Page 5 - AsianOil Week 31 2021

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Asian spot LNG prices soared this week, Petroleum in February, noting that the deal
with Reuters reporting on August 5 that Pet- would help to reduce the country’s LNG import
roChina had sold a cargo to Trafigura for more basket price. It added: “Considering the higher
than $16.14 per mmBtu ($446.43 per 1,000 cubic demand in the upcoming winter season, PSO
metres). has exercised the option in the new QP contract
PetroChina sold the cargo for September for bringing four additional cargoes in Novem-
delivery at the Fujian terminal in China, Reuters ber and December at the new contractual prices,
said citing S&P Global Platts data, with the news- which are expected to be much lower than the
wire noting that this was the highest spot Asian market price during winter.”
prices had been at this time of year since 2013. After the furore caused by Ogra’s notice, the
Islamabad, however, has argued that switch- body withdrew the August 2 notification and
ing from gas to fuel oil for the country’s power explained that the incorrect price had been
generation needs would prove the more costly posted as a result of its calculations having been
of the two options. based on various provisional pricing compo-
“Moreover, if, due to RLNG shortage, we are nents and that they had not been finalised using
forced to burn diesel to fulfil summer power actual incurred costs.
demand, the resultant incremental electricity
generation cost in September would be almost What next
50% more expensive,” the government added. Pakistan’s decision to re-enter the spot mar-
“So, it’s the lesser of the two evils.” ket despite high prices is unsurprising, given
reports last month that PLL’s decision to cancel
Purchase denied eight cargoes owing to their high price had set
The situation with PLL set the stage this week the country up for a gas shortage in September
for further pricing drama, with local daily Dawn and October.
reporting on August 3 that PSO had last month The knock-on effect from buying more
agreed to pay $20.055 per mmBtu ($554.72 per expensive gas will be passed on to the end-user.
1,000 cubic metres) for a cargo. The government has already hiked RLNG prices
The paper, which cited a pricing notice from for gas utilities Sui Southern Gas Company Ltd
the Oil and Gas Regulatory Authority (Ogra) on (SSGCL) and Sui Northern Gas Pipelines Ltd’s
August 2, had avoided publicising terms of the (SNGPL) end-users.
deal in order to avoid drawing criticism. SSGCL customers saw their rates increase by
PSO was quick to deny the Dawn report, 5.59% this month to $13.34 per mmBtu ($368.98
tweeting that same day that it had scrapped a per 1,000 cubic metres), while SNGPL’s custom-
tender on July 27 because of high prices and had ers will pay 5.36% more at $13.6 per mmBtu
issued a fresh tender. The company refuted alle- ($376.18 per 1,000 cubic metres), the Express
gations it had kept the results secret, noting that Tribune reported on August 3.
it “always maintains absolute transparency in all The paper said PSO had lined up six LNG car-
its business dealings and practices”. goes to arrive in August, while PLL had arranged
PSO added: “All bid results are published on for the delivery of six spot deliveries.
PSO’s website as per Public Procurement Regu- Pakistan will likely continue paying higher
latory Authority (PPRA) rules.” LNG prices if it is to avoid gas supply shortfalls, a
The state company pointed to the 10-year strategy that will expose the government to per-
supply contract that it signed with Qatar sistent criticism whether fairly earned or not.™

Week 31 05•August•2021 www. NEWSBASE .com P5