Page 5 - GLNG Week 31 2021

GLNG COMMENTARY GLNG

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

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