ISLAMABAD: Amid unending liquefied natural gas (LNG) difficulties, the country’s pioneer importer — Pakistan State Oil — did not get even a single bid for Oct 22-24 delivery window due to supply constraints in the international market.
When contacted, a PSO spokesperson confirmed that the company was scheduled on Wednesday to technically qualify bidders for LNG supply, but did not receive any bid.
This comes a day after PSO awarded an LNG cargo to commodity trader Vitol at 24.5456 per cent of Brent (about $17.86 per mmBtu) — the most expensive so far — for delivery on Sept 26-27.
The spokesperson said the country’s largest fuel supplier had not yet taken a decision but would most probably go for fresh bidding on an urgent basis as it had now received relevant exemptions from Public Procurement Regulatory Authority (PPRA) rules.
On a request of the petroleum division and supported by Finance Minister Shaukat Tarin, the PPRA has recently exempted LNG imports from some of its rules dealing with specific deadlines for various stages for six months i.e. about 15-16 spot cargos. The petroleum division had sought PPRA exemptions for at least one year to let LNG importing entities — PSO and Pakistan LNG Limited — freedom of timing and decision making for LNG imports so that they can operate in a volatile global market like the traders normally do.
The PPRA board of directors headed by the finance secretary was reluctant to allow such a long exemption from rules. The finance minister, however, advised that the exemption should be provided for six months during which time the process of legislation for PPRA exemption could be ensured for LNG.
The companies have been agitating that PPRA rules do not suit LNG market as global players have to operate on a day-to-day basis and LNG bidders are reluctant to hold their cargo on to Pakistani customers for 15 days and 30 days or charge high premiums while prices fluctuate rapidly.
Vitol was the single bidder for the Sept 26-27 cargo that the PSO booked on August 31. Earlier, the PSO had rejected slightly higher bid of 27.54pc of Brent by the same single bidder for delivery on Sept 24.
The previous record of the highest LNG price was that of $15.93 per unit (22.13pc of Brent) from Qatar Petroleum for Aug 29-30 delivery.
On Aug 24, another state-run firm Pakistan LNG Ltd (PLL) had also received very expensive bids for seven LNG cargoes for October and November ranging between $17.1449 and $22.6 per mmBtu. PLL has not yet awarded contract for any of the cargoes, bids for which are still valid until next week, and has gone into emergency re-bidding for five cargoes.
In a written comment to Dawn, the PSO had confirmed last month that the cargo for Aug 29-30 at $15.93, or 22.13pc, was the most expensive so far. “The highest slope PSO has paid was in February 2016 which was 18.93pc of Brent,” a company spokesperson said.
The PLL has now sought fresh bids for five cargoes with delivery targets on Oct 8, 23 and 28, besides Nov 6 and 12. All these were single bids from Vitol Bahrain. Its bid rates ranged between $19 and $22.58 per mmBtu. To be precise, Vitol bid for Oct 7-8 cargo at $22.5866 per unit, $20.9466 for Oct 22-23, $18.9966 for Oct 27-28, $19.6966 per unit Nov 11-12 and $20.9266 for Nov 26-27 delivery window.
Although, it has not yet awarded two other cargoes but re-bidding for five cargoes meant the PLL authorities had made up mind to accept two bids for delivery on Oct 17 and Nov 16. Total was rated lowest evaluated bidder for its both bids at the rate of $17.1449 per mmBtu for delivery on Oct 17-18 and $17.5350 per mmBtu for Nov 16-17 delivery window.
The bids for four spot LNG deliveries in September accepted by the PLL ranged between $15.2 and $15.5 per mmBtu and at the time were the highest since the beginning of LNG imports in 2015.
Published in Dawn, September 2nd, 2021