Two public-sector LNG companies in Pakistan have raised safety concerns over the excessive utilisation of the country’s two existing LNG terminals. 

A joint report by Pakistan LNG Ltd and Pakistan LNG Terminal Ltd said both terminals are overstressed and the LNG value chain is very fragile compared to global standards, owing to “inflexible infrastructure constraints”. 

It added that both terminals could face operational and safety risks. Contrary to perceptions, the combined utilisation of the two terminals has been around 84 percent against a global average of 43 percent, which leaves very little flexibility to handle shocks. 

Even countries such as Kuwait and Argentina, which rely on floating storage and re-gasification units like Pakistan, have a far lower utilisation rate. 

The reasons for overstressing the existing LNG import capacity are firstly that the lack of investment in new terminals means the government has no option but to fully use the existing facilities to meet the country’s increasing LNG import needs. 

Secondly, the failure to build LNG storage requires the authorities to overstretch the existing capacity, especially during winters when the demand for imported gas peaks, which shows up in lower-than-world-ratio ‘re-gas to storage’ and ‘import capacity to storage’.

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10th March 2021