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FM AMEMBASSY ISLAMABAD
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UNCLAS SECTION 01 OF 02 ISLAMABAD 000182 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ENRG PK
SUBJECT: PAKISTAN'S PETROLEUM MINISTER ON IMPORTED LNG 
 
REF: 09 ISLAMABAD 2665 
 
¶1. (SBU) Summary: The GOP has nearly completed a deal to 
import liquefied natural gas (LNG) supplies and build 
re-gasification facilities in Port Qasim, according to 
Minister for Petroleum and Natural Resources Naveed Qamar. 
Pakistan's Economic Coordination Committee (ECC) is expected 
to approve 4Gas' re-gasification facility by the end of 
January, as OPIC support made it financially viable.  The ECC 
will also approve long-term LNG supply contracts and a second 
re-gasification project.  Although the GOP preferred gas 
supplies from Qatar, it would sign long-term contracts with 
whatever group could provide supplies at the lowest price. 
Qamar agreed with Holbrooke that the GOP and USG needed to 
work together to change public perceptions of the U.S. and 
GOP by informing the public of their joint efforts in the 
energy and water sectors.  End Summary. 
 
Re-gasification facilities 
-------------------------- 
 
¶2. (SBU) In a January 13 meeting with SRAP Holbrooke and 
Ambassador, Minister for Petroleum and Natural Resources 
Naveed Qamar said that imported liquefied natural gas (LNG) 
was an important step in ameliorating Pakistan's natural gas 
and electric power shortages.  Qamar said the viability of 
imported LNG depended on the landed cost of natural gas being 
less than that for imported refined fuel oil (RFO), and 
better still, less than the delivered price of natural gas 
imported through the proposed Iran-Pakistan pipeline.  (Note: 
according to rough GOP estimates, the delivered price of 
re-gasified LNG is less than RFO and 10 percent more than the 
proposed Iran pipeline. End note.) Qamar said the Economic 
Coordination Committee (ECC) would approve two 
re-gasification facilities and LNG supply contracts by the 
end of January.  He said the projects would be completed by 
the end of 2011, with the U.S.-owned company 4Gas supplying 
500 m/cfd of gas and a second facility 200 m/cfd (Note: The 
second company is Vitol-Fauji, though Qamar did not name the 
project.  End note) 
 
¶3. (SBU) Qamar thanked Holbrooke for support of the Overseas 
Private Investment Company (OPIC) for the 4Gas (Mashal) 
re-gasification facility.  He explained that the GOP had 
hesitated to approve the 4Gas project due to "some financial 
weakness" in its proposal, but USG support "clinched" its 
decision to proceed.  Qamar urged the U.S. to support 
additional entrants into the re-gasification market, adding 
that the Ministry of Petroleum and Natural Resources was 
seeking U.S. support for a third project with a U.S. equity 
stake.  (Note: The Ministry sent a letter requesting OPIC 
financing for Associated Group's GasPort project in December 
¶2009.  End note.) 
 
¶4. (SBU) Qamar said that dredging the Port Qasim navigation 
channel to allow for the transit of large LNG tankers would 
facilitate the import of LNG.  He encouraged the USG and U.S. 
companies to look into how they could get involved in this 
$200 million project. 
 
LNG supplies 
------------ 
 
¶5. (SBU) Qamar said that Pakistan would prefer to get LNG 
supplies from Qatar but would take "the cheapest offer on the 
table."  Qamar said that Shell, which controls sizable Qatari 
LNG, had offered Pakistan LNG supplies at prices higher than 
those recently offered to other countries.  He noted that 
fuel suppliers wanted to charge a premium due to concerns 
over the GOP's ability to ensure payment. 
Holbrooke asked whether Qamar was concerned about Chinese 
competition for Qatar's gas supplies, and offered to lobby 
Qatari PM Hamad bin Jassim al-Thani on Pakistan's behalf. 
Qamar said this would not be necessary as the "global glut" 
of LNG put Pakistan in a good negotiating position.  He added 
 
ISLAMABAD 00000182  002 OF 002 
 
 
that Pakistan was not negotiating directly with Qatar but 
with Shell for Qatari supplies. 
 
Load shedding and public perceptions of the GOP 
--------------------------------------------- -- 
 
¶6. (SBU) Qamar noted that the 13.6 percent January 1 power 
tariff hike came at an inopportune moment, as there was not 
enough thermal generation in place to reduce both scheduled 
and unscheduled load shedding.  He added, however, that this 
problem would be solved later in 2010.  He said fuel supplies 
would continue to get tighter, but the LNG program would help 
improve them. 
 
¶7. (SBU) Holbrooke said there had been an "understanding 
deficit" between the GOP and USG that both sides needed to 
repair.  Holbrooke noted that the U.S. was moving quickly to 
deliver on the Secretary's Signature Energy Program, and that 
he would sign the implementing agreement for a $16.5 million 
project to upgrade Tarbela dam's power house later in the 
day.  He requested that Qamar let the Pakistani public know 
that the U.S. is working with the GOP to improve the water 
and power sectors.  Qamar said that the 
GOP, along with the United States, suffered from negative 
media coverage and agreed that the two countries should work 
together to change public perceptions. 
 
¶8.  (U)  This cable was cleared by SRAP staff. 
PATTERSON