Government unwilling to accept costly LNG offer

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Pakistan is once again having trouble obtaining Liquefied Natural Gas (LNG) in time for the next winter since the lone proposal submitted for the tender is pricey for both the government and local customers.

The procurement of three LNG cargoes in the first and final weeks of January 2024 and the fourth week of February 2024 was the subject of an international tender launched by Pakistan LNG Limited (PLL) on June 13.

The deadline for submission of proposals was set for noon on July 14th. However, only one bid was received, from Trafigura Pte Ltd, at $23.47 per mmBtu for January and $22.47 for February.

These rates are 26 to 29 percent more than those found on the LNG Spot market.

There is anticipation that it will force Socar Trading, owned by the government of Azerbaijan, to make a cheaper offer for cargo and call into question the G2G arrangement with Socar.

This is so that it may be determined whether the bilateral price is reasonable by using price discovery from comparable spot market bids.

The PLL board of directors will decide as no further bids have been received and PLL has formally certified that both proposals are qualified.

Last month, Pakistan made the decision to re-enter the LNG market. On June 13, two tenders were released, the first for six cargoes for October and December, but no bids were received.

Despite the fact that supply on the spot market has surged and prices have drastically decreased, PLL is having trouble getting offers for less expensive cargo.

Despite the fact that the government used to import three cargoes a month to meet domestic demand, this is mostly owing to the country’s declining credit rating and diminished foreign reserves.