KARACHI: Pakistan received bids to purchase liquefied natural gas (LNG) from the spot market for the first time in over a year on Friday, confirmed official documents and analysts, as the country’s financial woes relatively eased after securing a $3 billion short-term bailout program from the International Monetary Fund this week.
Cash-strapped Pakistan has remained out of the spot LNG market since June 2022 due to the skyrocketing prices which hit a record high of $69.9 per million British thermal units (mmBtu) for Asia deliveries in August last year.
Pakistan LNG (PLL), a state-owned entity mandated to import the commodity, floated two tenders to secure the supply of super chilled fuel from the spot market in June after remaining inactive for about a year due to high prices in the global market and low foreign exchange reserves at home.
The South Asian nation earlier failed to attract any bid in response to a tender floated for the supply of six cargoes – two for October, one for November, and three for December – with the bid opening date fixed for June 20, 2023.
In response to another tender, however, Pakistan received two bids on Friday from Trafigura for supply of cargo in January and February 2024 at the contract price of $23.47 and $22.47 per mmBTu, respectively, according to PLL.
The bids were only submitted by Trafigura, a Singapore-based multinational commodity trading company, since no other supplier turned up in response to last month’s PLL tender.
Analysts said, however, the offer rates submitted by the company were still high and there was a possibility the government could decline the offer.
“The rates offered for January and February 2024 are around 35 percent more than the current spot prices,” Tahir Abbas, research head at Arif Habib Limited, told Arab News, adding the Pakistani administration might turn down the offer.
However, PLL officials said no decision to accept or reject the bids had been taken so far.
“Decision will be taken by the [PLL] board,” a senior company official, who requested anonymity since he was not authorized to speak to the media, told Arab News. “Bids are valid until 31st July.”
Pakistan’s financial challenges eased this week when the country received over $4 billion from the IMF, Saudi Arabia and the United Arab Emirates (UAE) after securing $3 billion bailout program from the fund.
Pakistan fulfils more than half of its LNG requirement through long-term import contracts while the gap is met through spot cargo purchases. Pakistan has long-term agreements with Gunvor and the ENI for the supply of one LNG cargo every month.
The country has imported $15.38 billion of petroleum products, including $3.4 billion of LNG, during the 11 months of the previous fiscal year.
The overall imports of petroleum group have declined by 22 percent, including the LNG which plummeted by 19 percent, according to the Pakistan Bureau of Statistics.
