Pakistan to offer two LNG tenders by October, working on government deal

ISLAMABAD: Pakistan plans to issue two international tenders for 750,000 tonnes per year of liquefied natural gas (LNG) each in the coming month, the head of the country's state-owned LNG company said, as the South Asian nation seeks to alleviate chronic energy shortfalls.

Pakistan's economy has long been hamstrung by crippling energy shortages, with Prime Minister Nawaz Sharif under pressure to end blackouts before the 2018 general election. Adnan Gilani, head of Pakistan LNG, a new state-owned company set up to manage procurement and supply of gas, said firms from Australia, Malaysia, Russia, Qatar, the United States and Azerbaijan are interested in the two tenders.

"We had over half a dozen participants bidding in our last international tender and expect more than twice that number this time around," Gilani told Reuters on Monday. Gilani said the specifics of the tenders are being finalised, but they will probably be a 5-year and a 15-year offer, as well as a possible spot purchase.

Pakistan has ploughed billions of dollars into LNG infrastructure, including construction of a second LNG import terminal and pipelines linking the port city of Karachi with Lahore in the Punjab region, the nation's industrial heartland.

Pakistan has been earmarked as an up-and-coming demand outlet for the oversupplied LNG market. Qatar, which signed two term supply contracts with Pakistan this year, is the country's largest LNG supplier.

Pakistan is heavily reliant on expensive furnace oil imports to plug energy shortfalls and officials expect the LNG imports to lower the cost of energy in a nation of 190 million people. Gilani said that Pakistan would also negotiate separate government-to-government LNG deals.

"We have interest from more than five sovereigns to supply LNG to Pakistan," he said. Gilani said an impending glut in global LNG production means Pakistan expects bids by international companies to be far below those offered by trading house Gunvor, which won the last international tender.

Though Gilani would not discuss financial details, traders say Gunvor offered a delivered price of 13.37 percent of a barrel of crude oil for the 60-cargo supply tender between 2016 and 2020. "We expect a substantial price decline because of the global supply glut and new production coming on line in the short term," he said.