ADB shows interest in construction of Strategic Underground Gas Storages

ISLAMABAD-Asian Development Bank has shown interest in the construction of Strategic Underground Gas Storages (SUGSs). Work on SUGSs is likely to commence in August 2021.

The Strategic Underground Gas Storages (SUGSs) along with other matters of the oil and gas sector was discussed by Nadeem Babar, Special Assistant to Prime Minister on Petroleum, in a virtual meeting with ADB team in Manila together with Ms Xiaohong Yang, Country Director Asian Development Bank, and their energy team here Tuesday. The meeting was aimed to discuss progress of reform programme in petroleum sector of Pakistan. 

During the meeting, the SAPM appreciated the support of ADB for hiring of consultant & study of Strategic Underground Gas Storages project. He appreciated the interest of ADB in funding the construction of the project. Nadeem Babar underlined the importance of the underground gas storage facilities & said that this project would enhance country’s capability to import gas and ensure sustainable economic growth.

Strategic Underground Gas Storage (SUGS) project will build emergency stockpiles of gas to deal with supply disruption amid growing domestic and commercial demand particularly in winter season. The ADB had agreed to provide grant of $575,000 for the technical study of the Strategic Underground Gas Storages (SUGSs) in Pakistan. A consortium of European oil and gas equipment companies was hired for conducting the study of the project. The company has already submitted the initial and midterm reports, while the final report will be submitted in May 2021, a source privy to the development told The Nation. After the feasibility study the government wants to perform the ground-breaking of the Strategic Underground Gas Storages during next financial year, most probably in August 2021, said the source.

In opening remarks, the SAPM thanked and appreciated ADB for support and cooperation for energy sector reforms in Pakistan. He said that the government had made significant progress in every agenda item of energy reforms despite challenges caused by the COVID-19 Pandemic.

SAPM apprised the forum that third-party access policy has been fully implemented. He said that TPA is also available for pipelines and government had advertised the unused capacity of terminals for private companies enabling them to bring & sell the LNG to consumers of their own choice by this April. 

Babar highlighted the exploration & production (E&P) activities in the country and said that first bidding round for 15 onshore oil & gas blocks had been completed. He said that the minimum investment carried out by the E&P companies for studies & investigations in these Blocks will be over USD 71 million in three years which will be followed by the development program in the identified blocks running into hundreds of millions of dollars in located areas. He noted that the second & third round blocks bidding would be completed by end of this year. 

The SAPM informed the forum that government had prepared framework of regulatory authority for upstream petroleum sector, and it would be put in place after approval by Council of Common Interests (CCI) and necessary legislation.

Apprising the participants on Unaccounted Gas Factor (UFG), SAPM said that both Sui companies had made a significant progress on UFG Reduction Plan.  

At conclusion of the meeting, Ms Xiaohong Yang, Country Director ADB, lauded the efforts of the Government of Pakistan for bringing reforms in the energy sector. She hoped that the Bank would continue the cooperation in field of energy.