Ogra withdraws notification after PSO denies purchasing ‘costliest’ LNG cargo

Published August 3, 2021
PSO claims the LNG rate of $20.055 per unit mentioned in a Dawn report was scrapped on July 27. — File Photo
PSO claims the LNG rate of $20.055 per unit mentioned in a Dawn report was scrapped on July 27. — File Photo

The Oil and Gas Regulatory Authority (Ogra) on Tuesday withdrew its notification from a day earlier that showed the purchase price of liquefied natural gas (LNG) cargo at $20.055 by the Pakistan State Oil (PSO), saying the petroleum corporation clarified it had scrapped the bid as it was 'high' and 'unacceptable'.

The withdrawal of the Ogra notification comes in the wake of Dawn report published Tuesday morning that said the state-run PSO had purchased a cargo of LNG at $20.055 per unit (almost 27.9pc of Brent) — the highest ever not only in the country but perhaps the second highest summer purchase in the world — and that the bid results were kept a secret to avoid public criticism.

Hours after the story was published, PSO issued a statement on Twitter, denying the award of any cargo at the rate of $20.055. It claimed that the said tender was scrapped on July 27 due to its high price and subsequently a fresh tender was issued.

It also denied keeping the bid results secret, insisting that it "always maintains absolute transparency in all its business dealings and practices".

"All bid results are published on PSO's website as per Public Procurement Regulatory Authority (PPRA) rules," the rebuttal added.

The PSO said it “has entered into a new long term supply contract with Qatar Petroleum (QP), supplies against which will start in January 2022 and this will further reduce the basket price of LNG being imported in the country”.

“Considering the higher demand in the upcoming winter season, PSO has exercised the option in the new QP contract for bringing 4 additional cargoes in November and December at the new contractual prices, which are expected to be much lower than the market price during winter.”

Federal Minister for Energy Hammad Azhar also reacted to the Dawn report, deeming it “fake".

Soon after, Ogra withdrew the notification which was cited in the report, saying: "As per routine monthly practice, estimated prices of RLNG are computed based on available data at the time of computation. "

It explained that since many pricing components were calculated for determination of prices on a provisional basis based on available data at that time, which was later actualised by Ogra based on actual costs incurred.

The authority said the PSO informed that it had scraped the cargo with offered price of 27.8pc of the Brent, adding "RLNG price notified on August 2 is no more valid and August RLNG price notification is being withdrawn".

Notification

The August 2 notification issued by Ogra regarding “determination of LNG weighted average sale provisional price” said the LNG price for the month was computed in the light of federal government’s decision on LNG allocation and pricing and advice from the Ministry of Energy.

Computation of weighted average LNG price for August 2021 as stated in the Ogra notification.
Computation of weighted average LNG price for August 2021 as stated in the Ogra notification.

The LNG Prices notified by Ogra — and as mentioned in the Dawn report — were based on data/prices provided by the PSO.

Ogra doesn't have its own data gathering mechanism about LNG and solely relies on prices contracted by and reported by LNG importers — PSO and Pakistan LNG Ltd (PLL).

Prior to the report, PSO had not issued a public statement about cancellation or tendering.

Now you can follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

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