Ogra notifies September RLNG price after three-week delay

Published October 2, 2021
After a delay of over three weeks, the Oil and Gas Regulatory Authority on Friday notified the average sale price for re-gasified liquefied natural gas for September. — Reuters/File
After a delay of over three weeks, the Oil and Gas Regulatory Authority on Friday notified the average sale price for re-gasified liquefied natural gas for September. — Reuters/File

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

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

Opinion

Editorial

Military option
Updated 21 Nov, 2024

Military option

While restoring peace is essential, addressing Balochistan’s socioeconomic deprivation is equally important.
HIV/AIDS disaster
21 Nov, 2024

HIV/AIDS disaster

A TORTUROUS sense of déjà vu is attached to the latest health fiasco at Multan’s Nishtar Hospital. The largest...
Dubious pardon
21 Nov, 2024

Dubious pardon

IT is disturbing how a crime as grave as custodial death has culminated in an out-of-court ‘settlement’. The...
Islamabad protest
Updated 20 Nov, 2024

Islamabad protest

As Nov 24 draws nearer, both the PTI and the Islamabad administration must remain wary and keep within the limits of reason and the law.
PIA uncertainty
20 Nov, 2024

PIA uncertainty

THE failed attempt to privatise the national flag carrier late last month has led to a fierce debate around the...
T20 disappointment
20 Nov, 2024

T20 disappointment

AFTER experiencing the historic high of the One-day International series triumph against Australia, Pakistan came...