Pakistan-Qatar sign agreement on Liquefied Natural Gas
Pakistan has signed a ten-years agreement with Qatar over the liquefied natural gas (LNG). The new agreement was signed at a significantly lower rate than the other deals that both the countries had signed.
Significance of the agreement
The new agreement between Pakistan and Qatar will help in saving $300 million annually or nearly $3 billion in the next 10 years for Pakistan.
This agreement was signed at around 31 percent lower rate when compared to the previous PML-N agreement of 2015. The agreement has been signed for 10 years which is the lowest publicly disclosed contract on the liquified natural gas in the world. As per the new contract, Pakistan will pay around $316 million less than the prior agreement. It will amount to saving of around $3 billion in LNG import. This agreement was signed after a year-long negotiation between both the countries.
About the agreement
The long-term contract was signed at the rate of 10.2 percent of Brent. With this agreement, Pakistan will import 200 million cubic feet (mmcfd) of LNG in a day. Earlier, Pakistan used to import 500 mmcfd of LNG in 2015 at the rate of 13.37 percent of Brent. Under this deal, Pakistan will get 3 million tonnes of LNG from the Qatar Petroleum per year starting from January 2022. It will start with receiving two ships per month. In the next three years, this will be increased to four ships. This agreement also provides for the provision of price negotiation option. Under the agreement, the price negotiation can be done after four years rather than 10 years.
Liquefied Natural Gas (LNG)
It is natural gas which mainly composed of the methane (CH4) along with the mixture of ethane (C2H6). This natural gas is cooled down to convert it into the liquid form to safely store and transport it.
Category: International Current Affairs