Pakistan secures LNG spot cargoes anticipating winter crunch

LAHORE: Pakistan on Friday secured two spot liquefied natural gas (LNG) cargoes on much competitive rates to counter possible negative impacts of two cancelled cargoes scheduled for November.

In response to tender floated by Pakistan LNG Ltd (PLL), three companies submitted bids to supply LNG for two different windows. VITOL BAHRAIN pitched the lowest bid of $29.8966/mmbtu for November 19-20 window, while the other bidder for the same window was from QP Trading at $30.0500/mmbtu.

For the second window, QP trading submitted lowest bid of $30.65/mmbtu for the period of November 26-27. Other bidders from same window were Total Energies gas and power at $30.96/mmbtu and Vitol Bahrain at $31.0566/mmbtu

The price attracted by PLL has been competitive in the sense that it is lower than the prevalent spot LNG price of $31/mmbtu in the Asian market. Such striking of deal would greatly help in meeting demand in the potential crunch winter period as well.

Pakistan has to issue an emergency LNG purchase tender to cope with sudden supply disruptions following backing out of suppliers under LT deal. Pakistan LNG seeks two cargoes for November under unusually prompt timeframe to offset negative impact of cancelled deliveries. This extreme step of exploring boiling LNG spot market has been considered as a setback for many, as federal government managed to secure additional cargoes under the LT deal to ward off exorbitant cost of spot purchases as well as meeting dearth of natural gas during peak winter load.

According to reports, Pakistan is going to face gas crisis by mid November on account of the backing out by two LNG trading companies, GUNVOR and ENI, on their long-term cargoes. Under the term agreements with PLL, Italy-based ENI was to deliver the LNG cargo on November 26-27 and Singapore-GUNVOR on November 19-20, but both informed Pakistan that they would not deliver the cargo on the said dates. The refusal of both companies was blamed on record high price being offered in the spot LNG market. The supplier cancelled the cargo in the wake of commercial considerations and logistical issues, so it is not possible for it to deliver the term cargo in November.

Meanwhile, Hammad Azhar, Federal Minister for Energy was hopeful of fully meeting winter natural gas demand through purchases under long-term deals and spot purchases as and when required. He announced that with a view to meeting demand in the potential crunch winter period we have procured around 80-90 percent of our LNG demand already, which is better than many countries. It may be noted that PLL, a subsidiary of Government Holdings (Private) Limited (GHPL) invited bids on November 1, 2021 from reputed international suppliers for the supply of two LNG cargoes on a Delivered Ex-Ship (DES) basis at Port Qasim, Karachi, Pakistan for the delivery windows November 19-20 and November 26-27, 2021.