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Gas deficit looms large as PLL fails to procure eight LNG cargoes for Dec-Jan

muhammadhafeezmalik

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The unprecedented gas deficit in the forthcoming winter season has become inevitable as Pakistan LNG Limited (PLL) has failed to attract the LNG trading companies in response to its tender floated on September 11, 2021 seeking eight LNG cargoes, four each for December and January.

This means the country will not be able to import 1.2 bcfd LNG each in December and January --- peak demand season in winter, instead it will be able to import just 900mmcfd in each month with a deficit of 300 mmcfd. In November, the government will import 1bcfd against 1.2 bcfd capacity.

In the wake of no response from LNG trading companies, in December and January, PLL’s 600 mmcfd capacity at PGPCL terminal will remain underutilized by 300 mmcfd each month. “This would be a double jeopardy for the government creating a mammoth political backlash from the masses sick of high inflation for a very long time,'' a senior official at the Energy Ministry privy to the development told The News.

“The production of local gas has fallen to 2.8 bcfd and the country can import 1.2 bcfd LNG which will not be fully exploited in the coming winter. In the winters the demand goes up to 5 bfcd whereas the country will only have 3.7 bcfd in December and January for failure in purchasing eight LNG cargoes.’

There would be a sizeable gas crisis even if the government manages the 8 LNG cargoes during the peak demand in December and January, but under new scenario without contracting the required tender, the gas crisis intensity would increase to a level where for the government would not be able to provide gas to power and export sector. The domestic sector may also face the maximum load shedding apart from zero gas supply of non-export, commercial and CNG sector.

“This means that in December and January, the country’s economic and industrial activities will virtually come to standstill,” the official said. The Pakistan LNG Limited (PLL) confirmed the development saying that in response to its PPRA compliant tenders floated on September 11, 2021 seeking 8 LNG cargoes, four each for December, 2021 and January 2022, it has not received any bids.

The LNG companies may not have submitted their bids on account of PPRA compliant tender, as under its rules the PPL is bound to hold the bids for 15 days discouraging the companies to come up with bids at a time when LNG spot prices have crossed $35 per MMBTU. Against the backdrop, the PLL got an exemption from PPRA on September 21, 2021 for spot purchasing which did not prove fruitful as it had already issued tenders on September 11, 2021.

The official at the Energy Ministry said that in November, PSO will have 6 term cargoes and PLL will have four including one cargo from Qatar at 10.2 percent of the Brent. However, in December and January the country will have 9 LNG cargoes (6 by PS0 and 3 by PLL) in each month against the demand of 13 cargoes per month. So there will be an unprecedented gas crisis in December and January. He said Bangladesh purchased LNG under spot purchasing at over $30 per MMBTU some days back which has now further increased over $35 per MMBTU.

The official said that the prices of LNG in the spot market have increased mainly because of the massive demand by EU countries as Russia has massively squeezed the gas supply to whole Europe after Germany raised the issues of sanctioned companies involved in building the Nord Stream 2 undersea gas pipeline. The LNG demand has also been driven as China is abandoning power generation based on coal as fuel.


 

Jungibaaz

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This is why forward agreements are a decent idea, the tail risks like this are hedged. Even if it costs you when gas prices fall, uncertainty is usually worse for business, and spot markets are really rough right now, worst time to be a buyer.
 

Sineva

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Its very funny reading this,now if only pakistan had had the courage to honor the commitments it had made in the ip pipeline deal that it signed,then it would likely have all the gas it could use today.:yes4:

The great irony here,is that pakistan today owes iran more in penalty fees for its failure to complete its section of the pipeline,than the actual cost of its section of the pipeline....:sarcastic:
:disagree:
 

Norwegian

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This is why forward agreements are a decent idea, the tail risks like this are hedged. Even if it costs you when gas prices fall, uncertainty is usually worse for business, and spot markets are really rough right now, worst time to be a buyer.
Except the fact Pakistan is still paying the highest price for electricity generation in the region due to these unusually expensive forward contracts.
32C6B368-AA86-4406-AF49-D929E8C6E107.png
B01A5460-C7C9-46AA-88B2-400C2A54FAAF.jpeg
FEF495A4-A7FE-4B8A-A0E6-293A50638A02.jpeg

