LNG price internationally dropped to $4 but Pakistan lodged in a 15yr contract.

[HAIDER]

Get Nawaz and Shahid Khan Abbasi and babus who wrote this contract .

 

[maithil]

Govt should get out of contract and rely on spot prices.

 

[AZ1]

As a mod you should have atleast bothered checking way of expression.
P.S:-What if prices go up?Would you like giving money to khaqan for that?

Today average price of one barrel of crude oil which is of 159 litres is around 55.5 USD,that was around 111.2 in 2012.
In 2012 price of diesel was around 85 in Pakistan while today it stands at 127.
In nutshell oil industry is very volatile in terms of pricing.

Ahan genius why contract for 15 years? Any logic?

 

[SoulSpokesman]

@maithil

Govt should get out of contract and rely on spot prices.

What if spot price hit the roof?

Regards

 

[ARMalik]

As a mod you should have atleast bothered checking way of expression.
P.S:-What if prices go up?Would you like giving money to khaqan for that?

Today average price of one barrel of crude oil which is of 159 litres is around 55.5 USD,that was around 111.2 in 2012.
In 2012 price of diesel was around 85 in Pakistan while today it stands at 127.
In nutshell oil industry is very volatile in terms of pricing.

I am involved in making decisions on buying gas due to business requirements. The company policy is that we either buy from spot market but ensuring we have a 'Hedge' against volatility. Or we contract on competitive prices but do not sign for more than 1-year as things can change in the market.

So what I am saying is that a 15-Year contract is nothing short of a massacre. It is absolutely horrendous injustice on so many levels, and should have never happened. And the very fact that the Guy who made such a decision is still a Free man in Pakistan without a doubt proves that Pakistan's Establishment which includes the Military are extremely corrupt to the core.

 

[Enigma SIG]

It appears that just like in the parliament, the use of bad language has become more common in this forum as well. I am sure that the same sentiment could have been expressed in a more civilized manner through words such as 'Scoundrel' or unscrupulous etc.

I would be probably the last one to suggest that there should be a censor, but words like 'Kanjar' (Son of a prostitute) implying that his father was unknown, are not appropriate and should not be used in civilized discussions. I would request the Mods to make an effort to raise the standard of this forum by suggesting that honorable members should refrain from using derogatory language in their posts.

Rightfully disagree. Politician's who have whored out the country deserve to be nailed to the pillar of shame and expletives added to their family names.

 

[IceCold]

what about all the other extremely inflated prices of EVERY OTHER DAMN THING?
maybe if this Govt comes out of the past, maybe, just maybe they may do something good for once

How do you suppose your present would be any different with the kind of past that was left? Some weird logic you lot posses. You talk about inflated prices, what do you think is going to happen when you are lodged in a 15 year contract to buy expensive LNG thanks people like Abbasi and you say this government should come out of past? If you want the government to not educate the fools about their past decisions than fools should also keep quiet and stop criticizing this government on the deeds done by their past leaders.

 

[TNT]

Sharif is a snake and destroyed Pakistan but this PM is also a moron. Why did he let him go? Why cant he recover the looted wealth? All that in past was his BS.

 

[AZ1]

How do you suppose your present would be any different with the kind of past that was left? Some weird logic you lot posses. You talk about inflated prices, what do you think is going to happen when you are lodged in a 15 year contract to buy expensive LNG thanks people like Abbasi and you say this government should come out of past? If you want the government to not educate the fools about their past decisions than fools should also keep quiet and stop criticizing this government on the deeds done by their past leaders.

Please forget past and dont say anything to patwari lover brcause for them

" Nawaz khata tha tou khelata bhi tha "

 

[niaz]

Why having contract for 15 years?

Honorable Sir,

As mentioned earlier that it is the norm in the oil industry to have a large part of the requirements for crude and of product imports on a long term basis with only a part left for spot purchases. Don’t know if you are aware that PSO & KPC have a gas oil supply contract going back to 1977.

