Sunday April 21, 2024

PSO invites bids for 2 LNG spot cargoes for May deliveries

By Javed Mirza
March 24, 2021

KARACHI: Pakistan State Oil (PSO) has invited bids for two cargoes of liquefied natural gas (LNG) to be delivered in May amid higher anticipated demand of fuel products in summers.

The first delivery window is May 20-21 and second delivery window is May 25-26, 2021 on delivered ex ship (DES) basis.

Analysts anticipate higher demand of gas owing to increasing import-export activities, higher vehicle sales, and demand from the power sector.

A day earlier, Pakistan LNG Limited (PLL) sought eight LNG import cargoes at fixed dollar price and tight tendering schedule for delivery between April 30 and June 28 Earlier, PLL used to evaluate each offer based on the lowest percentage of Brent.

PLL invited bids for delivery of eight cargoes in May and June and set the deadline of March 30 for submitting the bid. The company would also be reducing the time between bid evaluation and award of the contracts.

Except for a few emergency tenders a couple of months ago, the PLL had always sought bids as percentage of Brent crude price and with longer terms for bidding, bid evaluation, award of contract and holding bidders for longer period.

Late last month, the federal cabinet granted partial exemption to PLL from Rule-35 of the Public Procurement Regulatory Authority rules by relaxing the period between announcement of evaluation report and award of tenders for spot cargoes.

More than half of Pakistan’s total LNG imports are based on long-term contracts while the rest of the required quantities are met through spot tenders.

Global demand for liquefied natural gas will grow to 700 million tons annually by 2040 from 360 million tons last year, Shell said in the LNG outlook 2021 report. As much as 75 percent of this demand growth will come from one regional market, Asia.

Asian economies have been a key market for liquefied natural gas for years now. The fuel has been gaining growing prominence as a cleaner and cost-effective alternative to coal. Asian spot liquefied natural gas prices have been almost steady this week.

The average LNG price for May delivery into Northeast Asia LNG-AS was estimated at about $6.55 per million British thermal units, in line with the previous week.