ISLAMABAD: In yet another round of spot tendering, Pakistan received very expensive bids for seven cargoes of Liquefied Natural Gas (LNG) deliveries in October and Nove­mber that may have to be rejected by the board of directors of state-run Pakistan LNG Ltd (PLL).

Bids opened by the PLL, a total of three bidders were technically qualified for seven LNG cargoes between Oct 7 and Nov 27. Together they submitted a total of 10 bids — one by PetroChina, two by Total Gas & Power and seven by Vitol Bahrain. PetroChina made the highest bid of $25 per unit for Oct 27-28 delivery slot.

Informed sources said the PLL would have to go for second round of bidding on a short notice as it had done in the past as well and was able to get lower rates a few months ago.

These sources said these bids had been invited under procurement rules that required 30-day notice and bid validity for 15 days. Not only the offers were fewer, the bid rates were on the higher side as no bidder could hold the vessel for such a long time or would charge a premium.

The PLL, sources said, was insisting on complete exemption from procurement rules for import of LNG as other countries including India had done to commensurate with LNG spot market dynamics.

Total was rated lowest evaluated bidder for its both bids at the rate of $17.1449 per million British Thermal Unit (mmBtu) for delivery on Oct 17-18 and $17.5350 per mmBtu for Nov 16-17 delivery window.

Vitol Bahrain was rated the lowest evaluated bidder for all the five other cargoes, although all these turned out to be single bids. 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 for Nov 11-12 and $20.9266 for Nov 26-27 delivery window.

The PLL did not immediately take a decision whether or not to accept the lowest evaluated bids. “No decision as yet. Bids are valid for 15 days,” Acting Managing Director of PLL Masood Nabi told Dawn saying board of directors would take a final decision.

A power sector expert said the LNG bids received by PLL were not viable for power generation as they were almost equivalent of 25-30 of Brent and beyond 17-18pc of Brent, furnace oil becomes competitive for power generation. He said spot markets had recently dropped slightly after Russia hinted at increasing gas supplies to Europe but later noted it may not be possible before January, hiking LNG prices again.

In winters, the LNG prices generally stay on the higher side but these have made fresh records in summers owing to supply constraints in global market.

Pakistan’s average LNG prices may, however, become lower on the back of second LNG import deal with Qatar that has to formally operationalise in January this year at about 11pc of Brent coupled with old first deal of $13.37pc of Brent with Qatar. This would take the overall supplies under long term deals to about 70-75pc of total existing terminal capacity, leaving smaller quantities to the vagaries of unpredictable spot market.

Last week, Pakistan State Oil had also received a highest bid rate of $25 per mmBtu but has not yet taken a final decision.

Published in Dawn, August 25th, 2021