- SNGPL has requested LNG cargo due to the expected increase in demand.
- PPL is unable to decide due to variables in demand projections.
- The current landed cost of LNG cargoes is close to $10 per MMBTU.
ISLAMABAD: The board of directors of Pakistan LNG Limited (PLL) has not taken any decision regarding a possible purchase of a cargo of liquefied natural gas (LNG) from Azerbaijani company SOCAR for January 2025, News reported Monday.
“The PPL board of directors met and completed the due diligence process regarding the application from Sui Northern Gas Pipelines Limited (SNGPL), but did not make any decisions,” one told the publication. senior manager aware of the development.
“This is because there are a lot of ifs and buts in the demand projections shared by gas companies,” he added.
This development follows SNGPL’s request for an LNG cargo for the said month, as it expects an increase in gas demand.
In the current month, 12 cargoes of LNG, the official said, will be imported and 11 in the next month of January to meet the country’s energy demand during the peak winter months. SNGPL wants the government to import additional cargo by January 2025.
“The spot price of LNG in the international market due to winter season soared by over $15 per MMBTU while Pakistan arranged 12 cargoes under forward agreements, 10 from Qatar and two from ENI. In September, PLL transferred its only cargo for the month. of December 2024. Likewise, for January, 11 LNG cargoes were arranged thanks to the rescheduling allowed in the forward agreements.
The current landed cost of LNG cargoes at the port under forward agreements stands at almost $10 per MMBTU, but the current spot price of LNG has climbed to $15 per MMBTU, so that the The Office is reluctant to import the LNG cargo.
PPL and SOCAR have already signed an agreement under which Pakistan can purchase distressed goods per month if it requests it.
However, in the past, the government would invite bids and the lowest bid would be shared with SOCAR and then it would offer one cent less than the lowest bid and Pakistan would buy the said cargo.
However, bidders became agitated when they learned that the government had used the lowest bid to obtain SOCAR’s LNG cargoes and had threatened not to participate in the bidding process for one-off LNG cargoes.
Now the government has no pricing mechanism and if the Board decides to buy a cargo of LNG from Azerbaijan SOCAR, the PLL will have to look for bids, then it will have to buy the cargo at the lowest price bidder, and not to SOCAR.
PLL and SOCAR signed an LNG agreement on July 25, 2023 for the supply of one distressed LNG cargo per month. Currently, for more than three weeks, pipeline pressure has remained above 5 billion cubic feet in the main gas pipeline, putting the country’s national gas transmission network at risk, which is quite alarming as a Gas pressure of 5 billion cubic feet is the dangerous mark.
The pipeline pressure remained higher simply due to the low gas consumption of 150 million cubic feet per month in the country and that is how the 18 LNG cargoes became additional.
Of the 18 additional shipments expected in 2025, the government managed to shift five shipments to 2026 to manage pipeline pressure.
Amid the postponement of five cargoes by 2025, the request to place an LNG cargo for January 2025 surprised senior officials of the Petroleum Division.