"LNG Mashal Project": SSGC report to Supreme Court raises key question

ISLAMABAD (April 24 2010): The report submitted by Sui Southern Gas Company Limited (SSGC) to the Supreme Court has raised the question as to who had recommended Shell Company for multibillion dollars LNG contract as a firm, '4 Gas', had not designated it as a supplier for the 'LNG Mashal Project'. According to the report, '4 Gas' designated GDF, Mitsubishi, BP and Woodside as its designated suppliers.

Price Negotiations Committee held discussions with whoever was willing to discuss supply of LNG to Mashal and choose to recommend the best offer which was that of GDF Suez. But the report submitted by SSGC has not shown how Shell Company was inducted in the project and even its offer was submitted to the Economic Co-ordination Committee (ECC) of the Cabinet as the second lowest bidder for LNG deal under LNG Mashal Project.

According to SSGC, the consultants appointed for the same had also recommended the '4Gas'-GDF Suez combination. The report gives the impression that it had already been decided to award contract to '4 Gas'-GDF Suez combination without any other party following the recommendations of the consultants.

The SSGC said that '4 Gas' participated in the Expression of Interest (EoI) and qualified at every level. '4 Gas' designated GDF, Mitsubishi, BP and Woodside as its designated suppliers. Price Negotiations Committee held discussions with whoever was willing to discuss supply of LNG to Mashal and choose to recommend the best offer which was that of GDF Suez.

According to SSGC, the consultants appointed for the same had also recommended the 4Gas-GDF Suez combination. "It is submitted that there is nothing illegal about the Mashal Project. This Hon'ble court has no jurisdiction, and there is no law to scrap this project if the ECC has approved it and still wants the same to go ahead with it," the SSGC added. But SSGC also missed the point that then ECC chairman Shaukat Tarin had stated many times that he was kept in the dark by Petroleum Ministry when summary was submitted for approval.

It is also pertinent to mention here that this is not a project which is being constructed by government funds. '4 Gas' is a private company that is making investment in the Mashal Project and taking the risks. According to SSGC, GDF Suez is LNG supplier willing to offer the best terms and conditions available in the market today which are acceptable to the government of Pakistan.

There is no reason to end this project. Submission of incomplete summary by the Petroleum Ministry to ECC or holding back information from ECC is the fault of the ministry and not of the gas suppliers or terminal operators. "In the end it is submitted that Pakistan may need more terminals and hence it has been recommended that ECC should approve future projects like Mashal to meet the increasing demand," the report said, adding that any action taken to jeopardise the Mashal Project is unjustified and wrong for the country.