OGRA reduces RLNG prices by up to 2.7% despite record system losses

The Oil and Gas Regulatory Authority (Ogra) announced a reduction of up to 2.7% in the sale price of Regasified Liquefied Natural Gas (RLNG) for December. 

According to the notification, RLNG’s sale price for SNGPL at the transmission stage decreased by 3.26% to $11.97 per million British thermal unit (mmBtu) from $12.37 in November. At the distribution stage, Sui Northern Gas Pipelines Limited (SNGPL) price was reduced by 2.72% to $12.90 per mmBtu from $13.26 in November.

For Sui Southern Gas Company Limited (SSGCL), the transmission-stage price was cut by 6% to $10.54 per mmBtu from $11.22 last month. The distribution price for SSGCL was reduced by 1.99% to $12.54 per mmBtu from $12.80 in November. The higher gap between transmission and distribution prices reflects significant losses during the distribution process.

The notification revealed that RLNG consumers are paying up to 16% higher charges due to unaccounted-for gas (UFG) losses.

Ogra increased the UFG loss limit for SSGCL from 13% to 16.16% and for SNGPL from 8% to 8.6%. The regulator did not clarify the reasoning behind its decision to approve higher UFG losses, which significantly impacts RLNG pricing.

In absolute terms, SSGCL’s transmission price reduction amounted to $0.675 per mmBtu, while the distribution price dropped by $0.255 per unit. For SNGPL, transmission prices decreased by $0.40 per mmBtu, and distribution prices were cut by $0.36 per unit.

Despite the reductions, the RLNG distribution prices for SSGCL and SNGPL, at $12.54 and $12.90 per mmBtu respectively, remain significantly higher than the Pakistan State Oil (PSO) average delivered price of $8.93 per mmBtu. This disparity is attributed to profit margins charged by LNG importers and port authorities, alongside high UFG losses of 16.16% for SSGCL and 10.13% for SNGPL.

The RLNG basket price for December was calculated based on 12 cargoes. These included 10 cargoes under PSO’s contracts with Qatar Gas at an average price of $8.93 per mmBtu — with four cargoes at $7.50 and six at $9.87 per mmBtu. Another cargo imported by Pakistan LNG Ltd (PLL) was delivered at $8.97 per mmBtu, slightly higher than the average PSO cargo price.

Ogra stated that the RLNG price reductions align with federal policy guidelines issued through the Ministry of Energy.