ISLAMABAD: Special Assistant to Prime Minister (SAPM) on Petroleum Nadeem Babar said on Friday that Pakistan would save an amount of around $3 billion in the import of Liquefied Natural Gas (LNG) under a 10-year agreement signed with Qatar at 10.2pc of the Brent, which would be effective from January 2022.
“Today we have signed a very important agreement with Qatar. Our earlier agreement [signed by the PML-N government] with Qatar was of 13.37pc of the Brent, under which an average five cargoes arrive every month. But, we [the PTI government] gave inked the deal at 10.2pc of the Brent,” he said while sharing with media details of the agreement, which was signed in the presence of Prime Minister Imran Khan at the PM House.
This contract, he said, was “almost 31pc lower” as compared to the previous agreement signed by the Pakistan Muslim League-Nawaz (PML-N) government.
“It is a 10-year agreement and the price can be renegotiated after a period of four years,” he informed, adding that the existing agreement was of 15 years, under which the price was fixed for a period of 10 years.
Under the new agreement, he said, Pakistan would save around $317 million annually and $3 billion collectively in 10 years.
Nadeem Babar said there were a number of amendments in the 10-year agreement. As per the old contract, Pakistan had given a letter of credit (LC) of $170 million to the Qatari government, but under the new agreement, the LC would be only of $84 million.
In the new arrangement, he said, import would be started with average two ships per month, which would be increased to four vessels in a period of three years.
Justifying the new deal, he said a contract of the Gunvor Company, which was operating at 13.37pc of the Brent, had expired in December 2020, while its second contract would be ending after 14 months.
The new contract, he said, would be replacing the two expensive contracts [of Gunvor].
The SAPM said there would be a cushion for Pakistan to import additional volume of LNG during the upcoming peak winter season, on need basis, at the same 10.2pc of the Brent.
“This agreement will be effective from next January, and if needed it can be executed two-three months before the commencement date, keeping in view the winter needs.”
He termed the new LNG supply deal ‘historic’ as it would ensure economic stability. “In the LNG trade, this price [10.2pc of the Brent] is the lowest publicly disclosed contract ever,” the SAPM claimed.
Answering a question, he said the process to strike this deal had started around two years ago, when he had accompanied the PM during his first visit to Qatar. “It is correct that the deal was discussed at the highest level of the government. The PM himself had talked to the Amir of Qatar thrice. It took long time to strike the deal at 10.2pc of the Brent, which is the lowest publicly known contract in the world today.”