There is not much RLNG available for Pakistan to procure for the next two to three months. Spot cargoes have been hard to come by, and long-term cargoes have been cancelled by suppliers for the months to come. Even though China has recorded significant slump in RLNG imports, Europe is still gasping for gas, as Russian supplies get hit. America’s gas future prices too have continued to sour. All of this tells Pakistan will continue to struggle to procure more imported gas, as peak summer season approaches.
Oil and Gas Regulatory Authority (OGRA) released consumer prices for April 2022 with the weighted average distribution price excluding GST for SSGC at $17/mmbtu and for SNGPL at $15.65/mmbtu. This is at par with the highest ever LNG consumer prices recorded last month. The difference this time around is with the spot cargo, which Pakistan managed to get hold of at 12.14 percent Brent slope, versus a spot cargo at record high delivered ex-ship price of $25/mmbtu.
On the other hand, PSO’s long-term cargoes cost the highest ever at $16.9/mmbtu at distribution level, excluding GST.
This is despite two cargoes arranged under long-term supply contract of 10.2 percent Brent slope, and five cargoes at 13.37 percent.
The slope for RLNG delivered ex-ship prices is based on last three-month Brent average of $97/mmbtu – up 15 percent month-on-month. The Brent average for the next two months would be on a much higher side, as January and February will be excluded going forward, and Brent has stayed at or around $100/bbl for much of April 2022.
Losses in the energy sector have always known to be higher and the regulator’s acceptance for distribution losses for RLNG has been adjusted on the higher side. The T&D losses incorporated in the consumer end price has gone up by nearly three times for SSGC, and 200 bps for SNGPL, at 18 and 9 percent, respectively.
Pakistan’s power sector is reportedly facing fuel shortages already as the mercury rises. The problem gets compounded with reduced water availability at the dams and extended turnaround at nuclear plants. The RLNG plants happen to be the most efficient in terms of energy efficiency, but it appears there will not be enough fuel available for them to be run at full throttle, yet again. In some cases, the high price would also mean RLNG sitting lower on merit order. Whichever way it goes, dearer cost of electricity generation is not going anywhere, anytime soon.