ISLAMABAD: State-run Pakistan State Oil (PSO) said on Tuesday it had not purchased a cargo of liquefied natural gas (LNG) at $20.055 per unit, or almost 27.9 percent of Brent, as reported by local media.
Pakistan’s Dawn newspaper reported on Tuesday PSO had paid the highest price ever for an LNG cargo “not only in the country but perhaps the second highest summer purchase in the world.”
Last month, Pakistan LNG Limited (PLL), which handles LNG imports, said it had bought four cargoes for September delivery at around $15 per million British thermal units — the highest since the nation began imports in 2015.
“PSO has not awarded any cargo at $20.055,” PSO said in a statement on Twitter. “The bid received against the required delivery of August 29 and 30, 2021 was high, resulting in a price which was not acceptable to PSO and the tender was scrapped.”
“PSO is committed to safeguarding national interest and leaves no stone unturned to fuel the country’s progress,” PSO added.
PSO strongly refutes the incorrect news published today regarding awarding the costliest purchase of LNG cargo and non-disclosure of procurement rates. PSO always maintains absolute transparency in all its business dealings and practices. @MoWP15 #PSO pic.twitter.com/eYJ3wVjVQK
— PSO (@PSOPakistan) August 3, 2021
However, Dawn reported on Tuesday that as a result of the expensive LNG cargoes acquired through the spot market by PSO and PPL, “the weighted average sale price for LNG (excluding GST) was notified by the Oil and Gas Regulatory Authority (Ogra) at $13.61 per MMBTU for August — up 5.5 percent over July prices that were already 25 percent expensive when compared to June.”
Last week, the Pakistani energy ministry said in a public statement the PLL board was “forced” to accept four LNG “spot” tenders at about $15 per MMBTU for September 2021 to avoid having to pay for replacement fuel (furnace oil), which was more expensive and would have resulted in 20 percent higher September power prices.
The energy ministry said diesel was an option but would have made electricity almost 50 percent more expensive.
After weighing different possibilities, the energy ministry said the country decided to opt for “the lesser of the two evils” and purchase the costly LNG.
Pakistan procures about one-third of its LNG through spot trading while the remaining two-third is done through long-term contracts.
Earlier this year, the government signed a long-term agreement with Qatar for additional 200 million cubic feet a day (MMCFD) of LNG, saying it had concluded the deal at about 31 percent lower rates than the previous government’s 2015 contract with Doha for 500mmcfd of gas.
