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Govt slashes RLNG prices up to 3.16pc for March 2023

By Israr Khan
March 22, 2023

ISLAMABAD: The government has cut the average sale price of Re-gasified liquefied natural gas (RLNG) by up to 3.16 percent for March 2023 in a move designed to give relief to consumers as international gas rates fall.

RLNG price for the Sui Northern Gas Pipelines Limited (SNGPL) consumers was reduced by 2.99 percent or $0.41/mmBtu, while for Sui Southern Gas Company (SSGC) clients, prices have been cut by 3.17 percent (or $0.442/mmBtu) over the previous month (February 2023).

The Oil and Gas Regulatory Authority (OGRA) issued its determined RLNG weighted average sale provisional price notice on Tuesday. It set RLNG prices at $13.294/mmBtu for the consumers of SNGPL and $13.51/mmBtu for SSGC clients.

It is important to note that the Asian Platts JKM (Japan Korea Marker) LNG price fell to over one-and-a-half-year low on March 22, 2023 to $13.155/mmBtu. This level was last seen in mid-July 2021. Likewise, since August 25, 2022, (when the LNG price peaked at $69.955/mmBtu), its price has reduced by $56.8/mmBtu or 81.2 percent. JKM is the LNG benchmark price assessment for the spot physical cargoes. Since January 1, 2023, LNG price dropped from $29.345/mmBtu to $13.51/mmBtu.

Amid soft global wholesale gas prices, OGRA has cut the average sale price of RLNG, in February by 4.3 percent and now for March, it was reduced by over three percent.

It is to be noted that LNG is pegged to the price of crude. Gas price also fluctuates with crude price movement. RLNG prices can be influenced by various other factors, such as global demand and supply, transportation costs, and geopolitical events. Therefore, RLNG prices in Pakistan, as in any other country, can be subject to fluctuations and may not remain stable over time.

Pakistan is meeting nearly a third of its energy demands through the imports of this super-chilled fuel. Since May 2022, the government has been reducing the RLNG prices for local consumers. According to the data, in May 2022, RLNG price in the local market was the highest ($21.8317/mmBtu for SNGPL and $23.7873/mmBtu for SSGC) since Pakistan started importing LNG in 2015.

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 (PSO) and Pakistan LNG Limited (PLL). These new weighted average sale prices of RLNG have been computed based on nine cargoes imported by PSO, while PLL imported one cargo of this super-chilled gas.

Under two long-term contracts with Qatar, PSO is procuring LNG at 13.37 percent of Brent and 10.20 percent of Brent respectively. Five cargos were procured at a slope of 13.37 percent of Brent while three at 10.2 percent. For the last eight months, PLL has procured one cargo per month, except for February when it made no procurement.

The newly announced prices were lower for SNGPL and higher for SSGC when compared with the prices in the same month of last year. Last year in March 2022, the RLNG price was $15.813/mmBtu for SNGPL and $17.115/mmBtu for SSGC consumers.

LNG is an important source of energy for Pakistan, as it has limited domestic natural gas reserves and relies heavily on imported LNG to meet its energy needs.

The import of LNG has helped Pakistan bridge the gap between demand and supply of natural gas, and to meet the energy needs of various sectors such as power generation, industry, and transportation.