Saturday July 13, 2024

Pakistan to issue tender for LNG cargo bids for January

Official cites the fact that bids for another cargo for December were at $18.3900 and $19.3900 per MMBtu, which were on higher side

By Our Correspondent
November 20, 2023
The picture shows an LNG cargo ship. — AFP/File
The picture shows an LNG cargo ship. — AFP/File

ISLAMABAD: Keeping in view an expected escalated gas deficit in the first month of 2024 on account of refusal by Azerbaijan’s state-owned firm SOCAR to offer a distressed LNG cargo for the month, Pakistan has decided to issue a tender in the current week, seeking bids from LNG trading companies for one spot LNG cargo required for January.

“Pakistan LNG Limited (PLL) will issue a tender in the current week seeking bids from LNG trading companies for the delivery of one LNG cargo to cope with the expected gas shortage and ensure gas supply to domestic sector for 8 hours at cooking times,” one of the top men of the Energy Ministry told The News.

Citing an earlier case, the official said the government had instructed the PLL to buy the cargo as per the lowest bid it receives in the bidding process, if it is in the range, and then it can ask SOCAR to offer the cargo lower than the price of the lowest bid. If the lowest bid does not fall in the range of PLL, it has the right to reject the bid.

He cited the fact that the bids for another cargo for December were at $18.3900 and $19.3900 per MMBtu, which were on the higher side. So the SOCAR provided the second cargo under the GtG agreement below the price of Vitol, which came up with the lowest bid of $15.95 per MMBtu. “We purchased one cargo from Vitol and the second from SOCAR.”

Asked what penalty Pakistan will seek if SOCAR does not come up with the offer of one distressed cargo to Pakistan in a month, the official said the agreement with SOCAR was loose. If SOCAR does not offer any cargo for any month, Pakistan has no right to penalize it. If it offers, Pakistan has the right to reject it in case the offer is not affordable.

During the previous government’s tenure headed by Shehbaz Sharif, a GtG deal was signed with Azeri firm SOCAR, under which it was bound to provide one LNG cargo a month. Pakistan and Azerbaijan, on July 25, 2023, inked an agreement for one-year, which is also extendable to another one year. Under the agreement, SOCAR Trading Company-UK will offer one LNG cargo 45 days prior to the start of the relevant delivery window, and each offer for the cargo will have a set validity period during which PLL may accept the offer. Before the impending non-provision of LNG cargo, the country was estimated to brave the gas shortfall of 360 million cubic feet per day (MMCFD) in the month of December 2023, which will escalate to 470 MMCFD in January 2024 despite restricting gas availability to the domestic sector just for 8 hours at cooking times only.

Government functionaries had earlier worked out that the gas deficit of 160 MMCFD would stay in December and 170 MMCFD in January in the Sui Southern System. However, in Sui Northern’s system, the gas deficit would be at 200 MMCFD in December and 300 MMCDF in January. The gas shortfall will remain in December at 360 MMCFD, which will increase in January to 470 MMCFD. However, in January, the gas crisis may increase because of the non-availability of LNG cargo from SOCAR.