Such things are bound to happen when an incompetent dumb and blind moron is leading the country.
Incompetent Imran Khan is responsible for global oil and gas supply shortage 🤦‍♂️

@Patriot forever @ziaulislam @Dual Wielder
Its very funny reading this,now if only pakistan had had the courage to honor the commitments it had made in the ip pipeline deal that it signed,then it would likely have all the gas it could use today.:yes4:

The great irony here,is that pakistan today owes iran more in penalty fees for its failure to complete its section of the pipeline,than the actual cost of its section of the pipeline....:sarcastic:
:disagree:
Pakistan could not face wrath of US if it continued dealing with under sanctioned Iran. Pakistan is not China or India
 
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The Accountant

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Except the fact Pakistan is still paying the highest price for electricity generation in the region due to these unusually expensive forward contracts. View attachment 784132 View attachment 784133 View attachment 784134

Incompetent Imran Khan is responsible for global oil and gas supply shortage 🤦‍♂️

@Patriot forever @ziaulislam @Dual Wielder

Pakistan could not face wrath of US if it continued dealing with under sanctioned Iran. Pakistan is not China or India
No use ... They are brain dead people. They cant see the reality
 

Pandora

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This is why forward agreements are a decent idea, the tail risks like this are hedged. Even if it costs you when gas prices fall, uncertainty is usually worse for business, and spot markets are really rough right now, worst time to be a buyer.
You cant have forward agreements for spot fixed LNG contracts. Pakistan imports almost 80% LNG via long term commitments rest is done by spot buying bcz our requirement fluctuates a lot. Secondly Pakistan doesnt have enough storage capacity to accomodate more than 4 days LNG at one time. Pakistan will need at least 15 billion dollars worth investment in terminals just to accomodate 30 days worth of gas. In that case pakistan can afford to skip spot buying in one month. It is not as easy as being portrayed in media.
 

Qutb-ud-din Aybak

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Its very funny reading this,now if only pakistan had had the courage to honor the commitments it had made in the ip pipeline deal that it signed,then it would likely have all the gas it could use today.:yes4:

The great irony here,is that pakistan today owes iran more in penalty fees for its failure to complete its section of the pipeline,than the actual cost of its section of the pipeline....:sarcastic:
:disagree:
TAP(Exclude I) isthe future of Pakistan as we now have peace in afghanistan.
 

Mentee

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Its very funny reading this,now if only pakistan had had the courage to honor the commitments it had made in the ip pipeline deal that it signed,then it would likely have all the gas it could use today.:yes4:

The great irony here,is that pakistan today owes iran more in penalty fees for its failure to complete its section of the pipeline,than the actual cost of its section of the pipeline....:sarcastic:
:disagree:
It's shia gas, we into evenglical
 

313ghazi

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This is why forward agreements are a decent idea, the tail risks like this are hedged. Even if it costs you when gas prices fall, uncertainty is usually worse for business, and spot markets are really rough right now, worst time to be a buyer.
Except the fact Pakistan is still paying the highest price for electricity generation in the region due to these unusually expensive forward contracts. View attachment 784132 View attachment 784133 View attachment 784134

Incompetent Imran Khan is responsible for global oil and gas supply shortage 🤦‍♂️

@Patriot forever @ziaulislam @Dual Wielder

Pakistan could not face wrath of US if it continued dealing with under sanctioned Iran. Pakistan is not China or India
Clearly there needs to be a middle ground where you buy say 6,12,18 months in advance and aim to wrap up the next negociation 6 months before the previous one expires. You might not get the best deal but it gives you flexibility, all without having the uncertainty.
Its very funny reading this,now if only pakistan had had the courage to honor the commitments it had made in the ip pipeline deal that it signed,then it would likely have all the gas it could use today.:yes4:

The great irony here,is that pakistan today owes iran more in penalty fees for its failure to complete its section of the pipeline,than the actual cost of its section of the pipeline....:sarcastic:
:disagree:

I agree. This is just a dumb move on our part. The sanctions etc are coming anyway - we might as well secure our gas needs.
 

