Vitol Bahrain offers lowest LNG rates for April delivery

KARACHI: Vitol Bahrain has offered the lowest rates for supply of two liquefied natural gas (LNG) cargoes to Pakistan in April, it was learnt on Thursday.

Pakistan LNG Terminal (PLL) issued the tenders for LNG delivery in April 2021. PLL has received lower bids for two LNG cargoes for April in the range of 10.89 percent to 11.05 percent of Brent against the tender that closed on February 4.

With Brent trading at $58.77/barrel, cargo for April 5-6 delivery is priced at $6.49/million metric British thermal unit (MMBtu) – 11.05 percent of Brent, and delivery for April 19-20 is priced at $6.4/mmbtu –10.89 percent of Brent. Four traders submitted the bids including QP Trading, Vitol Bahrain, POSCO International Corporation and PetroChina International. PLL received considerably lower bids for three LNG cargoes for March in the range of 12.7 percent to 13.6 percent of Brent against the tender that closed on January 26. Government issued a tender to import 280,000 cubic meters of liquefied natural gas in December last for delivery in April from the spot market, acting promptly after a cold-shoulder response to the delayed tenders for January cargoes. PLL, a subsidiary of Government Holdings (Pvt) Limited, floated the tender to import 140,000 cubic meters each of LNG. An advertisement by PLL said the country is seeking cargoes – each of 140,000 cubic metres in two delivery windows. January 29 is the deadline for submission of bids. The first LNG cargo will be delivered on April 6 and second on April 19-20 on a delivered ex-ship basis, according to the PLL. In mid of November, PLL had invited bids for six LNG cargoes for delivery in January. It didn’t get a single bid for three cargoes to be delivered in the first half of January and was offered highest price for the second half of the month.

PLL received these all-time highest bids up to 32.48 percent of Brent crude. The lowest bids for the delivery windows of February 2021 were nearly at 21 percent to 23 percent of Brent, as received by the PLL on December 28. The gap in demand and supply of gas is expected to spiral beyond two billion cubic feet per day owing to rapid urbanisation, China-Pakistan Economic Corridor projects, and industrial growth. “The ongoing gas crisis and much propagated mismanagement in LNG procurement warrant urgent commercial import of LNG by private parties. Government needs to remove all the hurdles and fast track regulatory formalities to enable smooth commercial import of LNG,” an industry official said. LNG imports by private parties would ensure sufficient supplies as well as relax state entities of cumbersome computations of demand forecasts and arranging spot purchases. A number of business houses and trade associations such as compressed natural gas associations are eager to import their own gas once the bureaucratic hurdles are removed.

Meanwhile, Oil and Gas Regulatory Authority determined the distribution price of RLNG through Sui Northern system at $9.61/mmbtu, and $9.357/mmbtu for distribution of RLNG through Sui Southern system.