Pakistan's Economy - News and Updates

[niaz]

Hi,

The market is too tight, and we might see this decision backfiring upon us, nonetheless it is an appreciative move on PD's part, a sly move, even if it fails to achieve desired outcome.

Pakistan needs to review it's baseline Rlng requirements and have to think beyond the guaranteed off-takes of ~800mmscfd. With private players in China willing to pay upto $2/mmbtu premiums (over TTF), securing lng vloumes for next two years (26 cargoes starting this winter), market is going to maintain its bullishness. The last week's drop in spot prices have adjusted themselves and have now risen back.

It should be noted that for past couple of tenders we have seen a new disturbing trend. Instead of getting a traditional discounted quote of 5-10% over JKM, we are getting a 20-25% premium on JKM. This aggressiveness is dictated less by the global supply chain woes and more due to cunningness of suppliers and their realization of Pakistan's dire energy situation. To mitigate this, we have resorted to short sighted but quick and manageable fix of utilizing more and more liquid fuels (FO/ Diesel).

To get out of this conundrum, in short term, we require a complete overhaul of our current procurement regime, and get out of band-aid solutions mindset, for example, instead of going for floating spot tenders every two months, we should look into tendering a one year contract for upto 2 cargoes on a fixed price, plenty of suppliers/ traders will be happy to accommodate us, even at $8-10/mmbtu, we will be in a better situation than our current scenario, and will not have to brace for market volatility, for long term, a massive infrastructure boost is required. This infra boost is capital intensive but with friendly investment policies, we can rope in private investors.

The next 2-3 years, will be massively challenging for Pakistan's energy market, till our planned infra projects like, lng terminals, onshore storage facilities and pipelines come online, traversing through these tricky times will be a daunting task for PD.

Having been in the oil industry for a very long time and experienced ups & downs of the international oil prices, I am a firm believer of Term Contracts with a price re-opener available to Seller as well the buyer in case the market gets too skewed.

In the large oil companies this is never a problem because top brass knows how the international commodities prices behave. However, in Pakistan, from the start, most people will assume (often with reason) that somebody has made millions and every time the spot prices dip, they would shout 'I told you so'.

Therefore if I were in the oil ministry or head of PSO, I would carry on as it is and sink or swim with the spot price. This way at least I would not be a potential victim of the NAB, who could keep me behind bar for months without even filing a Reference.

 

[ghazi52]

FY21 Economic Indicators of Pakistan.

Remittances = $29.4B
27%

YoY, highest ever
Goods Exports = $25.6B
14%

YoY, highest ever
IT Exports = $2.1B
47%

YoY, doubled in 3 years
Forex Reserves = Above $25B first time
Current Account = -$1.9B
0.6% of GDP, Lowest in 10 years
Source: SBP (State Bank of Pakistan)
© Musa

 

[Path-Finder]

https://twitter.com/x/status/1418535136841420805

https://twitter.com/x/status/1418535142189158402

https://twitter.com/x/status/1418535144395321346

https://twitter.com/x/status/1418535146144288771

https://twitter.com/x/status/1418535147713015812

https://twitter.com/x/status/1418535149290070018

 

[farok84]

Pakistan seeks eight LNG cargoes for September, October

Pakistan LNG Limited (PLL) has floated a tender, seeking delivery of eight cargoes of the liquefied natural gas (LNG) in September this year.

www.bolnews.com

Tender:

https://www.ppra.org.pk/tdoc/6/PLL%20IFB%20LNGT-39%2018x2.jpg

View attachment 760790
Evaluation:

https://www.ppra.org.pk/elv/7/pll8721.pdf

View attachment 760791


Pakistan has cancelled this tender. It's a bold but calculated move motivated by last two days trend showing 5-10% decrease in spot lng prices (TTF/ JKM). Remember in February, we cancelled a tender and refloated a new one instead, that risk paid off and we got cheaper quotes as a result. Lets hope if we can get the same results this time. It's a fairly risky but appreciated move by Petroleum Division.

