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Price fall at start of winter a welcome relief for gas consumers
As stoves are turned off due to gas shortage with the start of cold weather, Pakistan is hoping to arrange some liquefied natural gas (LNG) cargoes following a sharp decline in prices in the global market.
LNG prices, which had ballooned to the peak of $60 per million British thermal units (mmbtu), have now dropped to $27 per unit.
“It is unusual that LNG prices are coming down at the beginning of winter when Europe is looking for supplies due to the reduction in Russian gas flows,” an LNG industry official said while talking to The Express Tribune.
Pakistan has been struggling to arrange LNG cargoes in recent months to meet the growing demand for gas in the winter season. State-owned Pakistan LNG Limited (PLL) has so far failed to secure supplies as demand has surged in many countries including the European states.
In June this year, PLL was forced to scrap an LNG tender because the supplier quoted a high bid of $39.8 per mmbtu. It led to electricity outages in the country with power plants running dry due to the absence of required fuel.
Qatar Energy had offered the high bid of $39.8 per mmbtu for delivery at the end of July. PLL rejected the bid, fearing it would push up the cost of electricity generation by 20%. This LNG price would have cost even more than the cost of power generation by furnace oil-based plants.
Later, in October, PLL announced that it had not received any bid sought for 72 LNG cargoes on the Delivered Ex-Ship basis at Port Qasim, Karachi over a period of six years. PLL tender covered the period from January 2023 to December 2028.
Industry people reveal that gas and power utilities in different countries had slashed the purchase of expensive LNG. With the costly fuel, cargo-carrying ships were also not available in the market as they had already been booked.
Now, LNG prices have come down, prompting Pakistan’s private sector to import the gas from the spot market. Private sector has already been allowed to bring LNG shipments, but not a single cargo has been imported so far.
Universal Gas Distribution Company CEO Ghiyas Paracha told The Express Tribune that the private sector should be given opportunity for LNG import.
“Private sector can help bring LNG to meet domestic gas demand. If the private sector comes into LNG business, it will also help to reduce circular debt,” he emphasised.
Circular debt in the gas sector has gone up to Rs1.5 trillion, posing a serious threat to the entire energy chain. However, a government official cautioned that the drop in LNG prices was temporary, which came because of the unavailability of cargo ships. “The government is looking closely at the fluctuation in LNG prices. If the rates come down further, we will decide in a week to float an import tender,” he added.
Gas crisis worsens
With the beginning of winter, stoves at homes have run out of gas, indicating that the energy crisis will worsen in the coming months when the weather will become harsh.
As an alternative arrangement, the government has directed state-run companies to import liquefied petroleum gas (LPG) and distribute gas-filled cylinders among customers to overcome the gas crisis.
These companies are importing LPG in bulk, though the dollar has become scarce in the country.
On the other hand, the LPG plant of Jamshoro Joint Venture Limited (JJVL), which was meeting 15% of demand, had been shut due to the lack of gas supplies.
The Economic Coordination Committee (ECC) has approved the reopening of the plant, but the decision has not yet been implemented. Instead, the government has switched over to expensive LPG imports, which will put more burden on state companies as they are already reeling from the circular debt.
tribune.com.pk
As stoves are turned off due to gas shortage with the start of cold weather, Pakistan is hoping to arrange some liquefied natural gas (LNG) cargoes following a sharp decline in prices in the global market.
LNG prices, which had ballooned to the peak of $60 per million British thermal units (mmbtu), have now dropped to $27 per unit.
“It is unusual that LNG prices are coming down at the beginning of winter when Europe is looking for supplies due to the reduction in Russian gas flows,” an LNG industry official said while talking to The Express Tribune.
Pakistan has been struggling to arrange LNG cargoes in recent months to meet the growing demand for gas in the winter season. State-owned Pakistan LNG Limited (PLL) has so far failed to secure supplies as demand has surged in many countries including the European states.
In June this year, PLL was forced to scrap an LNG tender because the supplier quoted a high bid of $39.8 per mmbtu. It led to electricity outages in the country with power plants running dry due to the absence of required fuel.
Qatar Energy had offered the high bid of $39.8 per mmbtu for delivery at the end of July. PLL rejected the bid, fearing it would push up the cost of electricity generation by 20%. This LNG price would have cost even more than the cost of power generation by furnace oil-based plants.
Later, in October, PLL announced that it had not received any bid sought for 72 LNG cargoes on the Delivered Ex-Ship basis at Port Qasim, Karachi over a period of six years. PLL tender covered the period from January 2023 to December 2028.
Industry people reveal that gas and power utilities in different countries had slashed the purchase of expensive LNG. With the costly fuel, cargo-carrying ships were also not available in the market as they had already been booked.
Now, LNG prices have come down, prompting Pakistan’s private sector to import the gas from the spot market. Private sector has already been allowed to bring LNG shipments, but not a single cargo has been imported so far.
Universal Gas Distribution Company CEO Ghiyas Paracha told The Express Tribune that the private sector should be given opportunity for LNG import.
“Private sector can help bring LNG to meet domestic gas demand. If the private sector comes into LNG business, it will also help to reduce circular debt,” he emphasised.
Circular debt in the gas sector has gone up to Rs1.5 trillion, posing a serious threat to the entire energy chain. However, a government official cautioned that the drop in LNG prices was temporary, which came because of the unavailability of cargo ships. “The government is looking closely at the fluctuation in LNG prices. If the rates come down further, we will decide in a week to float an import tender,” he added.
Gas crisis worsens
With the beginning of winter, stoves at homes have run out of gas, indicating that the energy crisis will worsen in the coming months when the weather will become harsh.
As an alternative arrangement, the government has directed state-run companies to import liquefied petroleum gas (LPG) and distribute gas-filled cylinders among customers to overcome the gas crisis.
These companies are importing LPG in bulk, though the dollar has become scarce in the country.
On the other hand, the LPG plant of Jamshoro Joint Venture Limited (JJVL), which was meeting 15% of demand, had been shut due to the lack of gas supplies.
The Economic Coordination Committee (ECC) has approved the reopening of the plant, but the decision has not yet been implemented. Instead, the government has switched over to expensive LPG imports, which will put more burden on state companies as they are already reeling from the circular debt.
Pakistan eyes LNG purchase as prices dive | The Express Tribune
Price fall at start of winter a welcome relief for gas consumers
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