Ogra cuts RLNG prices by up to 2.48 percent for November

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has cut average sale price of Re-gasified liquefied natural gas (RLNG) by up to 2.48 percent for November 2022 amid a fall in global wholesale gas prices.

The RLNG for the Sui Northern Gas Pipeline Limited (SNGPL) consumers was reduced by 2.34 percent or $0.3463/ mmBtu, while for Sui Southern Gas Company (SSGC) clients, prices have been cut by 2.48 percent (or $0.3799/mmBtu) over the previous month.

The Ogra sets RLNG prices at $14.4387/mmBtu for the consumers of SNGPL and $14.8105/mmBtu for SSGC clients.

The government for the seventh month in a row since May 2022 has reduced the RLNG prices for local consumers in line with the soft global prices.

A combination of full storage, lower demand and mild weather in Europe, among other factors, has softened gas prices in the region.

In May 2022, the RLNG price in the local market was the highest since Pakistan started importing super-chilled fuel in 2015.

The government jacked up RLNG price by 40 percent to a historic high and sat its price for SNGPL at $21.8317/mmBtu and for SSGC at $23.7873 per mmBtu in last May.

Since LNG is pegged to the crude price, so with the oil price movement, the gas price also fluctuates. The Global Benchmark Brent price was over $95/barrel on Friday. Previously, on March 7, it hit US$139.13 a barrel. The all-time of $147.50 was last seen in July 2008.

For Pakistan, 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.

The newly 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 10 cargoes (nine by PSO and one by 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.

For the last five months, the government has significantly 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).

The Asian Platts JKM (Japan Korea Marker) LNG price has also reduced sizable since August 25, 2022, when LNG price peaked at $69.955/mmBtu (million metric British thermal units), from Sept 15 price of $53.37. In November 2022, it closed at $27.545/mmBtu showing a decline of $25.825 or 48.4 percent in less than a month. From its peak price, the gas price has been reduced by three-fifth. JKM is the LNG benchmark price assessment for the spot physical cargoes.

It is to be noted that the new prices were lower than the prices in the same month of last year. Last year in November 2021, the RLNG price was $15.679/mmBtu for SNGPL and $15.4259/mmBtu for SSGC consumers.

For the previous month of October 2022, the government slashed the RLNG price by over 13 percent and set its price for SNGPL at $14.785 and $15.1865/mmBtu for SSGC. For 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.