It also begs for a carefully articulated road map for upcoming winter's procurement plan, if they have any, unfortunately PD has a proven tendency for adhoc/ band-aid solutions than a deliberated and long term strategy. If we are getting these prices (+$15/mmbtu) in September/ October, it's unlikely to get any cheaper in winters.

It will be interesting to see whether PD can source cargoes (upto 2) from QP starting October/ November at 10.2%, as was foretold at the signage of PTI's lng contract in February. (Note 2 out of 3 lowest bids for October, priced at $13.9875, are by QP Trading, the spot lng trading arm of QP)

Well, the gamble didn't work.



Gunvor and PetroChina place lowest offers for Pakistan LNG tender

• Offers suggest that spot prices for LNG are expected to climb to above $15 per million British thermal units (mmBtu) this week, a new multi-month high

Reuters 28 Jul 2021

SINGAPORE: Gunvor and PetroChina placed the lowest offers for a tender by Pakistan LNG to buy four liquefied natural gas (LNG) cargoes for delivery in September, two industry sources said on Wednesday.

Offers suggest that spot prices for LNG are expected to climb to above $15 per million British thermal units (mmBtu) this week, a new multi-month high.

Gunvor placed the lowest offer of $15.397 per million British thermal units (mmbtu) for two cargoes to be delivered over Sept. 6 to 7 and Sept. 17 to 18 and $15.497 per mmBtu for a cargo to be delivered over Sept. 12-13, the sources said.

PetroChina placed the lowest offer for a cargo to be delivered over Sept. 27-28 at $15.1998 per mmBtu, they said.

Other companies which participated in the tender to supply cargoes include BP, Trafigura, TotalEnergies, Vitol and POSCO, one of the sources said.

More offers were placed for the late September cargo compared with the earlier dates, indicating a likely shortage of supply, a second source said.

It was not immediately clear if Pakistan LNG will award the tender.

Gunvor and PetroChina place lowest offers for Pakistan LNG tender

Offers suggest that spot prices for LNG are expected to climb to above $15 per million British thermal units (mmBtu) this week, a new multi-month high

www.brecorder.com

Pakistan Forced to Buy Priciest LNG Shipments to Avoid Blackouts

By Stephen Stapczynski and Faseeh Mangi

29 July 2021, 15:39 GMT+5


- Nation’s gamble that spot prices would fall fails to pay off


- Global supply crunch has boosted rates from Europe to the U.S.



Cash-strapped Pakistan’s bet that liquefied natural gas prices would go down has failed, forcing the South Asian nation to pay more than ever for the power plant fuel or risk blackouts.

Pakistan LNG this week bought four cargoes for September delivery at around $15 per million British thermal units, the highest since the nation began imports in 2015, according to people with knowledge of the matter. The importer scrapped a tender for September cargoes that closed earlier this month in a gamble that prices would fall.

Pakistan Forced to Buy Priciest LNG Shipments to Avoid Blackouts

Cash-strapped Pakistan’s bet that liquefied natural gas prices would go down has failed, forcing the South Asian nation to pay more than ever for the power plant fuel or risk blackouts.

www.bloomberg.com

https://twitter.com/x/status/1420785698639028225

Apart from these, PSO has also placed a tender seeking supply of two lng cargoes for delivery in the month of September.

 

[Path-Finder]

Well, the gamble didn't work.



Gunvor and PetroChina place lowest offers for Pakistan LNG tender

• Offers suggest that spot prices for LNG are expected to climb to above $15 per million British thermal units (mmBtu) this week, a new multi-month high

Reuters 28 Jul 2021

SINGAPORE: Gunvor and PetroChina placed the lowest offers for a tender by Pakistan LNG to buy four liquefied natural gas (LNG) cargoes for delivery in September, two industry sources said on Wednesday.

Offers suggest that spot prices for LNG are expected to climb to above $15 per million British thermal units (mmBtu) this week, a new multi-month high.

Gunvor placed the lowest offer of $15.397 per million British thermal units (mmbtu) for two cargoes to be delivered over Sept. 6 to 7 and Sept. 17 to 18 and $15.497 per mmBtu for a cargo to be delivered over Sept. 12-13, the sources said.

