TAPI gas import cheaper option for Pakistan compared to LNG
Turkmen natural gas, which will be supplied to Pakistan via the Turkmenistan-Afghanistan-Pakistan-India transnational gas pipeline in the future, is quite competitive in price compared to liquefied natural gas. This conclusion follows from information published by the Pakistani newspaper The Express Tribune, citing government sources who are well aware of the situation in the country's energy sector.
According to these sources, a group of officials from the Petroleum Division unfairly recently put forward a proposal to revise tariffs for gas export deliveries on TAPI, allegedly guided by the current market prices for LNG.
Pakistan’s top civil and military leadership has already given assurances to Turkmenistan that Pakistan is committed to executing the strategic TAPI pipeline project in order to ensure energy security, the newspaper emphasizes.
Despite certain lobby for LNG deals, a number of sectors in Pakistan, including the energy sector itself, have already informed the government of their decision to stop expensive LNG imports after 2025, when a long-term agreement on gas imports from Qatar will be taken up for review. As a result, the public sector entity Pakistan LNG Limited (PLL), the largest player in the local LNG market, was compelled to scrap a 10-year LNG supply tender a couple of months ago.
Moreover, as noted in the article, some Pakistani officials conducted a comparative analysis of prices for gas supplies for TAPI and LNG. It turned out that natural gas, which will be imported through the TAPI gas pipeline, will cost the Pakistani budget 9% cheaper than LNG.
For example, if pipeline gas of Turkmen origin will cost us $ 8.268 per million British thermal units (mmbtu) on the border with Pakistan, the cost of re-gasified LNG price at Pakistan port is $ 8.982.US $ per mmbtu based on three-month average Brent crude price.
The APP Agency reported on Thursday, citing the Petroleum Division, the TAPI gas pipeline project is progressing in accordance with the terms agreed by the participating countries of the project.
In the first phase, there will be free flow of gas in the pipeline, which will be completed at an estimated cost of $5-6 billion while in the second phase, compressor stations will be set up at a cost of $1.9-2 billion, The Express Tribune reports.
As ORIENT recently reported, the Saudi Development Fund will transfer the second tranche for TAPI project, which will be spent on procurement of the necessary equipment and materials.