Pakistan gets poor response to LNG tender

Only four companies submitted bids for supply of 240 cargoes over 10 years

ISLAMABAD: Pakistan has failed to get encouraging response from liquefied natural gas (LNG) producers in a tender seeking supply of 200 million cubic feet of LNG per day (mmcfd) through a long-term contract.

Pakistan LNG Limited (PLL) had invited bids for the supply of 240 LNG cargoes over a period of 10 years with the arrival of two cargoes a month.

Only four companies participated in the tender as they had been qualified in technical bids. These companies included Italian energy giant Eni, Trafigura, Socar of Azerbaijan and Chinese firm PetroChina.

PLL has hired a consultant for evaluating the financial bids before their opening.

Sources told The Express Tribune that Trafigura, Socar, and PetroChina were trading companies whereas only Eni was the LNG producer. Other renowned companies like Shell and Mitsubishi, which were also LNG producers, stayed away from the tender.

According to officials, the LNG producers were reluctant as they came to know that bids had been invited to seek a price that matched the one offered by Qatar. Though Saudi Arabia and Qatar had been keen to export LNG to Pakistan, their companies skipped the tender.

Qatar had offered a price of 11.25% of Brent crude for a 15-year LNG supply contract and 11.5% of Brent for a 10-year contract. These prices were higher compared to the spot prices which had been below 8% of Brent.

The Petroleum Division was interested in securing more LNG supply from Qatar, with whom the government had signed a state-to-state deal, but it sparked controversy over ignoring other LNG suppliers.

Fearing criticism, the government decided to float a tender but received a poor response from the bidders. Afterward, PLL issued another tender to secure 10 LNG cargoes on a spot basis, which were separate from the 240 cargoes sought over the long term.

“Spot prices have dropped in recent months, therefore, the government is hoping to secure 10 LNG cargoes at cheaper rates,” a government official said.

The government has also recently allowed the private sector to utilise the additional capacity of the second LNG terminal at Port Qasim.

The private sector is interested in importing LNG at cheaper rates to meet its demand and market the remaining gas. However, bureaucratic hurdles have caused a delay in this regard.

Recently, gas exploration companies have reduced supply from the fields due to the failure of public utilities to receive gas due to heavy LNG imports.

Published in The Express Tribune, August 21^st, 2019.

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