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December 29, 2020

LNG bids for February 2021: Pakistan secures two bids at higher than diesel price

Top Story

December 29, 2020

ISLAMABAD: Amid the burgeoning gas crisis that will hit the country the most in January 2021 because of failure to procure three LNG cargoes for the first 20 days of next month, Pakistan on Monday received bids from five LNG trading companies for two LNG cargoes for February 2021 at the highest price of up to 32.4888 percent of Brent.

However, Pakistan LNG Limited (PLL) obtained the lowest bids for delivery windows of Feb 15-16 and Feb 23-24, 2021 at price of 20.8483-23.4331 percent of Brent. The LNG trading company SOCAR came up with the lowest bid for February 15-16 at 20.8483, which is equal to $10.5 per MMBTU and ENOC appeared with the lowest bid for the time slot of February 23-24 at 23.4331 percent of Brent (equal to $11.70 per MMBTU). “The government obtained the LNG prices at more than the diesel price as LNG cargoes are already booked across the globe. Had the government arranged the bidding for spot cargos for winter back in August-September 2020, it would have attracted better prices,” independent industrial sources told The News.

More importantly, they said, the Gorgan company of Australia, which produced LNG from 16.5 million tons to up 18 million tons per year, has shut down its operations, creating LNG shortage in the international market and due to LNG shortage, trading companies are unable to submit bids at reasonable prices.

The Pakistan LNG Limited had sought bids for two LNG cargoes and it secured five bids from LNG trading companies out of which Total Company stood disqualified. The remaining four LNG trading companies that qualified for the bids included SOCAR, Trafigura, GUNVOR, and ENOC.

Pakistan received bids for two LNG cargoes for February for 15-16 February and 23-24 February, 2021. The lowest bid for 15-16 February was secured by Pakistan LNG Limited at 23.4331 percent of Brent. But the lowest bid PLL got for 23-24 February stands at 20.8483 percent of Brent. This shows the country would contract two LNG cargoes with lowest bids at price of 20.8483-23.4331 percent of Brent for February.

The LNG trading company, SOCAR, offered its bids at 23.4331 percent of Brent for February 15-16, 2021 and 22.1142 percent of Brent for February 23-24, 2021. However, GUNVOR for February 15-16 offered its bid at 25.5666 percent of Brent and 23.5666 percent of Brent for February 23-24. ECNOC did not submit its bid for February 15-16. However, it offered bid for February 23-24 at 20.8483 percent of Brent. Trafigura submitted two bids for two time slots with highest prices. It deposited its bid at 32.4888 percent of Brent for February 15-16 and 25.9777 percent for February 23-24, 2021.

Meanwhile, Miftah Ismail, PML-N leader and former finance minister, tweeted that GUNVOR, which made a long term deal with PML-N government at 11.6 percent of Brent, has now offered bid for February cargo at 25.6 percent of Brent. And Trafigura, willing to convert PML-N LNG contracts to a fixed rate between $3.7 to $4.7, has now offered bid at 32 percent of Brent. He said that the lowest bid is about twice the long term price obtained by the PML-N government. He insisted that the February cost of LNG for the seven cargoes contracted by PML-N was about $5.8 million per MMBTU. But the two lowest bids received by PTI government were about $9.96 per MMBTU. “And overpayment in just two shipments will be more than $26 million but the cost of shortage created by the PTI government by importing less LNG is even more.”