close
Advertisement
Can't connect right now! retry

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!

add The News to homescreen

tap to bring up your browser menu and select 'Add to homescreen' to pin the The News web app

Got it!
December 1, 2020

LNG spot buying preferred over long-term contracts

Business

December 1, 2020

KARACHI: Pakistan continued spot buying of liquefied natural gas (LNG) from international markets with the government linking long-term agreements with a consistent demand in the market, it was learnt on Monday.

The government invited bids for two more LNG cargoes for February, according to a document. Only last month it issued tenders of six LNG cargoes to be delivered in January.

Pakistan LNG Limited (PLL) said the country is seeking cargoes – each of 140,000 cubic metres in two delivery windows. The deadline for submission of bids is December 28. The first LNG cargo will be delivered on 15-16 February and second on 23-24 February on a delivered ex-ship basis, according to the PLL. Two cargoes for February are much less than six cargoes sought for December and January.

The country has resumed spot buying of LNG from the international market after six-month pause as energy demand posted a v-shaped recovery with easing lockdown related to coronavirus from July. State-run PLL had invited bids for supply of three LNG cargoes – 140,000 cubic meters each – to be delivered in August and September.

December and January usually see the largest monthly spike in demand for gas and yet this year the demand-supply shortfall will be greater on the back of higher consumption and diminishing indigenous supply, according to informed people.

Pakistan has long-term LNG agreements in place, including one with Qatar, but it has been active on the spot market. LNG contributes 22 percent in the country’s energy mix, while its share in energy imports stands at 24 percent.

Energy ministry said the government would sign LNG import contracts only when there is a sufficient demand from buyers in the country in a bid to avoid any other circular debt crisis. It needs to sell out 800 million metric cubic feet per day (mmcfd) every month “before we can commit to more long-term contracts,” the petroleum division said in a statement,” the ministry said in a statement. “When the projections will show that the country has firm demand exceeding 800 mmcfd on a consistent basis, only then the government will consider signing more long-term agreements. Otherwise, it will be releasing LNG in the air.”

Therefore, the government has already permitted private sector to buy imported LNG according to their consumption requirement with no financial commitment on the part of government. Two private companies are moving forward and one is likely to break ground within two months, according to the ministry.