Govt slashes RLNG price by 13pc

ISLAMABAD: The government of Pakistan on Monday slashed the RLNG (Re-gasified liquefied natural gas) prices by up to 13.1 percent for October 2022, over the previous month, amid the falling British, Dutch, and Asian wholesale gas prices.

According to the Oil and Gas Regulatory Authority (OGRA) notification, LNG for the Sui Northern Gas Pipeline Limited (SNGPL) consumers was reduced by 12.92 percent or $2.1929/MMBtu, while for Sui Southern Gas Company (SSGC) clients, prices have been cut by 13.1 percent (or $2.2896/MMBtu) over the previous month.

The regulator set RLNG prices at $14.785/MMBtu for the consumers of SNGPL and $15.1865/MMBtu for SSGC clients.

It is worth mentioning that Platts JKM (Japan Korea Marker) LNG price has started reducing since August 25, 2022, when its price peaked at $69.955/MMBtu (million metric British thermal units), from Sept 15 price of $53.37, it sharply declined and on Monday it closed at $34.779/MMBtu showing a decline of $18.59 or 34.8 percent in one month. So far from its peak price, the gas price has been reduced to half. JKM is the LNG benchmark price assessment for the spot physical cargoes.

The new notified prices of RLNG also include charges of the LNG terminals, transmission losses, port charges, and margins of the state-run importers — Pakistan State Oil and Pakistan LNG Limited. These new weighted average sale prices of RLNG have been computed based on nine cargoes imported for the month.

For the last four months, the government has sizably reduced the spot purchases of gas. Since August, the government each month procures only one cargo under the spot arrangement through its company Pakistan LNG Limited (PLL).

Under two long-term contracts with Qatar, PSO is procuring LNG at 13.37 percent of Brent and 10.20 percent of Brent respectively. PSO this month procured eight cargoes against the same quantity last month, while only one cargo was by PLL.

It is to be noted that the new prices were lower than the prices in the same month of last year. Last year in October 2021, the RLNG price was $15.7828/MMBtu for SNGPL and $15.528/MMBtu for SSGC consumers.

“In accordance with the federal government decision regarding RLNG allocation, pricing and associated matters and advice from the ministry of energy regarding weighted average sale price dated January 22, 2018, RLNG weighted average sale price for the month of October 2022 has been computed,” OGRA said in a statement.

For the previous month of September, RLNG prices for SNGPL were $16.9779/MMBtu and for SSGC, it was $17.4762/MMBtu. In August 2022, RLNG price for SNGPL was $16.9496/MMBtu and $17.4783/MMBtu for SSGC.

It is to be noted that RLNG is the second major contributor to the country’s power generation after hydroelectric sources. Its price variation also strongly affects the cost of generation, which is subsequently translated into the power tariff for consumers. May 2022 was the month when the government increased RLNG prices by 40 percent to a historic high for SNGPL clients at $21.8317/MMBtu and $23.7873/MMBtu for SSGC.