POPEYE-Sailor

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Awww another Achievement by Poootiiii
Now people will use wood to make it warm and show contribution in global warming.
This is Incredible Pakistan not NAYA PAKISTAN
:omghaha: :omghaha:
 
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Winter is coming: Major gas crisis expected again in Pakistan

  • Gas deficit looms large as PLL fails to procure eight LNG cargoes.
  • Energy ministry official says prices of LNG in spot market have increased mainly because of high demand by EU countries.
  • Demand for LNG has also been driven as China is abandoning power generation based on coal as fuel.


ISLAMABAD: Another major gas crisis is expected to hit the country this winter as Pakistan LNG Limited (PLL) was unable to attract LNG trading companies to its tender floated on September 11, 2021, where eight LNG cargoes were sought - four each for December and January.

According to a report in The News, this means the country will not be able to import 1.2 bcfd LNG each during the peak demand season in December and January.

Instead, the country will be able to import just 900mmcfd each month with a deficit of 300 mmcfd. In November, the government will import 1bcfd against a capacity of 1.2 bcfd, the publication reported.


Because of no response from LNG trading companies, PLL’s 600 mmcfd capacity at the PGPCL terminal will remain underutilized by 300 mmcfd in both in December and January. “This would be double jeopardy for the government, creating major political backlash from the masses who are sick of high inflation for a very long time,'' a senior official from the energy ministry told the publication.

“The production of local gas has fallen to 2.8 bcfd and the country can import 1.2 bcfd LNG which will not be fully exploited in the coming winter. In the winters, demand goes up to five bfcd, whereas the country will only have 3.7 bcfd in December and January for failure in purchasing eight LNG cargoes," the official was quoted as saying.

'Economic, industrial activities will virtually come to a standstill'
Even if the government manages the eight LNG cargoes during peak demand in December and January, there will be a sizeable gas crisis.

Under the new scenario, without contracting the required tender, the intensity of the gas crisis will reach a point where the government will not be able to provide gas to the power and export sectors. The domestic sector may also face maximum load-shedding, apart from zero gas supply of non-export, commercial and CNG sectors.

“This means that in December and January, the country’s economic and industrial activities will virtually come to standstill,” the official said.

PLL confirmed the development, saying that in response to its PPRA compliant tenders floated on September 11, 2021, seeking eight LNG cargoes, four each for December, 2021 and January 2022, it has not received any bids.

The LNG companies may not have submitted their bids on account of PPRA compliant tender, as under its rules the PPL is bound to hold the bids for 15 days, discouraging the companies to come up with bids at a time when LNG spot prices have crossed $35 per mmbtu.

Against this backdrop, the PLL got an exemption from PPRA on September 21, 2021 for spot purchasing which did not prove fruitful as it had already issued tenders on September 11, 2021.

In November, PSO will have six term cargoes and PLL will have four, including one cargo from Qatar at 10.2% of the Brent, the energy ministry official said.

In December and January, however, the country will have nine LNG cargoes (six by PS0 and three by PLL) in each month against a demand of 13 cargoes per month. So there will be an unprecedented gas crisis in December and January.

He said Bangladesh purchased LNG under spot purchasing at over $30 per mmbtu some days back, which has now further increased over $35 per mmbtu.

The official said that the prices of LNG in the spot market have increased mainly because of the high demand by EU countries as Russia has majorly squeezed gas supply to all of Europe after Germany raised an issue of sanctioned companies being involved in building the Nord Stream 2 undersea gas pipeline.

The demand for LNG has also been driven as China is abandoning power generation based on coal as fuel.

 

farok84

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You cant have forward agreements for spot fixed LNG contracts. Pakistan imports almost 80% LNG via long term commitments rest is done by spot buying bcz our requirement fluctuates a lot. Secondly Pakistan doesnt have enough storage capacity to accomodate more than 4 days LNG at one time. Pakistan will need at least 15 billion dollars worth investment in terminals just to accomodate 30 days worth of gas. In that case pakistan can afford to skip spot buying in one month. It is not as easy as being portrayed in media.
Hi,

Quite interesting figures. Do you have more information regarding it?

