ISLAMABAD: Pakistan risks scaring off investment from global energy giants eyeing one of Asia’s fastest-growing energy markets if it pursues renegotiation of contracts for two liquefied natural gas terminals, an architect of its energy policy said.
Shahid Khaqan Abbasi, who ended a nine-month stint as premier in late May, championed a vast LNG infrastructure to ease energy shortages that throttled economic growth and brought hours of darkness every day for nearly a decade.
“It will scare off foreign investors. It’s stupidity,” Abbasi told Reuters in an interview on Monday. “This is not a joke, this is not some small company, this is Engro, the number one corporation in Pakistan.”
He was referring to a terminal built by private conglomerate Engro Corp, which the new government of Prime Minister Imran Khan has said was too costly, and vowed to renegotiate the deals for Pakistan’s two LNG terminals.
The second terminal was built by Pakistan’s Associated Group and energy trading firm Trafigura.
But such a move will endanger Pakistan’s position as a hot LNG investment destination and deter producers such as Exxon Mobil and traders like Trafigura and Vitol, all hunting for partners to build more terminals, said Abbasi.
Abbasi, who was declared the target of an investigation by Pakistan’s anti-graft agency in June, masterminded the country’s embrace of LNG during his four years as petroleum minister, before becoming prime minister in August 2017.
New Petroleum Minister Ghulam Sarwar Khan has said Engro’s LNG terminal built in 2015, Pakistan’s first such facility, rewards the company with returns that are too high.
Engro responded by saying the bidding was done in a “fair and transparent manner” and it was under no obligation to renegotiate.
Abbasi said Engro’s terminal offered one of the “lowest regasification rates for a floating LNG terminal in the world”, with the terminal operator charging 48 cents per MMBTU (million British Thermal Units) for the transfer of gas, including five cents to be paid to the port.
Engro declined to comment on Abbasi’s remarks.
Pakistan’s anti-corruption agency announced an inquiry against Abbasi in June over an unspecified terminal project, but gave no details. Abbasi said he had repeatedly asked the agency to talk to him, or explain its accusations.
“Nobody has talked to me yet,” he said.
While petroleum minister, Abbasi said he twice visited Exxon Mobil’s headquarters in Texas to re-assure the oil giant that Pakistan is a safe investment destination.
Exxon Mobil returned to Pakistan in May with an investment in an offshore drilling project. It has expressed interest in building an LNG terminal in the country.
“LNG was a big driver, the whole world took notice,” he said of Exxon Mobil’s return to Pakistan after an 18-year absence.