SG:Pakistan renegotiates gas price agreement with Iran
The Dawn reported that Pakistan will renegotiate a price agreement with Iran for the 750 million cubic feet per day of natural gas it planned to import by December 2014 under USD 3.6 billion pipeline deal. The talks will be held on the basis of the lower gas price parameters finalized with Turkmenistan.
Dr Asim Hussain petroleum minister of Pakistan said that “We will definitely renegotiate gas price with Iran. The agreement with Iran provides for price renegotiation before the commencement of gas flows.”
The minister claimed that on the basis of pricing formula already decided, the Turkmen gas would be 10% cheaper than the Iranian gas. The Iranian price would have to be brought down and we expect to secure from Iran and the one we have already finalized with Turkmenistan a cumulative saving of about USD 100 billion over a period of 25 years with the two projects.
He said that Pakistan and Turkmenistan would initial the gas sales and purchase agreement during the Turkmen President’s visit. The formal signing of the agreement would take some time because the transit fee for the pipeline in Afghanistan was not yet clear. Turkmenistan claims the transit fee (in Afghanistan) would be lower but we think it would be higher, so we have to take into account the transit fee risk factor before signing the formal agreement.
Dr Asim claimed that the financing for the Turkmenistan, Afghanistan, Pakistan and India pipeline project would not be a problem although the cost of the Pakistan segment was not yet clear because the project partners had not started the process for appointing a financial adviser for the structure.
He said that a lot of progress had been achieved on the Iran and Pakistan pipeline project. The survey for the project route is complete and its design engineering report is expected within 15 days. We hope to hold tendering for the pipeline and other long-lead items within this month.”
The minister attributed the current serious gas shortfall to a constitutional discrepancy arising out of the 18th Amendment that required the use of gas from new discoveries in the province where it was made and the failure of successive governments to develop and utilize huge reserves in tight, shale and low heating value gas resources. These two factors have led us to a crisis situation now.
He expressed the hope that with these measures the serious shortfall would come under control next year and there would be no gas shortage in 2013 and the country would be back to business as usual. The shale and tight gas had cumulative reserves of about 76 trillion cubic feet of gas almost three times the proven reserves of conventional gas reserves. Of this about 500MMCFD of shale gas would come into the system in two years while the first 20 MMCFD of tight gas from Kirthar range would be online soon.
The minister said that the gas shortfall against committed supplies would be around 529 MMCFD during this month, going up to 911 MMCFD in December and peaking at 1127 and 1460 MMCFD in January and February respectively, before easing down to 726 MMCFD in March.
He said that under the gas load shedding plan finalized with consensus at a meeting with stakeholders, supplies to CNG and industrial sector would remain closed for three days a week on an alternate basis. Certain consumer sectors were running a campaign but it had to be kept in mind that the industrial sector had contracts only for nine months and all industries and their labour irrespective of their location belonged to Pakistan.