For price comparison, India is constructing its Dharma Lng Terminal (50-50% stakes b/w Adani & Total - to be commissioned in July 2022) for about $750million, that is a 12mtpa regasification capacity with two 180,000 cubic meters storage tanks, with a jetty capable of handling QMax cargoes. Our combined Lng storage capacity is around 320,000 cubic meters (13,750 mmcf or 9.5days at 1440 mmcfd regasification capacity)

Influx of $15B seems too huge, and unrealistic for our needs.

By allowing Tabeer and Energas to construct more FSRU based Lng terminals, Pti has done huge blunder. They should have incentivized them, giving them a 10 year tax holiday, and getting them to build Onshore import terminals instead with two 180,000 cu meters storage tanks each, effectively mitigating our strategic Lng storage requirements.

Clearly there needs to be a middle ground where you buy say 6,12,18 months in advance and aim to wrap up the next negociation 6 months before the previous one expires. You might not get the best deal but it gives you flexibility, all without having the uncertainty.
Hi,

Unfortunately, we won't be able to afford it. China has recently signed two 2 year contracts, paying premium upto $2/mmbtu over JKM & TTF. Precedence has been set, and it heavily favors the suppliers, we simply can't compete. Our spot buying will go down once our new Qatar contract fully comes into play (in 2024). Pti has envisaged our firm demand to increase from 800 to 1000mmcfd by then and has secured volumes accordingly. Till then it will be spot buying or alternate fuels.
 
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Pandora

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Hi,

Quite interesting figures. Do you have more information regarding it?

For price comparison, India is constructing its Dharma Lng Terminal (50-50% stakes b/w Adani & Total - to be commissioned in July 2022) for about $750million, that is a 12mtpa regasification capacity with two 180,000 cubic meters storage tanks, with a jetty capable of handling QMax cargoes. Our combined Lng storage capacity is around 320,000 cubic meters (13,750 mmcf or 9.5days at 1440 mmcfd regasification capacity)

Influx of $15B seems too huge, and unrealistic for our needs.

By allowing Tabeer and Energas to construct more FSRU based Lng terminals, Pti has done huge blunder. They should have incentivized them, giving them a 10 year tax holiday, and getting them to build Onshore import terminals instead with two 180,000 cu meters storage tanks each, effectively mitigating our strategic Lng storage requirements.



Hi,

Unfortunately, we won't be able to afford it. China has recently signed two 2 year contracts, paying premium upto $2/mmbtu over JKM & TTF. Precedence has been set, and it heavily favors the suppliers, we simply can't compete. Our spot buying will go down once our new Qatar contract fully comes into play (in 2024). Pti has envisaged our firm demand to increase from 800 to 1000mmcfd by then and has secured volumes accordingly. Till then it will be spot buying or alternate fuels.
No we really we need atleast 6 new terminal. At least 2 new terminal with in haste to atleast have a backup in case of any problem with others. Right now first two terminals are pumping it at full capacity non stop bcz we have non storage capacity. All gas that comes on port is being pumped directly into system after regasification. Pakistan will need at least 6 new terminals by 2030 at minimum.
i was actually talking about highly compressed storage terminals earlier to have a storage capacity for 1 month. It is what we should aim for long term due to ever increasing demand. 15 billion will be minimum investment to build inland storage facilities. Having this storage capacity will help us against market volatility as well.
We cant compare Indian terminal price tag to Pakistan bcz our terminals are built by fireign companies. There is no local company which can undertake this task successfully. I am not sure about exact price tag for first two terminal but i think it was probably 1.5-2 billion for first 2.
 

muhammadhafeezmalik

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Except the fact Pakistan is still paying the highest price for electricity generation in the region due to these unusually expensive forward contracts. View attachment 784132 View attachment 784133 View attachment 784134

Incompetent Imran Khan is responsible for global oil and gas supply shortage 🤦‍♂️

@Patriot forever @ziaulislam @Dual Wielder

Pakistan could not face wrath of US if it continued dealing with under sanctioned Iran. Pakistan is not China or India
No use ... They are brain dead people. They cant see the reality

This has nothing to do with prices, this incompetent rubber stamp in not able to even secure the gas for next months. Price is a secondary issue here.
 

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