PSO procures spot LNG cargo at $15.9271 per MMBTU

ISLAMABAD: The state-owned Pakistan State Oil (PSO) has managed to procure one spot LNG cargo required for August 29-30 at $15.9271 per MMBTU from Qatar Petroleum Trading in response to its short tender that opened here on Thursday. The Qatar Petroleum (QP) Trading is the only one bidder that appeared with its bid at price of 22.1311pc of the Brent.

Ogra will today (Friday) determine the new average LNG prices for Sui Southern and Sui Northern for the month of August, keeping in view the procurement of new spot LNG cargo by PSO at $15.9271 per MMBTU, a senior official of the regulatory authority told The News.

Ogra on August 3, 2021 withdrew its notification about the LNG prices for the month of August after PSO had refused to procure spot LNG cargo to be delivered on August 29-30 as the price per MMBTU was the highest-ever at $20.055 equal to 27.9pc of the Brent.

PSO on Thursday tweeted saying that further to its tweet on August 03, 2021, PSO is happy to announce that the retender done for the procurement of LNG for the delivery period August 29-30, 2021 (after scrapping the initial tender on July 27 due to high rates), was opened here on Thursday.

“The bid received translates into $15.9271 per MMBTU, which is very competitive with current market rates. Keeping our nation’s best interest foremost, and through prudent decision making, PSO has saved the national exchequer Rs2.1 billion. PSO continues to maintain absolute transparency in all its business dealing and practices.”

The PSO spokesman said that the company's board of directors after opening the bid decided to procure the LNG at the price of $15.9271, declaring it a very competitive price and placing it on the PSO website as per PPRA rules.

The PSO spokesman told The News that PSO issued the earlier tender one month back on June 24 as per the PPRA rules seeking one spot LNG cargo to be delivered on August 29-30. After 30 days, the bid was opened on June 24 technically and on June 27 commercially. One LNG supplier GUNVOR came up with its bid at $20.55 per MMBTU.

He said that since the bid price was the highest-ever in Pakistan procurement of LNG history and could lead to surge in electricity price to Rs22-23 per unit, the management decided on July 27 to scratch down the tender. PSO informed the LNG supplier on July 29 about the scrapping of the tender when the minutes of the July 27 meeting got finalised. PSO issued a short tender for spot LNG cargo on July 29 by invoking the emergency clause of PPRA rules. The bid in response to short tender opened on Thursday (August 05) and QT Petroleum was the only bidder that appeared with its price of 22.1311pc of the Brent.

The spokesman said that under the PPRA (Public Procurement Regulatory Authority) rules, almost one month back, PSO was bound to issue a tender for spot purchasing of LNG, and the bids were opened after 30 days. Under the PPRA rules, PSO is bound to hold up the LNG bids prices for 15 days for which the LNG bidders add premium in the bid price, causing more surge in LNG price. "All bid results are published on PSO’s website as per PPRA rules."

He said that PSO has to provide 600 mmcfd RLNG to the country under the agreement. Since the short term LNG supply agreement with GUNVOR has ended in December 2020, an extra LNG cargo is needed every month.

For August, September and October, PSO needs one extra LNG cargo per month through spot purchasing. "We are in touch with Qatar seeking LNG cargo at 10.2 percent of the Brent for the month of October under new 10-year GtoG agreement with Qatar, but it seems not possible keeping in view the volatile market of LNG.

"Factually, the new LNG agreement with Qatar under which LNG price will be available at 10.2 percent of the Brent will be available from January 1, 2022, but under special provisions, Pakistan has already booked four LNG cargoes (two each for November and December) this calendar year, which will help decrease the basket price of RLNG."