Pakistan set to double import of LNG from Dec 28

New terminal to be used for supplying fuel to power plants in Punjab

ISLAMABAD: Pakistan is set to enhance its import of LNG for power plants established in Punjab from December 28.

The country is currently importing 600 million cubic feet per day (mmcfd) from its only LNG terminal located at Port Qasim. However, it would start importing another 600 mmcfd from another LNG terminal expected to be operational by December 28, an official said, adding that the total volume of LNG supply would reach 1.2 bcfd.

“Pakistan LNG Limited (PLL) has arranged six LNG cargoes to start supply from December 28,” a senior government official told The Express Tribune.

He said that these cargoes had been arranged through tenders and spot purchases by following the prescribed rules. He said that commodity company, Gunvor, was already supplying LNG, and had supply contracts with Pakistan State Oil (PSO), by using the first LNG terminal.



However, Gunvor had secured another supply contract through tender and would start supply from December 28 through the second LNG terminal.

Prime Minister Shahid Khaqan Abbasi is set to inaugurate the second LNG terminal on November 20.

Officials said that the Italian energy giant Eni had also secured the LNG supply contract and would start supplying LNG from December 28 which will be provided to LNG-based power plants being set up in Punjab to tackle prolonged power outages. Some cargoes have been arranged through spot purchases.

The Italian company had won a long-term contract after offering some discount in the gas price. Eni came up with the offer in response to two tenders floated by Pakistan LNG Company for gas delivery.

One tender was for a short-term period of five years and the other was for long-term supplies over a period of 15 years. Around 15 companies participated in the short-term tender whereas five companies submitted bids for long-term supplies.

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 deliveries whereas Eni quoted 12.29% of crude oil price for long-term supplies.

This was the second LNG contract won by Gunvor. Earlier, it clinched a deal after PSO floated a tender on May 13, 2015 for import of 100 million cubic feet of LNG per day (mmcfd).

According to the official, Eni offered some concessions and agreed to lower the price to 11.99% of crude oil rate compared to 12.29% quoted in the tender.

Following the discount offer, Pakistan LNG Company awarded the long-term LNG supply contract to Eni. Apart from the fresh tender, PSO has struck a long-term LNG supply agreement with Qatar at 13.37% of crude oil price for cargo deliveries over a period of 15 years.

Earlier, Pakistan LNG Company, set up by the government for gas imports, had hired services of an international consultant to evaluate the LNG prices quoted by Gunvor and Eni in response to the tenders.

The consultant suggested that Gunvor had quoted the price in line with the 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 bid.

Following this, Eni offered a discount and succeeded in winning the multibillion-dollar contract. Eni has now quoted the lowest price compared with the prices at which earlier LNG supply contracts were signed by PSO with Gunvor and Qatar.



Elaborating on the topic, a senior government official said that Pakistan received attractive prices.

Only Egypt floated three tenders, but awarded only one whereas two were scrapped. However, he said, “it is unlikely Pakistan would get a similar price offer in the future.”

“Pakistan is expected to save $500 million every year under the short-term LNG deal with Gunvor because of the low price,” an official said, adding that Eni’s price was also lower compared to the price agreed with Qatar in the long-term deal.

Published in The Express Tribune, November 11^th, 2017.

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