Pakistan to import LNG at $6.34 per mmbtu
Market sources were of the view that it was a good decision by the regulator as it would open new avenues of private invest-ment in the LNG sector. PHOTO: FILE
In the wake of heavy criticism for losing a lifetime opportunity to import liquefied natural gas (LNG) at exceptionally low price, the government announced import of 30% more fuel during the peak winter month of January 2021 at the price of $6.34 per mmbtu - which it claims is the cheapest ever.
LNG has emerged as a lifeline for the nation particularly during winters when households utilise it to operate heater and geysers as the mercury drops to freezing temperatures in many parts of the country. With decline in production of fuel from the local fields and no major discovery being made during the past one decade, the country has resorted to imports.
“Pakistan will be moving 30% more LNG in this January (2021) compared to January 2018 at the cheapest ever price of $6.34 during the peak winter month,” Ministry of Energy (Petroleum Division) spokesperson said in a tweet on the division’s official Twitter handle on Saturday. The government has arranged import of 12 ships of LNG in January 2021.
“In addition, the volume has been increased in certain cargoes (ships),” he said. Pakistan can receive maximum 12-13 LNG ships per month due to import capacity constraints. At present, there are only two import terminals in operation at a port in Karachi.
The combined import capacity of the two terminals stands at around 1,200 million cubic feet per day (mmcfd). Despite imports, and local production cumulatively amounting to 3,500 mmcfd, the government has to resort to load-shedding through temporary suspension of the fuel mostly to CNG filling stations, fertiliser manufacturers, power plants and others.
The government provides the gas to residential consumers on a priority basis, however, they have been reporting blackouts as well. The spokesperson said. “With these robust steps, the load management plan approved by the cabinet for this winter remains undisturbed, whereby curtailment will be done primarily for CNG (filling stations) and captive power units (mostly run by textile exporting firms), as needed.” City loads have increased by 9% on Sui Northern Gas Pipeline Limited’s (SNGPL) network in Punjab and Khyber-Pakhtunkhwa due to severe cold.
Sui Southern Gas Company (SSGC) faces similar drops in temperature in Karachi and Quetta. “Drop in temperature by one degree increases demand by 6mmcfd (million cubic feet per day) in Islamabad and Rawalpindi,” said the spokesperson. Prime Minister’s Special Assistant on Petroleum Nadeem Babar said in a TV show on Friday, “The average import price of LNG for December 2020 and January 2021 stands at $6.34 mmbtu compared to $8 mmbtu during December 2017 and January 2018 (the last months of PML-N rule).”
Former premier and petroleum minister Shahid Khaqan Abbasi, the co-guest at the show, however, criticised the Pakistan Tehreek-eInsaf government for having failed to book LNG cargo for peak winter months. He recalled that the fuel was available at less than $4 mmbtu a couple of months back when its demand had dropped next to zero globally owing to supply gluts during peak Covid-19 pandemic in summer 2020.
Babar criticised Abbasi for signing a 15-year long import contract with Qatargas at an expensive price (13.37% of Brent) at a time when the world was predicting drop in the commodity price due to supply gluts in 2016. Later on, the prediction came true.