The Oil and Gas Regulatory Authority (OGRA) in Pakistan is set to conduct a public hearing for the grant of licences for sale and marketing of liquefied natural gas (LNG) to two companies.

Subsidiaries of Energas and Tabeer Energy have submitted applications, seeking licence for sale and marketing of LNG.

However, different quarters have raised questions and said the licences, if allowed, will be like oil marketing companies’ licences without having storages.

At present, these companies do not have storages as they are under the process of constructing LNG terminals. The storage is a mandatory requirement for companies seeking licence for sale and marketing of LNG.

Critics have also raised questions over the acceptance of applications by the regulator, saying the authority has given favour by ignoring the mandatory requirement of having an agreement/MoU with a licensed terminal operator. In the case of Energas and Tabeer, neither has taken a final investment decision nor have they started construction of terminals.

Moreover, the critics argue how a company can claim government-owned capacity without following due process and it is surprisingly accepted by the authority for public comment.

Both companies have already been granted licence on a provisional basis, so it covers all the aspects required to construct, commission and operate a terminal.

The grant of sale licence will be considered based on the existing practice of equal requirement/terms, which were adopted by the authority for other licensees/applicants for having an arrangement with the licensed terminal operators only.

The government had announced a new policy for setting up LNG terminals by private parties on their own risk. Under the policy, Energas and Tabeer Energy decided to set up LNG terminals. The policy requires these parties to find their own customers as the government does not give any guarantee to lift the gas. In other words, the LNG terminal operators will have to operate without the ‘take-or-pay’ clause.

In addition to these two companies, Shell has also filed an application with the regulator, seeking licence for sale and marketing of LNG in Pakistan.

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21st December 2020