ISLAMABAD: After a delay of over three weeks, the Oil and Gas Regulatory Authority (Ogra) on Friday notified average sale price for re-gasified liquefied natural gas (RLNG) for last month (September) at about $15.35 per million British thermal unit (mmBtu), which is over 16 per cent higher than the rate of previous month (August).
The RLNG price notification, which is routinely issued by the regulator in the first week of every month, was “delayed due to the Lahore [High] Court orders”, a spokesperson for Ogra told Dawn. The prices were notified after addressing the court’s observations.
The RLNG price for September 2021 is almost 122pc higher than that for the same month last year when it stood at about $6.93 per mmBtu.
According to the Ogra notification, average delivered ex-ship (DES) price for Pakistan LNG Limited (PLL) stood at $13.105 per mmBtu for September this year, almost 27pc higher than that for August. PLL’s two cargoes were delivered at $8.45 and $8.687 per mmBtu because of long-term contracts, but its average price surged due to four spot cargoes at significantly higher prices between $15.20 and $15.50 per mmBtu.
On the other hand, average DES price at $11.40 per mmBtu for Pakistan State Oil (PSO) was about 15pc cheaper than that of PLL for the same month mainly because of its major imports through long-term contracts at about $9.7 per mmBtu or 13.37pc of Brent.
This was despite the fact that PSO had accepted one of the cargos at a record 24.54pc of Brent or $17.84 per mmBtu. PSO’s average price in September this year was 6.23pc higher than that of August and about 95pc higher than September 2020.
PSO’s most expensive LNG cargo was supplied by commodity trader Vitol at 24.5456pc of Brent (about $17.86 per mmBtu) — the most expensive so far included in RLNG pricing — on Sept 26-27. Even higher prices would follow in October and November because of even costlier cargos already booked.
The regulator kept the allowance for system losses unchanged at 6.68pc for Sui Northern Gas Pipelines Limited (SNGPL) and 6.42pc for Sui Southern Gas Company Limited (SSGCL) which the two companies had challenged in various courts, including Lahore and Islamabad high courts.
In a related but separate determination, Ogra said it had to separately determine actual average unaccounted for gas (UFG) of last financial year in respect of RLNG supplies for its pricing. It said that during dedicated hearings under the court orders, the gas companies maintained that Ogra had determined their actual UFG as part of annual final revenue requirement decision which should also be adopted for RLNG prices.
“This understanding is totally inconsistent with the ECC (Economic Coordination Committee) decisions and a misconception on the part of gas companies, whereby, in respect of UFG figures, the volumes claimed by the companies had been adjusted to arrive at their correct claims in respect of indigenous system. This correction cannot be constructed as determination of ‘actual average UFG’ for RLNG pricing purpose when gas companies themselves admit that no separate measurement mechanism is in place and volumes are being arbitrarily allocated to RLNG supplies, which is in total contrast to ‘ring-fencing’ [of imported gas] as required by ECC decisions,” the regulator observed.
It said that until a proper UFG study was completed that was currently in progress, the prevailing UFG of 6.68pc and 6.42pc for SNGPL and SSGCL, respectively, would remain validly applicable.
Published in Dawn, October 2nd, 2021