Featured Pakistan Forced to Buy Priciest LNG Shipments to Avoid Blackouts

[farok84]

Importing LNG from United States or Qatar carries freight charges (you will not find one of these details worth billions of dollars extra cost on top of the price mentioned anywhere) there are other costs involved that are also never mentioned.

Hi,

All our Lng contracts, whether from Qatar, Eni, Gunvor or Spot purchases are DES (delivered ex ship). We do not pay extra for shipment, it is included in the contract price. Qatar also pays $320,000 (per 2016 contract) and $400,000 (per 2021 contract) as port charges per cargo, which should have been paid by PSO.

No one is denying benefits of secured uninterrupted pipeline gas, but can you please compare the contract prices of gas through IP, TAPI, and Qatar Lng (2016 and 2021) at landfall and to end consumer for better understandings of the "kindergarten failed economists".

 

[SoulSpokesman]

@farok84

Thanks. Your posts have been very helpful.

Regards

 

[HAIDER]

Hi,

All our Lng contracts, whether from Qatar, Eni, Gunvor or Spot purchases are DES (delivered ex ship). We do not pay extra for shipment, it is included in the contract price. Qatar also pays $320,000 (per 2016 contract) and $400,000 (per 2021 contract) as port charges per cargo, which should have been paid by PSO.

No one is denying benefits of secured uninterrupted pipeline gas, but can you please compare the contract prices of gas through IP, TAPI, and Qatar Lng (2016 and 2021) at landfall and to end consumer for better understandings of the "kindergarten failed economists".

Who is sitting in Qatar and Qatari business board ....Sharif family business ...

 

[niaz]

If that was the case then why did the on earth did the then pak government even sign the contract to build its section of the ip pipeline in the first place?
Perhaps the then pak government never really had any intention of honoring the deal in the first place,possibly this was just a way of extracting us and saudi energy or economic concessions in return for never going ahead with the ip pipeline construction,tho if this was the plan it was a remarkably ill considered one,as by signing the deal pakistan was liable to some very heavy penalty fees for non completion.
I`m curious,why do you think pakistan got itself into this mess with the ip pipeline?

My data is quite old but in my experience, one needs to add anywhere between $3.00 to $3.50 per MMBtu for regassification and distribution to the landed cost of imported LNG . Piped gas on the hand only needs the connection to the national grid. But pipelines are expensive to build and the capital requirement can be beyond the means of a cash starved country like Pakistan.

Assuming both the piped gas & LNG prices are crude price linked; there is always the chance of picking up a few low priced spot cargoes of LNG during the periods of low demand which is not available in case of supply through pipeline. One therefore needs a thorough analysis of the annualised cost per MMBtu before making the final judgement.

Personally speaking, I would prefer importing gas via pipelines to the importation as LNG.

 

[farok84]

Who is sitting in Qatar and Qatari business board ....Sharif family business ...
View attachment 892196

View attachment 892198

Hi,

PTI has also signed one of the lowest priced long term Lng contract with Qatar in 2021.

 

[RoadRunner401]

All our Lng contracts, whether from Qatar, Eni, Gunvor or Spot purchases are DES (delivered ex ship). We do not pay extra for shipment, it is included in the contract price. Qatar also pays $320,000 (per 2016 contract) and $400,000 (per 2021 contract) as port charges per cargo, which should have been paid by PSO.

Freight included in the price does not mean you aren't paying for it.


Pakistan LNG Ltd., the country's second-largest state-owned petroleum company that imports LNG on behalf of the government, has a five-year contract with Gunvor at 11.6247% Brent slope that ends in July this year, the officials said.

Gunvor has already defaulted on three occasions and backed out from supplying LNG cargoes for the scheduled delivery dates of Nov. 19, 2021, Jan. 10 and March 11, S&P Global reported earlier citing officials.

To mitigate the deficit, Pakistan LNG issued two tenders for spot LNG supply where the lowest bidders were Vitol Bahrain at a price of $34.6777/MMBtu for the April 21-22 window, and PetroChina at a price of $33.5300/MMBtu for May 14-15 delivery, tender documents showed.

These are some of the highest prices paid by Pakistan for LNG imports and results in downstream prices that make natural gas unaffordable in many sectors.

Other bidders for the April 21-22 window were ENOC Singapore offering $37/MMBtu, TotalEnergies at $36.77/MMBtu and PetroChina at $34.99/MMBtu, the document showed. For May 14-15 other bidders were TotalEnergies at $37.77/ MMBtu and PetroChina at $33.53/MMBtu.

However, there is a likelihood that the government might not accept even the lowest bids because after adding port handling charges and other costs the imported value of LNG on the day of the arrival might be as much as around $41/MMBtu, according to industry sources.

No one is denying benefits of secured uninterrupted pipeline gas, but can you please compare the contract prices of gas through IP, TAPI, and Qatar Lng (2016 and 2021) at landfall and to end consumer for better understandings of the "kindergarten failed economists".