Let us also not forget that in Feb 2007, both India & Pakistan had agreed to pay Iran $4.93 per mm Btu for natural gas in the IPI project. The total cost was $7.5-bilion dollars. If anyone cares to put the cost of investment of about $3.75-billion relating to Pakistan's half of the pipeline, the end result would not be much different than the LNG cost from Qatar and that was for supposed to be for the life of the pipeline which could be more than 50 years!

Your question “Why 15 Years?” is however pertinent for those who are not familiar with the mechanics of the international LNG industry and how it developed. This requires a bit of explanation.

Until the late 1950’s LNG was virtually an unknown word and few outside the USA had heard of.it. Understand first commercial plant to store gas in the liquefied form was in the Cleveland Ohio in 1941 but none existed outside the United States until 1964 when the first commercial shipment of Algerian LNG arrived in the UK aboard the ship called Methane Princess. A special ‘Seminar’ on the liquefaction & transport process of natural gas was organized for the Chemical Engineering students by the college.

Construction of an LNG plant costs a hell of a lot of money. LNG plant of Oman consisting of two LNG trains of 3.3-million tons each constructed by a Chiyoda- Foster Wheeler (a JV between Chiyoda & Foster Wheeler) cost about $2-billion in 2000 which is about $3-billion in today’s money. Today it is estimated that the construction of the LNG train has gone up to cost approx. $560/ton. Hence a 6.6- million-ton plant would set you back approx $3.7-billion.

Therefore, before a consortium of banks would agree to finance such a costly project they wanted assurance that the LNG thus produce would have guaranteed buyers. Thus a 25-year long term Sale & Purchase agreement was signed with Korea Gas Corporation for 4.1-million tons per annum in 1996. Another 25- year contract was also signed with Osaka gas in 1998 along with a 20-year contract with Dahbol Power Company of India provided assured outlets for almost all of the LNG output. The first LNG train was inaugurated by Sultan Qaboos in 2000.

Since then long-term contracts have formed the basis for the growth of the liquefied natural gas market in Asia which now represents more than 70% of global LNG demand. LNG importers in Japan, South Korea, and China accounted for the majority of the LNG global market during the 2000-2010 period. During this period Qatar emerged as the largest LNG exporter in the world with an output of 77-million tons per annum. Japanese consortium JERA with 85-million tons p.a. is the largest LNG importer in the world.

The situation has changed with the new LNG manufacturing projects coming on stream in Australia, North America, Russia, and Africa. These project found easier to get financing on the belief that environmental constraints on Sulphur emission would curtail the use of fuel oil causing Asian LNG demand to continue to grow and that the existing contract structure would largely stay in place.

The low oil price environment of the last two years caused primarily by the slowdown in the Indian & Chinese demand coupled with the increased supply situation from the new sources has been a boon as well as a bane for the Asian LNG market. On one hand, LNG buyers are able to purchase cheap LNG on the spot market, long-term LNG contracts indexed to regional oil prices are becoming onerous as the crude price has not dropped as much as the gas prices. However many LNG buyers are seeking to renegotiate the long term LNG contracts. This is causing problems for the producers because their financing arrangement are often tied with the term contract price.

I am not privy to the long term LNG contracts of Qatar, except that JERA imports about 17-million tons and that original term price was close to $12 per million Btu.

In addition to the Korean 4.1-million ton contract already mentioned earlier, I am aware of the following ones involving Oman. I don’t know the price.

Osaka gas 660 K tons p.a. (25 years). Itochu Corp. 700 K tons p.a. (20 years) both signed in 2000. Osaka gas 800 K tons p.a. (17years) signed in2009. Mitsubishi Corp 800K tons p.a. (15 years) signed in 2006.

“Oman LNG and Enron Sign LNG Supply Agreement for Dabhol Power Plant

Oman LNG and Enron's Indian affiliate MetGas signed on 8 December along-term sales and purchase agreement to supply LNG to the Dabhol power plant in India's Maharashtra state. Under the 20-year agreement, MetGas will purchase 1.6mntons/year of Omani LNG beginning in the fourth quarter of 2001 (for details, see MEES, 30 November)”

http://archives.mees.com/issues/720/articles/28481

Recent news from India:

India may renegotiate LNG import contracts at appropriate time: Dharmendra Pradhan

"Long-term contracts are supposed to be honoured. We will look at an appropriate time (to review). In the past also we had renegotiated the deals," Pradhan said.

