China has nominated its largest energy firm, Sinopec, to sign a government-to-government LNG deal worth billions of dollars with Pakistan, but local officials have expressed concern over the Beijing-based company that is facing a corruption probe.
Officials familiar with the development said that Pakistan was negotiating LNG supply deals with different countries including France, Italy and China on a government-to-government basis. But China had nominated Sinopec, which was facing a corruption probe and could lead to problems in materialising the deal.
As global oil prices slump, LNG is readily available and countries that have supply agreements want to enter into a deal with Pakistan that is desperately looking to import the fuel and bridge its supply-demand gap. Officials said that China was one of the countries which had LNG supply agreements and wanted to export it to Pakistan.
However, they added that China’s nomination of Sinopec could be an issue.
A senior government official said that Pakistan was currently in negotiations for LNG supply with different countries like Italy, France and China. He said that Pakistan wanted to sign government to government deals with these countries after it recently approved the second LNG terminal contract to the successful bidder.
He said that Pakistan has forwarded the draft of a government-to-government deal to these three countries.
The official said that talks with Russian firm Gazprom were under way as well. He said that the Russian firm had offered LNG and Pakistan was keen to proceed as well.
Officials said that US had also conveyed during the energy working group meeting that prices of LNG would come down and therefore, it asked Pakistan to sign LNG supply agreements with other world suppliers. Pakistan has an agreement with Qatar for 400 mmcfd gas, while Gunvor was supplying 100 mmcfd.
Gas utilities have a pipeline capacity of 400 mmcfd. These companies will add 1.2 bcfd capacity in December 2016, in a bid to cater to the greater supply.
The current LNG terminal in Karachi also has a capacity of 600 mmcfd, while the second, which would be completed in 11 eleven months, would add to the capacity.
