The liquefied natural gas (LNG) suppliers have refused to provide Pakistan their supply for the month of February in the wake of the recent massive hike in gas prices, it was reported on Sunday.
The Pakistan LNG Limited (PLL) advertised a tender on November 28, 2020, for procurement of two spot LNG cargoes to be delivered in February, 2021.
On December 28, 2020, the bids were opened and the results were announced in accordance with the PPRA Rules.
The award intimation was made for 10 days later on 7 January 2021. The [first] spot cargo in mid-February was awarded to SOCAR Trading UK Ltd.
The second spot cargo, for the last week of February 2021, was awarded to the lowest bidder as per PPRA Rules, who conveyed inability to deliver as per its bid.
The PLL approached the second and third lowest bidders within the bid validity period, all of whom regretted to deliver the cargo at the prices they had offered in their respective bids.
This bid default of the suppliers was associated with the recent supply shortages leading to high price volatility in the spot market coupled with extra buying in North Asia.
There was news in the market about numerous global companies defaulting on their bids, or even contracts in some cases, given the supply shortages and extremely volatile prices.
The suppliers who had regretted to supply after bidding in the PLL tender include state-run entities and major international LNG traders.
The PLL was taking all measures available under law and its tender process, including forfeiture of bid bonds, against the bidder(s) who failed to supply cargo as per their bids.
February being a low demand month, Pakistan on average had imported 7.75 cargoes for that month in the last four years. At this time, a total of eight cargoes had been secured.
The PLL is working with the respective users to reconfirm demand at the current prices and is exploring alternatives if demand for an additional cargo in February was reconfirmed.
The PLL had already advertised unused capacity in its terminal for February 2021, whereas the private sector may bring in additional LNG.
It was reported on December 29, 2020, that Pakistan LNG Limited (PLL) received its all-time highest bid at 32.48% of Brent to secure cargoes for the month of February.
Pakistan has to purchase the costliest liquefied natural gas (LNG) in February 2021 at 32.48% of Brent with a 31-day gap between tender opening and advertisement.