Gas from Iran at 80 percent crude value: ECC approval sought to sign GPSA

[LahoreEstate]

ZAFAR BHUTTA & MUSHTAQ GHUMMAN
ISLAMABAD (March 19 2009): The Petroleum Ministry has pressed the Economic Co-ordination Committee (ECC) of the Cabinet to approve signing of Gas Sale and Purchase Agreement (GSPA) with Iran at 80 percent of crude after President Zardaris recent visit to Iran, a price that is 2 percent higher than what was last offered to Pakistan, sources said.

They said that Petroleum Ministry has moved a summary to ECC, which is scheduled to meet on Thursday, after Iran warned that it would be free to commit supplies reserved for Pakistan to its other buyers if no agreement was reached between the two countries during the current Iranian year ending on March 20, 2009.

Iran has also said that it might also raise the gas prices, further, by nearly 10 percent. The Petroleum Ministry has, therefore, recommended that Pakistan may enter into the GSPA with Iran at the price offered by Iran in the current scenario.

According to the summary moved to ECC, the Ministry has further recommended to purchase gas specifically for power generation that would be supplied to power generation units through the public sector gas utility companies under the administrative control of Petroleum Ministry. A separate tariff has been recommended for those industrial consumers who would use imported gas. Petroleum Ministry has been proposed to be the administrative ministry in this regard.

Petroleum Ministry had moved a summary to the Prime Minister stating above facts and urgency in the matter and Prime Minister has directed to place the matter before ECC. The project envisages import of one billion cubic feet daily (bcfd) of natural gas, which is nearly 25 percent of Pakistans current gas production.

The project will take at least 4 years to complete, and be able to generate 5,000 megawatts (mw) power. According to an analysis imported Iranian gas will result in annual saving of $1 billion over import of furnace oil, (at crude oil price of $50 per barrel).

Similarly, there will be an annual saving of $735 million if equivalent quantity of LNG is imported. The savings will increase in line with the hike in global crude oil price. The IPI Project shall have immense economic benefits for the people of Pakistan.

The most significant benefit to Pakistans economy will be to provide energy security through the guaranteed availability of clean fuel of high energy content, which is not only less expensive than alternative fuels, but is also environmentally friendly. In addition, it will generate employment and boost the economy.

http://www.brecorder.com/index.php?id=77...=&supDate=