LPG Pipeline from Karachi to North of Proposed Country

ISLAMABAD: Senior Petroleum Division officials have proposed a 12,000 tpd capacity LPG pipeline from Karachi in the north of the country, ending in Lahore in the first phase and Rawalpindi in the second phase with offtakes at various charging hubs such as Bahawalpur, Multan and Lahore, a senior energy ministry official told The News. “At each pick-up point, storage must also be constructed to minimize storage needs at import terminals.”

The Petroleum Division for this purpose will soon send a summary to the ECC requesting authorization to start the project. It is proposed that the LPG pipeline follow the route of the white oil pipeline and use its right of way (ROW), where it will be available.

The supply of imported LPG from the port city of Karachi and various local refineries and gas production fields is done entirely by tankers, causing traffic congestion and security threats. In addition, the supply by tanker trucks is a major bottleneck in the increase in the supply of LPG corresponding to a growing demand.

According to the working paper prepared by the Petroleum Division and available with The News, the project will be implemented under a public-private partnership (PPP) model with support from the Government of Pakistan. Inter-State Gas System (ISGS), as the representative of the government, will provide its equity share while the remaining stake will be introduced into the equity market. Project financing will preferably be raised on the local market within standard project financing ratios.

In winter, given the domestic deficit of 500 mmcfd on the SNGPL network, LPG can be an alternative to fill this deficit. And to meet this, approximately 11,000 tonnes of LPG per day will be needed.

The existing import capacity allows additional imports of only 800 tons per day as explained above while a fleet of 200 tankers will be needed to transport this quantity of LPG. Nevertheless, transporting the necessary 11,000 tonnes per day will require around 2,700 additional tankers. As a result, storage and bottle requirements will also increase, which will require huge investments.

There is therefore an urgent need to increase the LPG infrastructure in the country keeping in mind the increase in import capacity from the existing 500,000 tonnes per year to around 4 million tonnes per year. And for this purpose, a detailed assessment must be undertaken by the owners of LPG import terminals and the LPG marketing companies.

The proposed LPG pipeline project will provide the nation with multiple benefits including improving LPG availability by addressing infrastructure constraints, minimizing storage requirements at import terminals which are estimated to be costly compared to storage along the pipeline, minimizing LPG transport costs, improving the environment by reducing energy consumption and exhaust emissions, enabling private sector LPG importers and traders to access to infrastructure and opening employment opportunities along the pipeline route.

It should be mentioned that LPG supply in FY 2020-21 amounted to 1.7 million tonnes compared to 1.2 million tonnes in FY 2020-21, reflecting an increase substantial in one year. Moreover, the share of local LPG has not changed much, showing that all of the increase in annual consumption and supply is attributed to imported LPG.

Currently, the combined optimal capacity of two import terminals (EVTL and SSGC) is about 500,000 tons per year, of which about 300,000 tons (800 tons per day) are idle. The combined storage capacity of these two terminals is approximately 13,000 tonnes. In addition, more than 1,800 LPG tankers are in service with a transport capacity of approximately 150,000 tonnes per month.

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