Pakistan LNG Limited (PLL) and Petronas of Malaysia will initiate negotiations on LNG pricing and the volume following the signing of an inter-governmental agreement between Pakistan and Malaysia, in this connection. Sources at the Ministry of Energy (Petroleum Division) told this correspondent that the inter-governmental LNG agreement signed between Pakistan and Malaysia in Islamabad on Thursday is an 'umbrella agreement' and is a component of the government's plan to negotiate LNG import deals with companies of six countries aimed at meeting domestic gas shortage.
Sources further said that the meeting between the two sides to firm up price and volume is yet to be scheduled; however, it may be initiated by the end of current month. Under Government to Government (G2G) negotiations, PLL is engaged in discussions specifically with PETRONAS of Malaysia and Gazprom of Russia. In addition, PLL is also in discussions with ENGIE of France, ENI of Italy, OTI of Oman and SOCAR of Azerbaijan for purchase of LNG.
For import of LNG molecules, a subsidiary company of Government Holding Private Limited (GHPL) with the mandate to import LNG was established after the approval from Economic Coordination Committee (ECC) on November 25, 2015. Accordingly, PLL was incorporated and as per its mandate approved by the ECC, it is in the process of arranging LNG supplies through open competitive bidding as well as through G2G negotiations.
Pakistan is currently facing a severe shortage of natural gas, both for its electricity generating plants and for general use by all sectors. Domestic gas production of nearly 4,000 MMCFD leaves a supply-demand gap of approximately 2,000 MMCFD which is continuously rising. In September 2017, commodity trader Gunvor and Spain's Gas Natural Fenosa won Pakistan's LNG tender for supply of LNG beating a host of rivals, including Malaysia's Petronas.
A document posted on Pakistan LNG Ltd website shows that commodities trader Gunvor and Spain's Gas Natural Fenosa put in the lowest bids in a tender to supply Pakistan with 4 LNG cargoes in January 2018. For the January 11-12, 2018 delivery window, Gas Natural Fenosa submitted a competitive bid at 16.25 percent of Brent. For January 16-17 and January 21-22, Gunvor was the most competitive at 16.4844 percent and 16.8931 percent, respectively. For Jan 26-27, Gas Natural Fenosa won with its 16.125 percent bid. PLL expects Pakistan's import of 3.5 million MT per year in 2016 to rise dramatically to 20 million MT per year in 2018 and 30 million MT per year by 2022.
Copyright Business Recorder, 2017