Sui Northern declares force majeure on RLNG supply as Hormuz tensions disrupt cargoes

Sui Northern Gas Pipelines Limited (SNGPL) has declared force majeure on the supply of regasified liquefied natural gas (RLNG) to power plants for three weeks due to renewed tensions around the Strait of Hormuz, a move that could affect more than 5,000 megawatts of RLNG-based power generation in Punjab and increase the risk of loadshedding by limiting electricity transmission from Sindh to upcountry load centres, Dawn reported.

In separate letters to four RLNG-based power plants in Punjab, SNGPL said Pakistan State Oil had informed it that a force majeure event notified because of the ongoing war in the Gulf region remained in effect and continued to affect the obligations of its supplier under LNG Sale and Purchase Agreements.

According to SNGPL, PSO also conveyed that the regional military conflict remained unresolved and security threats were still elevated.

The company said Qatar Energy had begun progressive resumption of operations based on its assessment of the regional security situation, employee safety arrangements and operational constraints. However, safe transit through the Strait of Hormuz remained intermittent and limited despite an increase in vessel movement.

Qatar Energy has indicated that it cannot deliver cargoes scheduled from July 14 to August 3, in addition to previously affected cargoes. 

SNGPL said the disruption was beyond its reasonable control and had materially affected its ability to meet obligations under the Gas Supply Agreement signed on October 29, 2016, including RLNG supply to power plants and compliance with gas specifications.

The company said the previously notified force majeure event would continue under Article 13 of the agreement for as long as its effects persist.

SNGPL said it was monitoring the situation and coordinating with PSO to manage the impact on RLNG supplies and related operations. It added that further updates would be provided if cargo schedules beyond August 3 were affected.

Officials said LNG supplies were expected to remain largely curtailed until August 3. They warned that power shortages and loadshedding could increase in Upper Punjab and Northern Areas.

Officials also said the Independent System & Market Operators may have to run power plants on diesel, which would raise generation costs. Consumers could face either higher outages or additional fuel cost adjustments later.