(Adds detail on plans, import capacity, fertiliser group quote)
By Rod Nickel
ISLAMABAD, Sept 20 (Reuters) - Pakistan has selected groups
that include Exxon Mobil Corp and Royal Dutch Shell
to build five liquefied natural gas (LNG) terminals as
it aims to triple imports and ease gas shortages.
The terminals could be in operation within two to three
years, Omar Ayub Khan, Pakistan's minister of power and
petroleum, said in an interview on Friday.
Pakistan is chronically short of gas for power production
and to supply manufacturers such as fertiliser makers, hobbling
the country's economy.
"It will make a significant dent in the gas shortage," Khan
said.
The groups selected to build terminals are Tabeer Energy, a
unit of Mitsubishi Corp; Exxon and Energas; Trafigura
Group and Pakistan GasPort; Shell and Engro Corp; and
Gunvor Group and Fatima.
It was not immediately clear if the companies involved had
made final investment decisions to proceed.
The five must submit plan details to the ministry of ports
and shipping by Nov. 5 for approval, but cabinet has already
approved them, Khan said.
Pakistan's two LNG terminals currently have 1.2 billion
cubic feet per day of capacity, and a third expected to come on
line next year will add 600 million cubic feet per day, Khan
said.
The country has sought bids for a 10-year LNG supply tender
for the current terminals and the results will be announced in
two to three weeks, Khan said.
It was unclear what capacity the five new terminals will
have, but Khan said they could collectively triple Pakistan's
LNG import capacity.
The arrests this summer of two LNG industry executives by
the National Accountability Bureau raised some concerns about
the risks of investing in Pakistan.
But Khan said the interest of five investment groups speaks
for itself.
"That is a ringing endorsement that (Pakistan's) policies
are clear and transparent," he said. "It's a competitive
market."
The cost of building the terminals and finding buyers for
the gas will be up to the groups, and they will pay Pakistan a
royalty based on volume, Khan said.
Pakistan's contribution will be funding construction of a $2
billion north-south pipeline to distribute the gas, and storage
facilities, he said.
Pakistan's fertiliser industry has coped in the past year
with a steep increase in government-set natural gas prices, Sher
Shah Malik, executive director of Fertilizer Manufacturers of
Pakistan Advisory Council, said in an interview on Thursday.
Gas is the main ingredient in production of urea fertiliser.
Two of Pakistan's urea plants lack gas to run regularly, and
one closed last year, forcing Pakistan to import fertiliser.
Since LNG is often too expensive for making fertiliser, the
government should also expand domestic gas exploration before
reserves are depleted, Malik said.
"We are heading for very difficult times," he said. "If
nothing happens, we'll be high and dry."
(Reporting by Rod Nickel in Islamabad; additional reporting by
Sabina Zawadzki in London; editing by Tom Hogue and Jason Neely)
