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Sunday December 05, 2021

Expensive bids received for urgent LNG tender for January

December 15, 2020

ISLAMABAD: The government continues to find itself in hot waters in terms of LNG availability in the first 20 days of January 2021, as by Monday the LNG trading companies offered bids up to $19.8 per MMBTU equivalent to 40 percent of Brent against its urgent tenders floated on Friday last.

After failure to attract bids from international companies for the first 20 days of January, the Pakistan LNG Limited (PPL) floated urgent tenders on Friday last seeking 1,140 GCV LNG from Oman, Abu Dhabi and Nigeria along with two-day window without any slope but with price in US dollars. “The lowest bids that the government received are at 26-30 percent of Brent per MMBTU in dollars, with stronger chances that the government may reject them.” Interestingly, Qatar Petroleum that had won the bids for later part of January 2021, did not participate in Monday’s bidding process besides Gunvor and ENI, which also didn’t submit any bid.

But another problem has arisen due to the delay of LNG cargo from Nigeria, due on December 18, by four days, official sources confirmed that the particular cargo management conveyed to Pakistan that due to subversive firing at the loading port, the cargo was facing delay.

Due to this, there is likely to be a surge in the gas crisis during these particular days when the shortage of of gas in Punjab and KPK would rise to 150mmcfd. To what can further add to the complex situation, the 20mmcfd extra gas from MOL through pipeline has been delayed due to delay in connection, Sui Northern system has faced a shortfall of 80-90 mmcfd gas(20 per cent). The Petroleum Ministry’s spokesman opted to remain silent when The News contacted him over the response of LNG suppliers against its urgent tender initiative and over the delay of LNG cargo which was due to arrive on December 18, 2020.

Regarding the LNG suppliers response, the official said, due to lack of response from the LNG suppliers for three weeks till January 18 after the bids opened on Dec 10, the government floated tenders for three LNG cargoes but only received bids for two vessels, one would arrive by January 8-9 2021 and another for 17-18 January, 2021. No bids were received for 12-13 January,2021. On the other hand, Pakistan LNG Limited (PLL) had received bids at exorbitant rates for 8-9 January 2021 at US$15.28 per MMBTU equal to 30 percent of the Brent and for January 17-18 it received the bid at US$12.95 per MMBTU equal to 26 percent of the Brent. Both the prices are unsustainable for an economy like Pakistan.

Three other LNG trading companies that participated in the bids included DXT, EDNOC and Tarfigura. For delivering LNG cargo on Jan 8-9, DXT offered bids at US$15.28 per MMBTU equal to 30 percent of the Brent. Whereas, Trafigura submitted its two bids one for 8-9 January slot at US$19.8 per MMBTU (40 percent of Brent) and other one for 17-18 January slot at $15.95 per MMBTU (31 percent of the Brent). EDNOC gave the lowest for January 17-18 at US$12.95 (26% of Brent).