Avoiding competition: Qatar uninterested in LNG supply tender

Energy giants like Shell, BP and Mitsubishi submit bids.

Zafar Bhutta July 22, 2014

ISLAMABAD: Qatar has turned down an offer to participate in Pakistan’s liquefied natural gas (LNG) supply tender, saying it is interested in clinching a direct government-to-government deal to meet needs of the energy-starved South Asian nation.

“The government suggested that Qatar Gas should take part in a tender floated by Pakistan State Oil (PSO) for LNG import but Doha refused and showed interest in striking a state-to-state deal without getting involved in any tender,” an official aware of the developments said.

The last date for submitting bids under the PSO tender was June 30, which was extended to July 15 on the demand of participating companies, which required some time to prepare bid documents.

According to officials, the tender has got an encouraging response from interested players, in sharp contrast to bids sought by the previous government, when only two domestic companies filed documents because of cancellation of tenders several times earlier.

In the current PSO tender, big energy giants have expressed interest and submitted bids including Royal Dutch Shell, British Petroleum and Mitsubishi. Officials term this a good omen for Pakistan’s energy needs as these companies have LNG supplies available with them.

The last tender floated by the previous government was struck down by the Supreme Court as only two domestic companies took part in the process.

According to officials, Pakistan is seeking to set a benchmark LNG price through bidding, following which it will try to weigh different options for a direct government-to-government deal. For the time being, talks for finalising an agreement with Qatar have stalled until the time bids are accepted.

The government is working on three proposals for LNG import. These include securing supplies through bids, a contract on a government-to-government basis with countries like Qatar and imports on the basis of spot purchases.

At present, all attention is focused on the bidding process as the government has drawn criticism from inside the country on reports that it will agree on LNG import from Qatar at a higher price.

Through the tender, the government will be able to fix a benchmark price for negotiating a deal with Qatar and other countries.

Meanwhile, officials said, a meeting was held at the Ministry of Petroleum and Natural Resources to review the progress on setting up an LNG terminal by the successful bidder Elengy Terminal Pakistan Limited (ETPL).

ETPL has hired China Harbour Engineering Company as its engineering, procurement and construction (EPC) contractor.

In the meeting, an ETPL representative said they would start dredging the water channel very soon. Prime Minister Nawaz Sharif is likely to conduct the groundbreaking of the terminal in the first week of next month.

First LNG shipment is expected to arrive in the first quarter of next year. The country plans to import 200 mmcfd in the initial phase, which will be increased to 400 mmcfd later.

Published in The Express Tribune, July 23rd, 2014.

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ali | 9 years ago | Reply

Qatar wants a long terms deal of 5 to 10 years of consistent supply and wants to lock in prices currently between $18 to $10 per mcf.The issue is LNG supplies are increasing and prices are gradually slowing and will retreat to the range of $13 in the next 2 years and then this deal with Qatar will not make sense.Tender is a good way to proceed. Another decent way would be to sign off take agreements with new LNG producers who want guaranteed buyers so they have assurance of constructing new LNG projects such as those in Canada,US and PNG.But for these there cant be government to government contracts,PSO,PPL or PGDC have to ultimately get involved which is actually the way our energy security strategy should be

usman786 | 9 years ago | Reply

Qatar has already given a letter of their rate to Khakan Abbasi. Consider it as their bid. Moreover, Qatar has clearly told us that they do not control gas business; its done by private companies?? When you disclose price and do re-tender, its discourages bidders.

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