Petroleum Divison rejects reports on LNG imports terming it ‘misleading’

The Petroleum Division has dismissed media reports regarding the analysis of two spot cargo bids of LNG for the second half of February 2021.

The PD in a statement said, "Ignoring the fact that spot LNG prices are always higher in winter given global demand and supply dynamics. Comparing a spot price in a high winter month with term price is totally irrational.”

PD said that if one wants to compare prices, it should be made for a full year that includes all seasons. “GoP purchased spot cargoes at average $6.84 DES(Delivered Ex Ship) including all higher cost winter cargoes in Jan, Feb, Nov and Dec 2020.Where all term cargoes received average of $8.06 DES at 18% higher rate,” it said.

Further, PLL is bound to follow PPRA rules, which requires a 30-day tender w/10- day period thereafter. PLL starts tender process approx. 90-100 days beforehand as soon as demand is confirmed.

The statement while highlighting reported quoting that in 2019, tender for Oct -Dec was floated in August while in 2020 tenders were issued late. “The facts are that combined 10 cargo tender for Oct-Dec was issued in August but only 3/10 tenders were awarded when demand was confirmed and average cost of cargoes in December 2019 was $7.81 which is higher than that of December 2020 at $6.34,” it said.

Petroleum Division said that if LNG were priced as natural gas, which will require change in legislation, ensuring price recovery for any sale additional short to medium term contracts can be signed. “Until, spot purchases can only be made once firm demand is established for consumers who are prepared to pay full price,” it said.

Petroleum Division that at this time supply side of LNG in the global market is very tight because many facilities are facing technical issues. It is expected that these supply constraints will ease by March 2021.