ISLAMABAD: The government has reportedly decided not to award LNG cargoes for the months of April and May 2022 due to higher prices, well informed sources told Business Recorder.
This was conveyed by Manager (Sales and Marketing) Sui Northern Gas Company Limited (SNGPL) in a letter written after back to back meetings in the Ministry of Energy.
According to sources, PPL has informed SNGPL that multiple meetings were held between Power and Petroleum Divisions on March 25, 2022 which were duly attended / participated by the relevant stakeholders including Pakistan State Oil, PPL, CPPA-G and SSGC.
During the meeting the stakeholders discussed and deliberated upon the suitability of the LNG bids received by PPL.
“It was decided that owing to the adverse impact on Economic Merit Order (EMO) of such high LNG prices PPL will not award the LNG cargoes for the months of April and May 2022. PPL will consider the option of re-tendering for LNG cargo to be delivered in May 2022 in case of any improvement in the LNG prices,” said PPL Manager (Sales and Marketing).
The monthly average re-gasification rates at terminal-2 (including PSO-QP cargoes) for April 2022 will be 201 MMCFD of which 17 MMCFD will be for KE and 187 MMCFD for SNGPL whereas in May 2022 regasification will be for 241 MMCFD LNG, which includes 65 MMCFD for KE and 176 MMCFD for SNGPL.
PPL argues that it is prudent for SNGPL to plan its activities accordingly while any development or change in situation will be updated by PLL in due course of time.
PPL has maintained that notwithstanding the current situation, SNGPL’s assertion regarding firm RLNG requirement is incorrect- any requirement unless backed by an agreement and payment security cannot be construed as firm. Furthermore, PLL has time and again intimated the issues which are pending at SNGPL’s end.
The issues include: (i) the finalization of GSPA; (ii) recovery of outstanding amount; and (iii) proper mechanism for subsequent RLNG payments in a timely manner.
The sources said SNGPL had been asked to expedite the resolution of pending issues for smooth RLNG supplies in the future.
The regasification profile is based on PPL’s preferred berthing dates of the planned cargoes and may change in case of any change in berthing dates/ schedule.
The regasification profile is based on standard cargo sizes, which may vary between +/- 5 percent. RLNG supply to KE and/ or any other firm supply consumer shall be carved out from the regasification rates. RLNG supply to KE is based on their indicative requirement and subject to change.
Copyright Business Recorder, 2022