Pakistan’s second liquefied natural gas (LNG) re-gasification terminal at Port Qasim inaugurated by Prime Minister Shahid Khaqan Abbasi a fortnight ago suffered a serious technical fault at an underground pipeline, resulting in a failure to inject re-gasified LNG into the system, prompting multiple shipments to be cancelled or diverted, trade sources told Reuters.
On top of the two cargoes traders believe have already been cancelled or diverted away from the terminal, Pakistan is in talks with suppliers to potentially delay, divert or declare force majeure on deliveries until the problem is fixed, the sources said.
Industry insiders told local daily Dawn this puts a question mark on the quality of the floating storage and re-gasification unit (FSRU) and the associated infrastructure, including the pipeline network. They said the initial testing should have been completed at one-and-a-half times the working pressure– at least 50 per cent higher pressure i.e. above 1,500 pounds per square inch (PSI). The pipeline suffered the setback below 1,000 PSI working pressure.
Engineering professionals told PKonweb the fault could be related to quality of material used or workmanship– or both, and that mitigating measures are generally set out for such field-related issues.
It occurred as LNG converted back into natural gas onboard a floating import terminal was pumped through pipelines to the shore, two industry sources said.
It remains unclear if additional fixes to infrastructure will be needed that might delay the terminal’s restart, they said.
The fault may however lead to cancellation of a few lined-up cargoes over the next few weeks, sources said on Wednesday.
Two ships carrying LNG were reportedly waiting for delivery at the FSRU when the incident ruptured an underwater pipeline while building gas pressure from LNG from the third shipment.
The second LNG terminal has been developed by a consortium led by Pakistan Gas Port Ltd (PGPL) and built with an investment of $500 million.
A source working close to PGPL’s FSRU said the gas leak incident was so serious that an emergency mechanism was put in place. It would need a minimum of 10-15 days to reach the stage where it resolved the problem and again build the gas pressure back.
He said a number of other shipments would also be deferred, cancelled or diverted. Authorities concerned were in talks with suppliers for an acceptable way out in the interest of long-term contracts or else they would be compelled to declare force majeure. The challenge can create gas shortages amid increasing winter demand. Many towns in Punjab were already facing gas pressure problems.
The LNG shipment from the second terminal was expected to be fed to three mega LNG-based power projects in energy-starved Punjab – Bhikki, Balloki and Haveli Bahadur Shah – of 1,200-megawatt each.
Addressing the inaugural ceremony, the prime minister had declared that Pakistan would have surplus gas after the second terminal started processing gas on November 24. However, he said the surplus would be short-lived as gas demand from industries and other sectors was rising.