Pakistan gets costly LNG bids for January

ISLAMABAD: Pakistan on Friday received four international bids, with the lowest at $18.46 per unit, for the supply of a liquefied natural gas (LNG) cargo in the first part of January to meet anticipated peak winter shortage in the residential sector as the gas regulator notified 1.2 per cent increase in the sale price of regasified-LNG (RLNG) for November.

The RLNG sale price for December is estimated to be even higher given the induction of two relatively expensive imported cargoes in the first and second week of next month already contracted by the state-run Pakistan LNG Limited (PLL) that normally procures through tender the commodity from the international spot market.

The difference could be gauged from the fact that supplies available under long-term contracts for eight cargoes currently stand between $10.25 to $10.77 per million British thermal unit (mmBtu) compared to a spot market cargo at $15.97 per mmBtu and another at $19.39 per mmBtu, higher by 49pc and 84pc respectively.

All four bidders were technically qualified as they offered their standard 140,000 cubic meters (about 100 million cubic feet per day) cargo for a delivery window of Jan 8-9 by the given deadline of Nov 24 against an urgent tender issued on Nov 20.

Last month, Pakistan received three bids, after a gap of about a year, for two additional Liquefied Natural Gas (LNG) cargoes for peak winter demand at a significantly higher premium over the prevailing spot market.

The government had accepted the two lowest evaluated bids to minimise winter gas shortage following a decline in domestic gas production and so as to maintain load management at around the same level experienced in winter last year.

LNG trader, Trafigura Pte Ltd -– had come up with two bids against the Dec 7-8 window and Dec 13-14 window at $18.39 per mmBtu and $19.39 per mmBtu. On the other hand, Vitol Bahrain offered a bid price of $15.97 per mmBtu for Dec 7-8 delivery window.

The PLL declared Vitol’s $15.97 per mmBtu bid for Dec 7-8 and Trafigura’s single bid of $19.39 per mmBtu for Dec 13-14 as the lowest evaluated bids.

For reference, the Oil & Gas Regulatory Authority (Ogra) had set basket RLNG transmission stage price for October at $12.32 per mmBtu for SNGPL and $11.90 for SSGCL based on about $10.2 per mmBtu average LNG price delivered ex-ship (DES) for 9 cargoes.

RLNG price hike

Separately, Ogra on Friday notified about 1.2pc increase in the sale price of RLNG for two Sui gas companies for the current month effective Nov 1 owing to system losses touching 14.5pc and higher international prices.

A 3.9pc hike was notified in RLNG prices for October and 3pc for September thanks to a bullish trend on the international market.

According to the notification, the RLNG’s sale price for Lahore-based Sui Northern Gas Pipelines Ltd (SNGPL) has been increased by 1.2pc to $12.47 per mmBtu at transmission stage and to $12.84 per mmBtu for distribution.

Likewise, the price for Karachi-based Sui Southern Gas Company Limited (SSGCL) has been jacked up by 1.17pc to $12.048 per mmBtu at transmission stage and to $14.034 per mmBtu at distribution stage.

The major reason behind lower RLNG prices for SNGPL despite its larger distribution network and greater distance from ports when compared to SSGCL, according to Ogra’s tariff sheet, is the significantly higher system losses of the SSGCL.

Ogra said the SSGCL’s distribution system losses, commonly described as unaccounted for gas (UFG), stood at 14.36pc when compared to 8.23pc of the SNGPL’s network. In contrast, the transmission losses for SSGCL have been assumed at 0.12pc and that of SNGPL at 0.38pc.

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