NEW DELHI: India may look at renegotiating pricing of its long-term LNG import contracts at an "appropriate time" to help reflect falling rates of the spot market, Oil Minister Dharmendra Pradhan said on Monday.
He was asked if the government is looking at renegotiating liquefied natural gas (LNG) contracts in view of fall in prices of the fuel available in spot or current market
"We see that at an appropriate time," he told reporters on side-lines of an industry event here.

India imports 8.5 million tonnes per annum of LNG from Qatar under two long-term contracts and has tied up 5.8 million tonnes a year supplies from the US. It also has a 2.5 million tonnes import contract with Gazprom of Russia and a 1.44 million tonnes deal with Gorgon project of Australia.

While long-term LNG from Qatar comes for USD 8.5-9 per million British thermal unit, the same gas is available in the spot market for less than half the price.

https://economictimes.indiatimes.co...dra-pradhan/articleshow/70838170.cms?from=mdr


IMHO, the 15 year LNG contract by Pakistan was quite normal. We have only witnessed the first 2 years, it is certain that the LNG price would go up & down quite a few times during the duration of the contract. My approach would be to closely watch what India does with her long term contract with Qatar and as soon as Indian price is reduced, GOP should mount an all-out effort to renegotiate Pakistan’s price as well.

I have virtually posted most of what I know about the LNG market. I stand by my assertion that the LNG contract and the LNG terminal signed by Shahid Khaqab Abbasi were okay in the market conditions prevailing at that time. People are of course free to believe what they like.

 

[Dubious]

P.S:-What if prices go up?Would you like giving money to khaqan for that?

No, he was responsible for the state at that time and if made a wrong choice he should be held responsible...Not the other way round! WHEN will people learn the meaning of being responsible for ones OWN actions?!

In nutshell oil industry is very volatile in terms of pricing.

THUS no one should sign 15 year deals without thinking! AND if they happen to, they should be fined if we go in loss...COZ the job of such people is not to make us go in loss! IF it happens they should be responsible!

 

[Sine Nomine]

No, he was responsible for the state at that time and if made a wrong choice he should be held responsible...Not the other way round! WHEN will people learn the meaning of being responsible for ones OWN actions?!

Going by that logic,we would have to held responsible lot and lot of people and mind that against them and their blunders this LNG case would look nothing.
Better focus on finding any angle of kickbacks in whole deal,a NAB hasn't found one yet.

THUS no one should sign 15 year deals without thinking! AND if they happen to, they should be fined if we go in loss...COZ the job of such people is not to make us go in loss! IF it happens they should be responsible!

Problem of many guys on PDF is that they have no first hand knowledge of how things work in Pakistan.
Let me break it for you,PMLN and PPP are lot happy on many corruption cases and media campign directed against themselves.

 

[Dubious]

Going by that logic,we would have to held responsible lot and lot of people and mind that against them and their blunders this LNG case would look nothing.

I am all up for that!

Better focus on finding any angle of kickbacks in whole deal,a NAB hasn't found one yet.

NAB itself needs a kick on the back!

PMLN and PPP are lot happy on many corruption cases and media campign directed against themselves.

Well I aint sorry about that!

 

[Sine Nomine]

Well I aint sorry about that!

You should feel sorry,without doing homework
they are destroying genuine cases by presenting them on media and courts.

I am all up for that!

Start from last 50 years.

NAB itself needs a kick on the back!

Who would do that?Most of cases it make look like a joke,if not for custody they can get through act,no one would have even bothered mentioning them.

 

[Dubious]

they are destroying genuine cases by presenting them on media and courts.

who?

Start from last 50 years.

I am in no position to do so but I would support it!

Who would do that?Most of cases it make look like a joke,if not for custody they can get through act,no one would have even bothered mentioning them.

So far our beloved courts have overturned or granted bail to almost all NAB related cases dealing with NOONI or PPP