Pakistan to reduce LNG import from Qatar amid decline in consumption

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ISLAMABAD: The government has decided to reduce the monthly import of Liquefied Natural Gas (LNG) from Qatar due to a significant decline in demand following the outbreak of COVID-19 pandemic in the country.

According to sources, LNG demand has witnessed a massive decrease in recent days, owing to which the government has decided to import only three of the already agreed five LNG cargos from Qatar this month.

Although the government had desired to postpone the supply of LNG from Qatar by claiming force majeure, there was no legal provision in the multi-billion dollar Pak-Qatar LNG deal other than decreasing the agreed quantity of LNG.

“Owing to no legal provision of force majeure in $16-billion LNG sale and purchase agreement between Pakistan and Qatar, the former cannot stop the import of LNG from the latter,” an official confirmed.

Sources said as the government has informed Qatar that it would import only three cargos for April, while the decision regarding LNG import for May would be taken by the end this month.

Pakistan has been importing expensive LNG from Qatar at a price parity of 13.37pc with Brent crude (almost $6/MMBTU) under a long-term agreement.

Sources said that Pakistan could save an amount of Rs10 billion on a monthly basis by postponing the import of already agreed three LNG cargos from the international commodity suppliers — Eni and Gunvor.

An insider explained, “The country can postpone LNG purchase from the two companies without paying any penalty as there are two conditions in their LNG purchase agreement under which Pakistan can postpone LNG purchase in case of epidemics or quarantine restrictions.”

Sources noted that the LNG from Eni and Gunvor was being purchased at a cost of $5.5 to $6 per MMBTU, while LNG is available in the international market at $1.5 to $2 per MMBTU.

Meanwhile, as per the country’s energy experts, Pakistan should immediately postpone or cancel the purchase of LNG from Eni and Gunvor to decrease the burden on the country’s foreign exchange reserve.

They said that Pakistan could restore the purchase of LNG from these commodity suppliers and can even purchase LNG on spot price from international market as and when the demand of gas is increased.

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