I'm a businessman, nearly all my contracts have a penalty clause, so if I can't deliver on time, I have to pay the penalty plus lose this client. In the end, I don't care about the cost of LNG, if it's not delivered as promised, it has no value to me.

 

[Sliver]

Hi,

PTI has also signed one of the lowest priced long term Lng contract with Qatar in 2021.

Want 2021 was when evergy prices were quite low due to COVID effects?

 

[CrazyZ]

Want 2021 was when evergy prices were quite low due to COVID effects?

They should have signed one for a larger amount so they wouldn't have needed additional contracts with Gunver or Eni.

PTI has also signed one of the lowest priced long term Lng contract with Qatar in 2021.

Considering forex situation and global LNG shortage.....Pakistan would be better off selling its LNG allotment at global spot prices and using gasified Thar coal domestically.....only issue is that there are no coal gasification sites in Pakistan currently.

 

[SoulSpokesman]

@CrazyZ

only issue is that there are no coal gasification sites in Pakistan currently.

A full blown large size coal to gas plant or coal to liquid (methanol etc) plant takes almost 4 years to build. The other issue is that most existing CTL and CTG plants are designed for burning a better grade of coal than Thar coal which is rather more like lignite than proper coal. Otherwise of course, your taller than mountain friend is the world leader in this.

Regards

 

[CrazyZ]

@CrazyZ

only issue is that there are no coal gasification sites in Pakistan currently.

A full blown large size coal to gas plant or coal to liquid (methanol etc) plant takes almost 4 years to build. The other issue is that most existing CTL and CTG plants are designed for burning a better grade of coal than Thar coal which is rather more like lignite than proper coal. Otherwise of course, your taller than mountain friend is the world leader in this.

Regards

7.5.1. Great Plains Synfuels Plant

The Great Plains Synfuels Plant (GPSP) in Beulah, North Dakota has been in operation producing synthetic natural gas (SNG) from lignite coal for 25 years and remains the only coal-to-SNG facility in the United States. In addition to the production of SNG, the plant also produces high purity...

netl.doe.gov

Lignite can be gasified. There is a very large plant in the USA that does this. Over the long term....Thar coal may be better used to make fertilizer, liquid fuels, and petrochemicals and leave electric production up to Hydro, Solar, Wind and Nuclear power plants.

 

[Sliver]

why arent pakistani leadership hedging against higher gas prices by working with futures market? that ways they can pay for higher prices

 

[farok84]

Freight included in the price does not mean you aren't paying for it.

Hi,

Freight is included in the contract price, which means, we are not paying anything extra or on top for that, to supplier. And, you will appreciate, no extra charges for freight are accounted in calculating monthly Rlng price by Ogra.

port handling charges and other costs

Port charges and other import related cost (referring to custom clearance charges usually 5% of CP) will still be there for pipeline gas, and are essentially funneled back to GOP. Port charges are partially borne by suppliers.

http://www.ogra.org.pk/download/8240

Since, we are accounting for add on charges, we should also account for pipeline construction cost, operations and maintenance, transportation charges, (from Iran-Pakistan border to Karachi or tie in point to PSGP) and the added tariff to pay for it.

The reason why TAPI is preferred by GOP, is owing to these added charges. Our agreed contract price includes not only, gas price, but also construction, operation, and maintenance cost of the pipeline and transportation cost for the gas. TurkmengGaz , will also be responsible for clearing related taxes, with Pakistan paying Afghanistan $0.45/mmbtu in transit fees. Pakistan will also be owing 5% share against it's initial investment of 5% of total project cost (pipeline construction and field development, estimated total cost $10B, Pakistan share is only $500mil), and will be sharing profits from gas sales accordingly. Unfortunately, Zardari forgot to think of all this, when he signed IP agreement and agreed the delivery point at Iran-Pakistan border. Obviously, it's not Iranians fault, but ours.

I'm a businessman, nearly all my contracts have a penalty clause, so if I can't deliver on time, I have to pay the penalty plus lose this client. In the end, I don't care about the cost of LNG, if it's not delivered as promised, it has no value to me.

Unfortunately both Eni and Gunvor have different business ethics. They don't really care about loosing us as clients when they can sell Lng at 3 times the price to ours. They are happy paying us 30% and keeping the rest 270% for themselves.

 

[SoulSpokesman]

@CrazyZ

Lignite can be gasified. There is a very large plant in the USA that does this. Over the long term....Thar coal may be better used to make fertilizer, liquid fuels, and petrochemicals and leave electric production up to Hydro, Solar, Wind and Nuclear power plants.

Thanks that was very useful. If indeed this is the case, Pak should go for it.

Incidentally, the Modi government is now going in for coal to liquid in a big way- the target is to have 100 million MT capacity (of coal processed) by 2030, although I think it is a bit late in the day. Ideally, it should have been started in the mid 2000s when oil prices had started hardening. Unfortunately, at that time we had the corrupt, casteist. communal criminal, Congoons in charge, which was far worse than any Imported govt you guys have ever had. Their priorities were completely to loot the nation.

Regards