PSO seeks spot LNG in first purchase in 3 years

SINGAPORE: Pakistan State Oil (PSO) is seeking a liquefied natural gas (LNG) cargo for delivery in April through a tender after a five-year contract with commodity trader Gunvor expired in December, three industry sources told Reuters.

If awarded, this will be the state-owned company’s first spot purchase in about three years, two of the sources said. PSO last sought spot cargoes in October, for delivery over November to January, but did not award the tender as demand had dropped amid the coronavirus pandemic and a surge in hydropower generation, one of the sources said.

“With summer approaching, which is when power generation demand usually increases, (PSO) will likely need more LNG,” the source said, adding that the company will probably regularly issue tenders seeking one to three LNG cargoes a month going forward.

The company has no immediate plans to sign another mid-term contract though there are discussions in place with potential suppliers, and plans to focus on the spot market instead, the source said.

“There’s been a lot of turbulence in (prices) recently, so PSO is a bit cautious of signing longer-term deals,” the source added.

Asian spot prices LNG-AS spiked to a record high of $32.50 per million British thermal units (mmBtu) last month, after dropping to a record low of below $2 per mmbtu last May. Prices have dropped to below $8 per mmbtu this week.

In the latest tender, PSO is seeking the LNG cargo for delivery over April 15 to 16, according to a document seen by Reuters. The tender closes on March 2.

After PSO’s five year-term contract with Gunvor - which was awarded through a tender - expired in December, the Pakistani firm received extra volumes from its long-term supplier Qatar Petroleum for delivery over January to March, two sources said.

Gunvor declined to comment, while PSO did not immediately reply to an email requesting comment.

Pakistan LNG (PLL) is another state-owned importer that imports LNG to the country. Vitol Bahrain has offered the lowest rates for supply of two liquefied natural gas cargoes to Pakistan in April against PPL tender.

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.