 3 billion cu ft daily. Imports of gas and LNG are already on the rise but not fast enough to ensure no more blackouts.

To remedy matters, the government has picked five consortia to build additional terminals. The consortia include, besides the two supermajors, also Mitsubishi Corp, Energas, Trafigura, and Gunvor.

The consortia must submit their detailed plans for the terminals for government approval by November 5 although Reuters quoted PM Khan as saying this approval had already been granted.

Pakistan currently has LNG import capacity of 1.2 billion cu ft per day in two terminals, with plans to add another with a capacity of 600 billion cu ft daily in 2020. One billion cu ft of natural gas equals about 21,000 tons of LNG.

Besides imports, however, Pakistan is also pursuing higher local production. The country is eager to open up its gas deposits to foreign energy companies, and earlier this year a senior government official told Reuters, “I expect in the second half of this year we will be auctioning at least 10, if not 20 blocks for exploration.”

The resources seem to be there, according to estimates. Pakistan has conventional gas reserves of 20 trillion cu ft and shale gas reserves exceed 100 trillion cu ft. So far, the authorities have delineated more than 30 gas blocks, all onshore.