A statement said Dana Gas, Single Buoy Moorings (SBM) and U.S.-based Granada Group signed the memorandum of understanding for the LNG terminal at Port Qasim, Karachi, which would have an initial capacity of 3.5 million tonnes a year.

It said the consortium was holding talks with major LNG producers, but did not name them.

‘Dana Gas has the objective to develop a network of LNG terminals mainly in the MENA (Middle East and North Africa) region and to tap into the LNG value chain including LNG trading activities,’ the statement said.

It said Dana Gas signed a cooperation agreement with SBM, under which the United Arab Emirates firm would focus on LNG marketing activities and SBM on the supply and operation of LNG floating storage and regasification terminals.

‘The newly formed alliance will initially target LNG terminal projects in Pakistan, Lebanon and Kuwait,’ it said.

Pakistan, which has its own gas fields, expects to have a supply deficit as soon as 2008. Plans to import LNG and pipeline gas from Iran and Turkmenistan are based on projected gas demand growth of about 6.5 percent a year.

Industry sources in Pakistan have said they expected the LNG terminal to be completed around 2010.

Dana Gas was set up to deliver gas to utilities and industrial users in the UAE. With an agreement to import Iranian natural gas delayed, Dana Gas’ second-quarter earnings came entirely from investments and financing activity.

The firm said it aims to invest in the upstream gas industry in the Middle East, the transmission and distribution sector and gas-related industries such as petrochemicals.

The statement said natural gas consumption in the Middle East has been growing by an average 5.9 percent a year in the last 10 years, driven mostly by demand for power generation due to growing populations and an industrialisation drive.