Gas firm rejects costly spot LNG bids

Pakistan LNG Limited (PLL) has rejected bids for two spot liquefied natural gas (LNG) cargoes, which demanded higher rates and could force consumers to pay an additional $22 million for one LNG cargo.

At a briefing, the Senate Standing Committee on Petroleum was informed that an LNG cargo was expected to arrive at Karachi Port on Tuesday.

Federal Minister for Petroleum Ali Pervaiz Malik told the committee that due to the absence of a lasting ceasefire in the US-Iran conflict and related import constraints, the government was compelled to prioritise critical sectors. It was apprised that gas supply had been diverted to urea production units to avert a fertiliser crisis, particularly after constraints to di-ammonium phosphate (DAP) imports.

Pakistan is expected to save $22 million to $50 million from two LNG cargoes through comparatively lower-cost arrangements from Qatar.

A meeting of the Senate Standing Committee on Petroleum deliberated on matters relating to the national stock position of petroleum products, gas supply to producing areas, PMDC board of governors' selection criteria, liquefied petroleum gas (LPG) pricing concerns, and suspension of compressed natural gas (CNG) supply in Khyber-Pakhtunkhwa.

The committee observed that the increase in petroleum prices last month, despite the availability of stocks, appeared to have financially benefited Oil Marketing Companies (OMCs). The minister for petroleum, however, explained that the price adjustment was intended to provide fiscal space and liquidity to OMCs in order to avoid fuel shortages amid volatility in international oil markets.

The committee urged authorities to conduct a comprehensive audit of OMCs to determine the extent of financial gains from existing stocks following the price hike. It was informed that a joint stock-taking mechanism involving Ogra, FIA, Intelligence Bureau, and other relevant agencies had been established to monitor stocks on a fortnightly basis. Committee chairman gave directives that all stock-taking reports be submitted to the Senate panel.

The committee questioned the petroleum pricing mechanism, and the chairman sought details of the formula used to determine fuel prices. Members also expressed serious concern over prolonged gas outages in Balochistan and questioned the uneven supply situation.

The committee took strong notice of rising LPG prices as well as the significant gap between officially notified rates and actual market prices. The chairman directed Ogra and relevant authorities to take strict action against overpricing and submit a detailed report.

The issue of non-provision of gas connections to the residents of gas-producing areas was also discussed. Members highlighted that despite the prime minister's directives and Supreme Court decisions, affected communities were still deprived of gas connections. Officials attributed the delay to non-availability of funds. The committee resolved to take up the matter with relevant stakeholders.

The Senate panel took notice of varying charges imposed by Pakistan Mineral Development Corporation (PMDC) on coal mining contractors at different sites in Balochistan. The chairman questioned the rationale behind price difference and observed that PMDC and coal mining contractors were interdependent stakeholders. He announced that he would engage with all stakeholders to resolve the issue amicably.

The standing committee deliberated on the suspension of CNG supply in Khyber-Pakhtunkhwa. Members noted that the disruption was adversely affecting low-income segments of the province.Officials said that the restoration of CNG supply was linked to the availability of imported LNG, hampered by the closure of Strait of Hormuz

It also questioned the allocation of natural gas to RLNG-based power plants in Punjab while similar facilities were not being extended to plants in other provinces, citing the example of Jamshoro Power Plant. Members sought clarification about the allocation priority mechanism.

Meanwhile, a second Qatari LNG tanker, Mihzem (174,000 cubic meters), was transiting the Strait of Hormuz en route to Port Qasim, days after the first cargo crossed under a special Iran-Pakistan arrangement. The vessel departed Ras Laffan and is expected to arrive on May 12, according to LSEG shipping data, Reuters reported.