India and Pakistan are exploring the option of negotiating a gas supply deal after Pakistan's private energy companies told Gail that they need more liquid gas than the previously-decided 5 million standard cubic metres per day (mmscmd),which wasn't enough.
Last week,Gail officials met representatives of Pakistan's energy companies that are planning new power plants in Pakistan,and they said that they need more supply from across the border.
"We may end up supplying more LNG to Pakistan as representatives of Pakistan's private power and energy companies told us they need more LNG," Prabhat Singh,director, marketing, Gail, told ET.
"They are planning new power plants in Pakistan,so the 5 mmscmd volume decided earlier could now be increased," he added.
Singh also said that once the deal is cleared by the governments of both the countries, "we could supply more LNG, but only through the Pakistani state gas firm, Inter State Gas Systems".
This comes soon after both the countries reached a preliminary agreement to enter into a contract where Gail can export natural gas to Pakistan through a pipeline from Punjab.
"We plan to import the LNG either at Petronet's LNG terminal in Dahej or at our Dabhol facility after regassifying it. We will transport this gas through our Dadri-Bawana-Nangal pipeline network to Jalandhar. From Jalandhar, we plan to lay a 110-km pipeline to transport the gas near Lahore for delivery into Pakistan," Singh added.
"We are seeking a price of around $22 mmBtu, but the Pakistanis are negotiating for a lower price of around $18 mmBtu. They are also seeking some tax exemptions," said Singh.
Pakistan's energy mix is highly skewed towards gas as it accounts for about 32% of the total pie. This deal with Gail gives Pakistan a cheaper import option when compared with current gas imports at $28/ mmBtu, said Singh. This deal is being negotiated at the highest level and representatives from the oil ministries of both sides have been in constant touch.
In early July this year, an Indian team visited Pakistan to discuss the issue threadbare, said people familiar with the development.Industry estimates say that gas demand in Pakistan is likely to rise substantially over the next few years as the county plans to promote the use of gas in future power generation projects.
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