- LNG cargoes from SOCAR will not arrive until January 2024.
- In the same month the gas shortage will increase to 470 mmcfd.
- Troubled LNG availability has become tough: Officials.
ISLAMABAD: As winter approaches Pakistan, the country may face a serious gas crisis as LNG cargo from Azerbaijan’s state-owned company SOCAR will not be able to arrive in January 2024, energy ministry officials said. news,
Ahead of the imminent non-provision of LNG cargo, the country was projected to face a gas shortfall of 360 million cubic feet per day (mmcfd) in the next month of December 2023, which would reduce to 470 mmcfd in January 2024 despite restricting gas. Will increase till. Only 8 hours availability of cooking time in domestic area.
Now the expected unavailability of SOCAR cargo will further aggravate the gas crisis in January and force the government to reduce gas availability in the domestic sector from eight hours to only six hours.
“News coming from SOCAR suggests that it may not be able to offer a price for the distressed LNG cargo for January,” the concerned officials said.
During the tenure of the previous government headed by then Prime Minister Shehbaz Sharif, a GtG deal was signed with the Azeri firm SOCAR, under which it is obliged to provide one LNG cargo per month.
On July 25, 2023, Pakistan and Azerbaijan signed an agreement for one year, which can also be extended for another year. Under the agreement, SOCAR Trading Company-UK will offer an LNG cargo 45 days before the commencement of the relevant delivery window, and each offer for the cargo will have a specified validity period, during which the PLL may accept the offer.
The official said SOCAR is refraining from offering LNG cargoes for January as Western economies have started to rebound and troubled LNG availability has become difficult. The Azeri firm is obliged to make an offer 45 days before delivery of the cargo, he said.
There is still time and SOCAR may bring an offer for January 2024, the official said.
Pakistan LNG Limited (PLL) is also planning to sell its tenders for spot cargo for January, but PLL has sought exemption from two issues under PPRA rules, one from 30 days response time and the other from 15 days bid. Validity time.
The process is still going on. Once the waiver is granted, PLL will issue tenders for spot cargo demand for January and it will have to respond and take a decision on the same day after a few hours.
Asked whether LNG trading companies would come up with bids for January as before, the government bought a cargo from Vitol based on its lowest bid.
However, PLL bought a cargo from SOCAR and priced it 10–20 cents lower than Vitol’s lowest bid. Market players believe that last time bids were placed to buy an LNG cargo from SOCAR. The official said this perception was wrong as SOCAR had offered its price separately as part of its process.
Government officials had earlier estimated that the Sui Southern system would have a gas shortfall of 160 MMcfd in December and 170 MMcfd in January. However, in Sui Northern’s system, the gas shortfall will be 200 mmcfd in December and 300 mmcfd in January, and the gas shortfall in December will remain at 360 mmcfd which will increase to 470 mmcfd in January.
However, the gas crisis may increase due to non-receipt of LNG cargo from SOCAR in January. Officials said that from January 2024, Pakistan will start getting four-term cargoes from Qatar at 10.2% Brent instead of three cargoes. The country is already receiving five cargoes from the same country at 13.37% of Brent at Terminal One. ENI is also offering a term cargo at 12.05% of the Brent price.
As gas demand at Sui Northern reaches 1,100 MMcfd and 960 MMcfd in January, Pakistan needs two more spot cargoes in the month. This seems difficult because bidders will come up with inflated prices taking into account their past bidding experience. Local gas production has declined by 9-10% every year to 3.19 Bcfd.
Originally published in news