Islamabad: A consortium of American companies, backed by US President Donald Trump’s administration, is seeking up to $4.4 billion in investment for an integrated Liquefied Natural Gas (LNG) project in Pakistan, according to a media report on Monday.
The proposed project will cover imports, storage, regasification, gas transmission and sales to large consumers on a merchant basis, the Dawn newspaper reported.
LNG is natural gas that has been cooled to around minus 162 degrees Celsius, turning it into a liquid and reducing its volume by about 600 times. This makes it easier to store and transport by specialised ships.
At its destination, the LNG is converted back into gas through a process called regasification and supplied to consumers. It is used to generate electricity, fuel industrial processes, produce fertilisers and provide energy for heating and cooking. It is also used as a fuel in some vehicles and ships.
Pakistan currently has no LNG storage facilities, leaving its supplies of regasified LNG dependent on import infrastructure and international energy prices.
The US consortium comprises Global Vision Energy Partners (GVEP) and Khanjee Holdings, along with strategic co-investors from other countries and Luxembourg-based General Mediterranean Holding.
The project is similar to the Energas venture, an earlier frontrunner involving the Lucky Group and QatarEnergy, which abandoned the project, citing changes in Pakistan’s energy policy and requirements, along with unresolved policy and fiscal issues.
The sponsors of the new proposed project have obtained consent from the Port Qasim Authority for the proposed project site and filed an application with the Oil and Gas Regulatory Authority (OGRA) for a provisional licence, Dawn reported.
Port Qasim is located in the southeastern part of Karachi in Pakistan’s Sindh province, along the coastline of the Arabian Sea in the Indus Delta region.
The project has been approved for consideration under the US Trade and Development Agency’s project preparation programme, the report said.
It may also receive partial financing from the US Development Finance Corporation, with export credit guarantees from the US Export-Import Bank for technology, equipment and services, it said.
The consortium plans to develop the project in two phases. The first will involve an LNG terminal and storage facility with four tanks and an estimated annual throughput of 35 Billion Cubic Feet (BCF), at a cost of $1.7 billion, according to Dawn.
The second phase will involve constructing a 1,100-km pipeline, measuring 42-48 inches in diameter, to transport gas to other parts of the country. The pipeline will have a capacity of around 1.2 BCF per day (BCFD), taking the total project cost to $4.4 billion, the report added.
A Special Purpose Vehicle (SPV) has been incorporated to hold the project’s assets and liabilities and ring-fence its financial risks.
The SPV will develop, own and operate the project as a regional LNG storage, regasification and trading hub, serving Pakistan’s domestic gas market as well as US and West Asian suppliers.
Government support for the venture has been conveyed through the Ministry of Maritime Affairs and the Petroleum Division of the Ministry of Energy, the report said, citing documents.
The consortium is also engaging local investors for up to 10 per cent equity participation, with indicative investments starting at $50 million per investor.
The sponsors are seeking strategic co-investors, including global energy and infrastructure funds and institutional investors such as Grey Rock Investment Partners, Kohlberg Kravis Roberts & Co, Blackstone Inc, Saudi Arabia’s Public Investment Fund and the Kuwait Investment Authority.
However, their participation remains subject to due diligence, investment approvals and definitive agreements. No binding equity commitments have been confirmed so far, the report said.
The US sponsors consider Port Qasim strategically important because of its existing port infrastructure and access for LNG carriers. Its location outside the Strait of Hormuz, a major global energy shipping chokepoint, is another key consideration, the report said.
