Page 4 - GLNG Week 31 2021

GLNG COMMENTARY GLNG

Pakistan justifies expensive

LNG purchases

The government has been forced to defend expensive spot LNG cargoes

amid a firming of international gas prices

POLICY THE Pakistani government’s LNG purchases “The recent [regasified LNG] RLNG pur-
have been under the microscope this week, after chase, which is [the] most expensive to date, is
WHAT: state-owned Pakistan LNG Ltd (PLL) paid more a daylight robbery. The government failed to
PLL has paid more than than $15 per mmBtu ($414.90 per 1,000 cubic benefit from cheap RLNG rates during COVID-
$15 per mmBtu for spot metres) for spot deliveries in September. 19 and is now making these costlier purchases.
deliveries in September. The news was somewhat surprising, given PTI’s [Pakistan Tehreek-e-Insaf’s] incompe-
that the company cancelled a tender for eight tence and greed will cause our nation [to lose]
WHY: cargoes in July on the grounds that $13.79 per billions of dollars,” PML-N president Shehbaz
Spot LNG prices have mmBtu ($381.43 per 1,000 cubic metres) was Sharif tweeted on July 31.
soared, leaving the state too much to pay, but gave weight to reports this “This procurement has cost the country
company little choice. week that state-owned Pakistan State Oil (PSO) $422.4mn extra. The PTI government repeat-
had agreed to pay more than $20 per mmBtu edly lied to the nation on the matter as it has
WHAT NEXT: ($553.20 per 1,000 cubic metres) for LNG. bought LNG for $15 per mmBtu which the
Domestic gas prices will While PSO promptly denied the report, say- PML-N bought for $8 per mmBtu,” Sharif said.
likely rise, setting the ing it had cancelled the tender as the price was The government, however, has argued that
scene for further political too high, the country’s exposure to the spot prices are high because the country relies on
uproar. market has left the government open to criti- the spot market for about a third of its spot pur-
cism from its political rivals. chases. As such, when prices climb, state buyers
do not have the luxury to refrain from buying
Political fallout the fuel.
PLL paid its highest rates ever for LNG, after “It is known that the spot LNG commodity
conducting a closed tender for September, price has spiked recently due to a variety of sup-
local daily The News International reported last ply-related issues and demand-related factors,”
week. It said the state company had agreed to pay the government said. “Therefore, PLL’s board
$15.19-15.49 per mmBtu ($420.19-428.45 per was forced to accept the four LNG spot tenders
1,000 cubic metres) for four cargoes. for September 2021.”
The news outlet quoted unnamed Petroleum Asian spot LNG prices soared this week, with
Division officials as saying that although inter- Reuters reporting on August 5 that PetroChina
national prices remained robust, the govern- had sold a cargo to Trafigura for more than
ment was watching the market and that if prices $16.14 per mmBtu ($446.43 per 1,000 cubic
retreated then PLL would retender the cargoes. metres).
The purchase, however, has created an open- PetroChina sold the cargo for September
ing for opposition party Pakistan Muslim delivery at the Fujian terminal in China, Reu-
League-Nawaz (PML-N) to demand a probe. ters said citing S&P Global Platts data, with the

P4 www. NEWSBASE .com Week 31 06•August•2021