Looming LNG shortage

Category: General

In a major setback to gas-starved consumers, Pakistan could not get even a single bid for three LNG (liquefied natural gas) cargoes meant for the first half of January and attracted the highest price for the second half of the month mainly because of delayed tenders amid rising international prices. Pakistan LNG Limited (PLL) had issued tenders for six cargoes for delivery between Jan 8 and Feb 1. In response, no supplier or trader bid for the first three slots between Jan 8 and Jan 18. This is the first time that the country did not get a bid since it entered the spot market five years ago.  For the fourth January 20-21 window, only two bids were received with potentially unviable prices. The lowest bid of 17.32 per cent of Brent price for this slot came from a surprise first-time bidder, Qatar Gas, which is not in the spot market. Qatar Gas also happened to be the only bidder for the fifth cargo for Jan 26-27 window and at the same price — 17.32pc of Brent. This is also for the first time that a lowest bid is more than 17pc, except the very first cargo that was purchased in 2015 for terminal testing.  The sixth and last cargo for Jan 29-Feb 1 received six bids and one was disqualified. The lowest bid of 15.32pc of Brent again came from Qatar Gas while all others were well above 20.48pc of Brent. One of the regular suppliers, Trafigura, offered the highest price of 33.94pc of Brent. These prices are again unprecedented. Unfortunately, the LNG price above 17pc of Brent becomes unviable and costlier than high speed diesel, crude and furnace oil. This means power plants should be run on furnace oil instead of LNG and if the former is available at local refineries it also saves foreign exchange.  It is first time country has not received a bid since it entered spot market five years ago

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