Long-term supplies: Eni quotes higher LNG price, may lose contract
Company offers to bring gas at 12.29% of crude oil price
The government would consider the price offered by Eni if it came up with a discount, said a senior government official. PHOTO: REUTERS
ISLAMABAD:
Italian energy giant Eni may lose a liquefied natural gas (LNG) supply contract valuing billions of dollars in the wake of higher price quoted by the company in the bidding process, an official says.
Eni gave the offer in response to two tenders floated by Pakistan LNG Company for the delivery of LNG.
One tender was for short-term supply over a period of five years and the other covered long-term supplies over 15 years. Around 15 companies participated in the short-term tender whereas five companies took part in bidding for long-term deliveries.
Two companies Gunvor and Eni were declared successful for quoting the lowest prices.
Gunvor quoted 11.62% of crude oil price for short-term LNG contract whereas Eni quoted 12.29% of crude oil price for long-term supplies.
This was the second LNG supply contract Gunvor had won. Earlier, it got a contract in response to Pakistan State Oil’s (PSO) tender of May 13, 2015, seeking import of 100 million cubic feet of LNG per day (mmcfd).
Apart from this, PSO has struck an LNG deal with Qatar at 13.37% of crude oil price for cargo deliveries over a period of 15 years. Under this arrangement, PSO is importing 400 mmcfd per day. Gunvor also offered to bring LNG at the same price.
Under short and long-term contracts, Pakistan will be importing one cargo every month.
A senior government official told The Express Tribune that Pakistan LNG Company, set up by the government for gas imports, had hired services of an international consultant to evaluate the LNG prices offered by Gunvor and Eni in response to its two tenders.
The consultant suggested that Gunvor had quoted the price in line with market trend but Eni’s bid was higher for the long-term contract. After that, Pakistan LNG Company awarded the short-term contract to Gunvor, but stopped short of approving Eni’s offer.
“The government will consider the price offered by Eni if it comes up with a discount. However, if the Italian company fails to offer some concession, it may lose the contract,” the official said.
“Pakistan LNG Company can be embroiled in a controversy if it awards LNG contract at the higher price.” Some other officials, however, believe that Eni has quoted the lowest price when compared with the price at which earlier LNG supply contracts were signed with Gunvor and Qatar by PSO.
The senior government official explained that Pakistan got lower bids because of a very small number of tenders invited around the world. Only Egypt sought three tenders, but awarded only one contract whereas two tenders were scrapped. Therefore, he said it was unlikely that Pakistan could get such a price in the future.
Published in The Express Tribune, March 5th, 2017.
Italian energy giant Eni may lose a liquefied natural gas (LNG) supply contract valuing billions of dollars in the wake of higher price quoted by the company in the bidding process, an official says.
Eni gave the offer in response to two tenders floated by Pakistan LNG Company for the delivery of LNG.
One tender was for short-term supply over a period of five years and the other covered long-term supplies over 15 years. Around 15 companies participated in the short-term tender whereas five companies took part in bidding for long-term deliveries.
Two companies Gunvor and Eni were declared successful for quoting the lowest prices.
Gunvor quoted 11.62% of crude oil price for short-term LNG contract whereas Eni quoted 12.29% of crude oil price for long-term supplies.
This was the second LNG supply contract Gunvor had won. Earlier, it got a contract in response to Pakistan State Oil’s (PSO) tender of May 13, 2015, seeking import of 100 million cubic feet of LNG per day (mmcfd).
Apart from this, PSO has struck an LNG deal with Qatar at 13.37% of crude oil price for cargo deliveries over a period of 15 years. Under this arrangement, PSO is importing 400 mmcfd per day. Gunvor also offered to bring LNG at the same price.
Under short and long-term contracts, Pakistan will be importing one cargo every month.
A senior government official told The Express Tribune that Pakistan LNG Company, set up by the government for gas imports, had hired services of an international consultant to evaluate the LNG prices offered by Gunvor and Eni in response to its two tenders.
The consultant suggested that Gunvor had quoted the price in line with market trend but Eni’s bid was higher for the long-term contract. After that, Pakistan LNG Company awarded the short-term contract to Gunvor, but stopped short of approving Eni’s offer.
“The government will consider the price offered by Eni if it comes up with a discount. However, if the Italian company fails to offer some concession, it may lose the contract,” the official said.
“Pakistan LNG Company can be embroiled in a controversy if it awards LNG contract at the higher price.” Some other officials, however, believe that Eni has quoted the lowest price when compared with the price at which earlier LNG supply contracts were signed with Gunvor and Qatar by PSO.
The senior government official explained that Pakistan got lower bids because of a very small number of tenders invited around the world. Only Egypt sought three tenders, but awarded only one contract whereas two tenders were scrapped. Therefore, he said it was unlikely that Pakistan could get such a price in the future.
Published in The Express Tribune, March 5th, 2017.