Government plans more LNG supply tenders

Government plans to launch at least two liquefied natural gas (LNG) supply tenders in the coming months, a senior energy industry official said on Tuesday, confirming that trading house Gunvor has won a tender to supply 60 LNG shipments to Pakistan over the next five years. Pakistan has become a major buyer in the global LNG markets in recent years, with the government frantically building pipelines and port terminals to speed up imports to alleviate chronic energy shortages.
About a third of energy supply comes from expensive furnace oil, and the South Asian nation of 180 million people can currently only meet two thirds of its demand for gas. The emergence of Pakistan as a large-scale buyer is a welcome boost in the market for LNG as demand slows in traditional big buyers like Japan. Pakistan's second LNG terminal will become operational in the middle of 2017, with an import capacity of 600 million cubic feet of gas per day. That equates to about six cargo shipments per month. A senior Pakistani government official said Pakistan LNG, a new state-owned company set up to import gas, was working on fresh deals before the terminal becomes operational.
"Depending on how a potential government-to-government deal goes, we will have at least two more tenders in the next few months," the official said.
A round of bidding was held earlier this month for the purchase of a combined 240 shipments of LNG, worth about $5 billion over the lifetime of the contracts. Gunvor supplied the lowest bid for the five-year tender, expressed as a percentage of a barrel of crude oil, at 11.6247 percent. For the 15-year tender to supply approximately 180 cargoes, Italy's Eni entered the lowest bid of 12.29 percent of a barrel of crude oil.
"The Gunvor bid will be confirmed today," said the official.
The evaluation process for the 15-year tender was continuing. Spot LNG prices have collapsed in recent years and the Gunvor bid was among one of the lowest ever recorded. "Using this new pricing as the benchmark, we estimate saving the Pakistani consumer more than 25 billion rupees ($240 million) per year," the official added. Pakistan's ruling party is battling to end energy blackouts in time for the 2018 elections and plans to have five LNG terminals operational by the start of 2019, including two private terminals.