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Wednesday Dec 09, 2015

Qatar dismayed over Pakistan delay in making $16 bn LNG deal operational

Qatar dismayed over Pakistan delay in making $16 bn LNG deal operational
ISLAMABAD: The Qatari authorities have expressed their dismay over the inordinate delay in approval of the much-touted $16 billion LNG deal for 15 years under a government-to-government arrangement by the ECC. Both the countries have already finalised the sale purchase agreement (SPA) that needs official signing from both sides prior to becoming operational. It is possible only if the ECC gives its go ahead.

Both the countries, Qatar and Pakistan, finalised the SPA, including the price of LNG, two months ago but the agreement is not operational yet as the ECC is confused as to whether it should approve the biggest-ever LNG deal or not, well-placed sources in the Ministry of Petroleum and Natural Resources said.

"Almost eight months and eight days have elapsed since the LNG terminal has got operational and Pakistan has received no LNG consignment from Qatar under government-to-government arrangement so far and to this effect, the Qatari authorities are irked and conveyed their displeasure."

However, Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, when contacted about the displeasure of the Qatari authorities, opted to stay mute. The minister said that the impression developed that the LNG deal with Qatar was not under g-to-g arrangement carries no weight as both the countries have signed an inter-government agreement on the LNG deal.

On top of that, the nine-member pricing committee constituted by the ECC government had finalised the LNG deal but the ECC in its meeting held in the last week of November was hesitant in according approval to the largest-ever deal, saying PSO is a commercial entity and it should sign the contract since the deal is a commercial transaction. In that particular meeting, however, it was decided to seek the view of the law ministry as to whether the ECC can approve the deal or not and assess whether the deal was done under government-to-government arrangement.

It is crystal clear that both the countries signed an inter-government agreement (IGA) for the LNG deal and under the IGA, Qatar nominated the Qatargas Company and Pakistan nominated PSO for finalising the agreement under the umbrella of nine-member pricing committee. The PSO is a government-owned entity as the government has 80 percent shares in it, said Dr Miftah Ismaeel, Chairman of Board of Investment, who is also the chairman of Sui Southern. He said that the Qatar government also owns 78 percent shares in the Qatargas Company and the remaining shares are held by international oil companies. However, the minister is optimistic that the ECC will approve the LNG import deal in the next ECC meeting saying that the ECC members have already been briefed about the LNG deal and they were given the answers of questions earlier raised by them about the 15-year contract.

It may not be out of place to mention that in the ECC meeting that was held in the last week of November some serious differences among various ministries had surfaced.In that particular meeting, Finance Minister Ishaq Dar had adopted the stance as to why the ECC should be involved in a commercial transaction of 16 billion dollars LNG deal which has been finalised between PSO and Qatargas Company and both the entities should seal it.

Petroleum Minister Shahid Khaqan Abbasi was perturbed in that particular meeting and he expressed his anger saying that the ECC approval was must for making the SPA operational as without the ECC’s nod, PSO will not seal the deal.It is to be seen whether the ECC gives a go ahead to the LNG deal in the next meeting that may be held either on Thursday or Saturday next.—Published in The News

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