Trump-Backed Group Plans $4.4 Billion LNG Investment After Qatar’s LNG Exit

For context, a consortium of US-linked firms is proposing an investment of up to $4.4 billion in an integrated liquefied natural gas (LNG) project in Pakistan, covering imports, storage, regasification, gas transmission and sales to substantial consumers.

Key points

• The consortium includes Global Vision Energy Partners (GVEP) and Khanjee Holdings, along with strategic co-investors from other countries and Luxembourg-based General Mediterranean Holding.
• The second phase would involve a 1, 100km pipeline, with a diameter of 42 to 48 inches, to transport gas to upcountry markets.
• The Administration facilitation has reportedly been conveyed through the Ministry of Maritime Affairs and the Petroleum Division of the Ministry of Energy.
• The proposed rates are projected to decline to $2.20 per mmBtu for terminal and storage services and $0.92 per mmBtu for transmission thereafter.
• The consortium is seeking up to 10 percent equity participation from local investors, with indicative investments starting at $50 million per investor.

Notably, the proposal, backed by the Trump administration, comes after Energas, an earlier contender comprising the Lucky Group and QatarEnergy, abandoned a similar project, citing changes in Pakistan's energy policies and unresolved policy and fiscal problems.

In practice, the consortium includes Global Vision Energy Partners (GVEP) and Khanjee Holdings, along with strategic co-investors from other countries and Luxembourg-based General Mediterranean Holding. The sponsors have reportedly obtained consent from the Port Qasim Authority for the proposed site and submitted an application to the Oil and Gas Regulatory Authority (Ogra) for a provisional licence. Oil Probable to Cross $120 Again: Here's Why. Project to Include LNG Terminal and 1, 100km Pipeline.

In practice, the project is planned in two phases. The first phase involves an LNG terminal and storage facility at Port Qasim, featuring four tanks with a combined capacity of 560, 000 cubic metres. The facility is projected to handle around 35 billion cubic feet (BCF) of LNG annually and is estimated to cost $1.7 billion.

For context, the second phase would involve a 1, 100km pipeline, with a diameter of 42 to 48 inches, to transport gas to upcountry markets. The pipeline would have a capacity of approximately 1.2 billion cubic feet per day (BCFD), taking the total project cost to $4.4 billion.

Notably, the terminal is projected to handle approximately 35.6 BCF of LNG annually, based on three inventory turnover cycles a year. Each cycle would involve around 11.9 BCF of LNG. Pakistan-Bound LNG Tanker Hit Near Hormuz by Unknown Attacker. Project Could Establish Regional LNG Trading Hub.

For context, the sponsors intend to develop the venture as a merchant infrastructure platform, serving Pakistan's domestic regasification needs while creating a physical LNG storage and trading hub for suppliers from the United States and the Middle East.

Pakistan at present has no LNG storage facilities, leaving its regasified LNG supplies dependent on international imports and their associated supply chains and costs.

In practice, the consortium has additionally highlighted Port Qasim's existing port infrastructure and marine access for LNG carriers. Its location outside the Strait of Hormuz, a major global energy shipping chokepoint, is another factor behind the proposed site.

Notably, the project would be developed, owned and operated by a special purpose vehicle (SPV), a separate legal entity established to hold the project's assets and liabilities and isolate financial risks. The proposed model would not rely on a single government-backed offtake arrangement. New Gas Connections to Stay Banned Indefinitely. US Financing Backing and Local Investment.

For context, the project has been approved for consideration under the US Trade and Development Agency's project preparation programme. It may additionally receive partial financing from the US Development Finance Corporation, backed by export credit guarantees from the US Export-Import Bank for technology, equipment and services.

Meanwhile, the consortium is seeking up to 10 percent equity participation from local investors, with indicative investments starting at $50 million per investor. It additionally expects to attract strategic co-investors, including global energy and infrastructure funds and institutional investors such as Grey Rock Investment Partners, Kohlberg Kravis Roberts & Co, Blackstone, Saudi Arabia's Public Investment Fund and the Kuwait Investment Authority.

Nevertheless, their participation remains subject to due diligence, investment approvals and definitive agreements. No binding equity commitments have been confirmed so far.

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In practice, the proposed financing structure envisages a 70: 30 debt-to-equity ratio. GVEP would hold a 26 percent stake, General Mediterranean Holding 24 percent, and Khanjee Holdings and strategic co-investors 20 percent each. Local investors would hold the remaining 10 percent in the first phase, estimated to cost $1.32 billion based on the proposed financing ratio. Proposed LNG Tariffs and Commercial Structure.

While reserving remaining capacity for merchant activities, the consortium intends to combine long-term tolling and storage agreements, transshipment arrangements and take-or-pay commitments where appropriate.

While the separate transmission tariff is estimated at $1.91 per mmBtu for the first 10 years, the proposed tariff for terminal and storage services is $4.93 per million British thermal units (mmBtu).

In practice, the proposed rates are projected to decline to $2.20 per mmBtu for terminal and storage services and $0.92 per mmBtu for transmission thereafter. While other commercial services, including storage, tolling and transshipment, would be priced on market-based terms, re-gasification tariffs for the domestic market would be submitted to Ogra for approval.

For context, the final project cost will be determined after engineering, procurement and construction contracts and other construction and supply agreements are executed.

Meanwhile, the Administration facilitation has reportedly been conveyed through the Ministry of Maritime Affairs and the Petroleum Division of the Ministry of Energy. Stay Connected with ProPakistani.

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For now, trump-Backed Group Plans $4.4 Billion LNG Investment After Qatar's LNG Exit remains the part of the story worth watching, and further updates are likely as more details are confirmed.