A high-level committee chaired by Deputy Prime Minister Ishaq Dar has raised concerns over a study on reducing liquefied natural gas (LNG) import charges and has directed the Oil and Gas Regulatory Authority (OGRA) to review the proposal, The Express Tribune reported.
The committee, formed by Prime Minister Shehbaz Sharif, was previously informed that LNG charges could potentially be reduced by up to $1.5 per million British thermal units (mmBtu) by revisiting certain expenditure categories.
The study, commissioned by the Port Qasim Authority, was presented in a recent meeting. However, the committee found the proposal lacking, as it only suggested a minor reduction of two cents per mmBtu. The members criticised the document as flawed and referred it back to OGRA for a more thorough review.
The current LNG pricing structure includes charges for port terminal services, retention charges, and high unaccounted-for-gas (UFG) losses. Sources revealed that LNG is mainly supplied via distribution lines, not transmission lines, leading to higher UFG charges. LNG buyers have requested the removal of retention charges and the implementation of a uniform UFG rate across transmission and distribution pipelines, which could help reduce prices.
In addition to the LNG pricing issue, the committee discussed the gas exploration sector’s financial challenges. Oil and Gas Development Company (OGDC) and Mari Petroleum executives expressed their appreciation for the committee’s decision to allow exploration companies to sell 35% of discovered gas to third parties. This move is expected to improve cash flow, mitigate circular debt, and enable companies to advance ongoing and new exploration projects.
The committee also discussed the bidding process for new onshore and offshore exploration blocks. It was decided to issue tenders for onshore blocks by April 30, 2025, with offshore block tenders to be floated by June 30, 2025. Deputy Prime Minister Dar noted that foreign investment, especially from Russian firms, would be crucial in the upcoming bidding rounds. ExxonMobil’s past participation in offshore drilling off Karachi had not yielded the desired results, but the government is hopeful about future participation from international companies.
During the meeting, Dar emphasized the government’s commitment to creating a secure environment for exploration and production (E&P) activities. He also underlined the need for long-term energy planning to optimize domestic resources and reduce reliance on imports. The committee reviewed ongoing efforts to tackle circular debt, improve gas pricing mechanisms, and ensure a stable energy supply.
Federal Minister for Petroleum Ali Pervaiz Malik highlighted the government’s focus on indigenization and integrated energy planning, while Dar praised the approval for E&P companies to sell 35% of gas to third parties, calling it a vital reform for promoting competition and improving financial stability in the energy sector.
The meeting also acknowledged the support of the Pakistan Army, law enforcement agencies, and the Ministry of Interior in ensuring security for E&P operations, especially in areas like Waziristan, where the Shewa discovery was connected to the Sui Northern Gas Pipelines Limited network.
The committee reaffirmed its commitment to implementing reforms in the energy sector, facilitating private sector involvement, and ensuring sustainable energy development. It directed relevant authorities to take immediate action on the identified challenges, particularly in LNG procurement and the broader energy supply chain, to maintain reliable gas availability for consumers and industries.