ExxonMobil, the world’s largest publicly traded oil and gas firm, on Wednesday signed an agreement with Universal Gas Distribution Company (UGDC) to supply liquefied natural gas (LNG) to the country’s transport sector.
“After the agreement, the first shipment of LNG is expected by the next month which will change the entire gas landscape in Pakistan,” said a statement issued by Petroleum Division of the Ministry of Energy.
The agreement was signed in Houston, Texas by Vice President of ExxonMobil Richard Rayfield and Chief Executive of UGDC Ghiyas Abdullah Paracha and witnessed by Special Assistant to the Prime Minister on Petroleum Nadeem Babar. A large entourage of the government is currently in the United States to attend an annual LNG conference.
Mr Paracha said the agreement initially covered four cargoes in the first year that would gradually increase overtime depending on revival of the CNG sector. He said the first cargo was being arranged for end-October for which legal framework was already in place and the prime minister had strongly focused on the Ease of Doing Business to revive investor confidence.
He said the agreement would enable the CNG sale at least 30 per cent cheaper than petrol price. “Based on this price differential, we are hopeful that two million fresh vehicles would convert to CNG in two years,” he said, adding this would result in an import bill saving of about $1bn a year.
The Petroleum Division said the agreement would “for the first time result in the import of private LNG to the country” and “the first shipment of LNG expected by the next month will change the entire gas landscape in Pakistan”.
Special Assistant to Prime Minister on Petroleum Nadeem Babar, Chairman LNG Market Development Alex Volkov, President Market Development ExxonMobil, Irtiza Sayyed, Country Manager Pakistan ExxonMobil Shahrukh Mirza, senior officials of the petroleum ministry and UGDC were also present on the occasion.
Speaking at the event, Babar said that this was a historic moment as ExxonMobil had decided to invest in Pakistan after a gap of 20 years. He said the businesses would be provided enabling environment according to the vision of Prime Minister Imran Khan.
He said the deal was an honour for Pakistan and the government will promote ease of doing business to facilitate investment in all the sectors including the energy sector.
He said the government wanted to put itself out of the gas import and this deal was the first step in that direction. Investment by ExxonMobil will also propel other energy companies to invest in Pakistan which will bring down the price of gas to help masses and the environment, he added.
Alex Volkov and Irtiza Sayyed said their company had decided to invest in Pakistan after two decades with a vision to provide economical and environmentally friendly gas to consumers on a regular basis. “We will support UGDC so that it can overcome the shortage of gas in Pakistan,” Volkov was quoted as saying.
Ghiyas Paracha said the government had changed third party rules to allow the private sector to import gas that would help the CNG sector to buy surplus gas from terminals and also buy the fuel from five upcoming terminals which will revive the CNG sector.