No decision on buying one LNG cargo for Jan 2025 on SNGPL demand

ISLAMABAD: The Board of Pakistan LNG Limited (PLL) met here on Sunday but it could not come up with any decision if it should purchase one LNG cargo from SOCAR of Azerbaijan for January 2025 or not.

The SNGPL had placed the request for one LNG cargo for the said month as it deems the gas demand will increase. “The PPL board met and carried out the process of due diligence of the SNGPL demand, but did not come up with any decision. This is because there are many ifs and buts in the demand projections shared by the gas companies,” a senior official privy to the development told The News.

In the ongoing month, 12 LNG cargoes, the official said, will be imported and 11 in the next month of January to cater to the energy demands of the country during the peak winter months. SNGPL wants the government to import one more cargo for January, 2025.

“The spot price of LNG in the international market because of winter season has surged over $15 per MMBTU while Pakistan has arranged 12 cargoes under term agreements, 10 from Qatar and two from ENI. In September, PLL has shifted its one cargo for the month of December, 2024. Likewise, for January, 11 LNG cargoes have been arranged through rescheduling allowed in the term agreements.”

The current landed cost of LNG cargoes at the port under term agreements stands close to $10 per MMBTU, but the current spot price of LNG has swelled to $15 per MMBTU, so the board is shy of importing the LNG cargo. The PPL and SOCAR have already signed the agreement under which Pakistan can purchase a distressed cargo a month if it places the demand. However, in the past, the government used to seek bids and the lowest bid was used to be shared with SOCAR, and then it used to offer one cent lower than the lowest bid and Pakistan purchased the said cargo.

However, the bidders got agitated when they came to know that the government used the lowest bid to get the LNG cargo from SOCAR and they had threatened that they would not participate in the bidding process for spot LNG cargoes.

Now the government has no mechanism for price discovery and if the board decides to purchase one LNG cargo from SOCAR of Azerbaijan, the PLL will have to seek the bids, then it would have to buy the cargo from the lowest bidder, not from SOCAR.

The PLL and SOCAR signed the LNG deal on July 25, 2023 for the provision of one distressed LNG cargo a month. Right now, for more than three weeks, line pack pressure stayed over 5 bcf in the main pipeline putting the country’s national gas transmission network at stake, which is a quite alarming development as 5bcf gas pressure is the dangerous mark.

The line pack pressure remained higher just because of low consumption of gas by 150 mmcf a month in the country and this is how the 18 LNG cargoes have become additional. Out of 18 additional cargoes due in 2025, the government has managed to shift 5 cargoes to 2026 to manage the line pack pressure. Amid the shifting of 5 cargoes to 2025, the demand of placing one LNG cargo for January 2025 has surprised the top functionaries of the Petroleum Division.