SINGAPORE: Pakistan LNG is seeking three liquefied natural gas (LNG) cargoes through an emergency tender, its second this week, as the country grapples with gas shortages, industry sources said.
Record high spot LNG prices due to freezing temperatures in North Asia are forcing emerging economies such as Pakistan to ration gas and seek alternative fuels.
Shipping constraints and the sudden spike in spot prices mean some suppliers have not been able to meet delivery timelines.
Pakistan LNG, a government subsidiary that procures LNG from the international market, is seeking three cargoes for delivery over March 11 to 12, March 18 to 19 and March 24 to 25 in a tender that closes on Jan. 26 and is valid for the same day, two sources said.
It had issued an emergency tender earlier this week for two cargoes to be delivered in February, after at least one supplier was unable to deliver a scheduled cargo.
Pakistan's energy ministry said in a statement on Friday it has arranged one LNG cargo for February delivery.
The ministry said the price of the February cargo was about 22% lower than the price an earlier bidder had offered, and later withdrawn, for the same cargo. It did not specify the name of the seller.
Sources however said the cargo was awarded to Qatar Petroleum Trading, which had placed the lowest offer at a percentage of the Brent crude oil futures price, known as a slope rate, of 16.33%, for delivery over Feb. 25 to 26, the sources said.
Commodity trader Vitol had placed the lowest offer for a cargo to be delivered over Feb. 21 to 22 at a slope rate of 19.55%. That cargo, however, was not awarded, they said. The reason was not immediately clear.
With spot prices falling as temperatures get warmer, prices for cargoes to be delivered in March are expected to be lower, traders said, which could be encouraging more buying.-Reuters
RECORDER REPORT adds: However, the division did not provide much detail about the LNG cargo.
This also puts to rest the argument that ordering very early, necessarily guarantees a better price.
To put things into perspective, the time period between the bid submission date and delivery date of cargo for the recent urgent tender was 35 days as compared with 49 days for the earlier tender in the same delivery window.
The arrangement was made following refusal from the LNG suppliers to provide LNG supplies to Pakistan for February in the wake of the recent massive hike in gas prices.
The Pakistan LNG Limited advertised a tender on 28th Nov, 2020 to procure two spot LNG cargoes delivered in Feb 2021.
On 28th Dec 2020, bids were opened, the results were announced, and by the PPRA Rules, the award intimation was made 10 days later, on 7th Jan 2021.
The spot cargo in mid-February was awarded to the SOCAR Trading UK Ltd.
In the last week of Feb 2021, the second spot cargo was awarded to the lowest bidder per the PPRA Rules, who conveyed the inability to deliver as per its bid.
The PLL approached the 2nd and 3rd lowest bidders within the bid validity period, all of whom regretted to deliver the cargo at the prices they had offered in their respective bids.