Pakistan cuts domestic RLNG price by up to 6 cents for April

ISLAMABAD: Pakistan on Thursday reduced the average sale price of re-gasified liquefied natural gas (RLNG) by as much as six cents month-on-month for April 2023 due to a decline in global wholesale gas prices.

The prices of super-cooled imported gas have been moderately reduced for the fourth straight month, providing some relief on the escalating cost of energy. In January, prices were lowered by up to 2.2 percent, followed by a reduction of 4.3 percent in February and 3.16 percent in March.

RLNG price for the Sui Northern Gas Pipelines Limited (SNGPL) consumers was reduced by $0.0626/mmBtu, while for Sui Southern Gas Company (SSGC) clients, prices have been cut by $0.031/mmBtu) over the previous month (March 2023).

The Oil and Gas Regulatory Authority (OGRA) issued its determined RLNG weighted average sale provisional price notice on Thursday. It set RLNG prices at $13.2316/mmBtu for the consumers of SNGPL and $13.48/mmBtu for SSGC clients.

The Asian Platts JKM (Japan Korea Marker) LNG price fell to almost a year and a half low on Wednesday to $12.625/mmBtu. In mid-July 2021, the LNG price was at the same level. On August 25, 2022, the LNG price peaked at $69.955/mmBtu and since then, its price has reduced by $57.33/mmBtu or 81.95 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 $12.625/mmBtu.

Because of a fall in wholesale gas prices in the global market, the prices in the region were also reduced. Pakistan is meeting nearly a third of its energy demands through the imports of this super-chilled fuel.

The country has been reducing RLNG prices for local consumers since May 2022, except for a few months. According to the data, in May 2022, the 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.

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.

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.

It is to be noted that under two long-term contracts with Qatar, PSO is procuring LNG at 13.37 percent of Brent and 10.20 percent of Brent respectively. Six 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. However, for March and April, it imported one cargo each.

The new prices were lower for SNGPL and SSGC when compared with the prices in the same month of last year. Last year in April 2022, the RLNG price was $15.6165/mmBtu for SNGPL and $16.9101/mmBtu for SSGC consumers.

Pakistan depends heavily on imported LNG to fulfill its energy needs due to limited domestic natural gas reserves. The import of LNG has played a crucial role in bridging the gap between the demand and supply of natural gas in the country. LNG is a significant source of energy for Pakistan, catering to various sectors, including power generation, industry, and transportation.

RLNG prices in Pakistan may not remain stable over time and can be subject to fluctuations due to various factors such as global demand and supply, transportation costs, and geopolitical events. Despite these uncertainties, Pakistan continues to rely on LNG imports to meet its energy needs and overcome its limited domestic natural gas reserves.