Thursday September 28, 2023

RLNG prices for August reduced by up to 2.92pc MoM

August 16, 2022

ISLAMABAD: The government on Monday revised down the prices of RLNG (re-gasified liquefied natural gas) by up to 2.92 percent month-on-month for August 2022, amid a minute decline in international crude prices and low procurement of pricey Spot LNG cargo.

Last month, the government did not make a spot purchase, however, this month only one such cargo was procured. The RLNG will cost consumers of public gas utilities 2.92 percent less in August 2022 than it did in June for SNGPL consumers and 2.77 percent less for SSGC clients, an Oil and Gas Regulatory Authority (ORGA) notification said.

The regulator set RLNG prices at $16.9496/million metric British thermal units (MMBtu) for the consumers of SNGPL and $17.4783/MMBtu for SSGC. During the month, only seven LNG cargoes were imported (six by PSO and one by PLL).

Under two long-term contracts with Qatar, PSO is procuring LNG at 13.37 percent of Brent and 10.20 percent of Brent respectively, while Pakistan LNG Limited (PLL) procures the gas mostly under spot arrangement.

In July, the RLNG price for SNGPL was $17.4603/mmbtu and $17.9575/mmBtu for SSGC. In June, RLNG price for SNGPL was $20.7691/mmBtu and $22.6076/mmBtu for SSGC. During July, the government did not procure LNG from the spot market, however, PSO procured eight cargoes under Qatar contracts.

It is to be noted that in May 2022, the government had increased RLNG prices by 40 percent to a historic high for SNGPL clients at $21.8317/mmBtu and $23.7873/mmBtu for SSGC. Now, for August 2022, in absolute terms, the RLNG’s latest price has been reduced by $0.5107/mmBtu for SNGP and 0.4792/mmBtu for SSGC.

“In accordance with the federal government decision regarding RLNG allocation, pricing and associated matters and advice from the ministry of energy regarding weighted average sale price dated January 22, 2018, RLNG weighted average sale price for the month of August 2022 has been computed,” OGRA said in a statement.

These new prices are almost 35 percent more compared to the prices of this fuel in the same month of the last year (Aug 2021). In one year, the sale price of RLNG for SNGPL customers increased 28.2 percent, and for SSGC, it increased 34.9 percent compared to its prices last year.

In August 2021, the prices for SNGPL were $13.2175/mmBtu and for SSGC, it was $12.9549/mmBtu. It is to be noted that RLNG is the second major contributor to the country’s power generation after hydroelectric sources. Its price variation also strongly affects the cost of generation, which issubsequently translated into the power tariff for consumers.

The new notified prices of RLNG also include charges of the LNG terminals, transmission losses, port charges, and margins of the state-run importers – Pakistan State Oil and Pakistan LNG Limited. These new weighted average sale prices of RLNG have been computed based on seven cargoes imported for the month, including six shipments by PSO and only one by PLL.

Production of indigenous gas stands at four billion cubic feet per day (bcfd) against the total demand of nearly seven bcfd. The country is currently importing LNG equivalent to 1.2 bcfd to meet the local requirements. There are presently two re-gasified liquefied natural gas terminals operating in the country.

The government last week also decided to supply RLNG at $9 per mmBtu without any disparity and all-inclusive to zero-rated five export-oriented sectors across the country for existing connections till the end-June 2023.