Liquefied natural gas (LNG) suppliers have refused to provide Pakistan with gas in the month of February.
According to local media reports that surfaced on Sunday, the Pakistan LNG Limited (PLL) awarded the first spot cargo to SOCAR Trading UK Ltd, while the second spot cargo was awarded to the lowest bidder, who conveyed its inability to deliver as per its bid.
Therefore, the PLL approached the second and third lowest bidders within the bid validity period, but all refused to deliver the cargo at the prices they had offered in their respective bids.
This bid default of the suppliers was associated with the recent supply shortages leading to high price volatility in the spot market coupled with extra buying in North Asia. Market reports have also been pointing out that numerous global companies are defaulting on their bids, or even contracts in some cases, given the supply shortages and extremely volatile prices.
The suppliers who had regretted to supply after bidding in the PLL tender include state-run entities and major international LNG traders.
The PLL was taking all measures available under law and its tender process, including forfeiture of bid bonds, against the bidder(s) who failed to supply cargo as per their bids.
The PLL is also working to reconfirm demand at the current prices and exploring alternatives if demand for an additional cargo in February was reconfirmed.
Earlier on January 13, Pakistan allowed the private sector to import LNG by issuing import licenses to at least two companies, for the first time in the country’s history.
According to details, Oil and Gas Regulatory Authority (OGRA) issued 10-year term LNG importing licenses to the private companies, stating that private sector import will encourage competition in the market and probably bring down prices of the utility.
“The licences would be valid for 10 years, starting Jan 8, 2021. Both applicants are stated to have their own customers in the private sector and would arrange LNG imports without any liability to the government by utilising pipeline network of gas utilities. Initially, they plan to also utilise the spare capacity of the LNG re-gasification terminals.”
Similarly, the PLL has also floated a tender, seeking bids to allocate idle LNG terminals to the private sector for a period of six months starting from February to July 2021.