PetroChina placed the lowest offer for a cargo to be delivered over Sept. 27-28 at $15.1998 per mmBtu, they said.

Other companies which participated in the tender to supply cargoes include BP, Trafigura, TotalEnergies, Vitol and POSCO, one of the sources said.

More offers were placed for the late September cargo compared with the earlier dates, indicating a likely shortage of supply, a second source said.

It was not immediately clear if Pakistan LNG will award the tender.

Gunvor and PetroChina place lowest offers for Pakistan LNG tender

Offers suggest that spot prices for LNG are expected to climb to above $15 per million British thermal units (mmBtu) this week, a new multi-month high

www.brecorder.com

Pakistan Forced to Buy Priciest LNG Shipments to Avoid Blackouts

By Stephen Stapczynski and Faseeh Mangi

29 July 2021, 15:39 GMT+5


- Nation’s gamble that spot prices would fall fails to pay off


- Global supply crunch has boosted rates from Europe to the U.S.



Cash-strapped Pakistan’s bet that liquefied natural gas prices would go down has failed, forcing the South Asian nation to pay more than ever for the power plant fuel or risk blackouts.

Pakistan LNG this week bought four cargoes for September delivery at around $15 per million British thermal units, the highest since the nation began imports in 2015, according to people with knowledge of the matter. The importer scrapped a tender for September cargoes that closed earlier this month in a gamble that prices would fall.

Pakistan Forced to Buy Priciest LNG Shipments to Avoid Blackouts

Cash-strapped Pakistan’s bet that liquefied natural gas prices would go down has failed, forcing the South Asian nation to pay more than ever for the power plant fuel or risk blackouts.

www.bloomberg.com

https://twitter.com/x/status/1420785698639028225

Apart from these, PSO has also placed a tender seeking supply of two lng cargoes for delivery in the month of September.

isnt a lng storage being built to horde LNG?

 

[farok84]

isnt a lng storage being built to horde LNG?

Hi,

At the moment, for Lng storage, it's only a proposal, Tabish Gohar had initial talks with Dutch, but apparently those were not fruitful. He had proposed to construct them with our own finances (GIDC) but that also seems unlikely. In my opinion, an above ground storage facility without an onshore regasification terminal won't be feasible operationally.

For underground gas storage (UGS), some surveys and feasibility were carried out in depleted reservoirs of Sindh and talks on financing through ADB loans were reported, but nothing concrete has yet happened.

 

[chinasun]

According to the 2030 World report released by HSBC Global Research, Pakistan will be one of the important countries driving world economic growth by 2030.

 

[farok84]

Evaluation Report - Supply of Liquefied Natural Gas (LNG) PLL/IMP/LNGT42 (Spot - Oct - Nov 2021)

https://www.paklng.com/LNG/T42/FinalEval_T42.pdf

https://twitter.com/x/status/1430162827050987524

Link to Bid Document (tender validity) mentioned in tweet. BidDocumentT42



"The official said that there is no doubt that the spot market is bullish and buoyant but PPRA rules are also causing further hike in the spot LNG prices. Under the PPRA rules, the period of keeping the bids validated from the date when prices are opened to the date of awarding of contract have increased from 10 to 15 days. This means that PLL cannot award the contract before 15 days. Earlier, 10 days for making bids intact were fixed and the period of 10-15 days is the main cause for hike in bids as suppliers add premium and cover the risks of fluctuation of LNG prices in the said period. In risk, dollar price variation also matters."

Pakistan gets costlier bids for seven LNG cargoes

ISLAMABAD: Pakistan LNG Limited here on Tuesday received bids for seven LNG cargoes to be delivered in October-November period, ranging from $17.1447 to up to $25 per MMBTU. Out of the seven...

www.thenews.com.pk

 

[farok84]

Backing out of LNG term cargo: PLL not keen to penalise ENI
Khalid Mustafa
Thursday, Aug 26, 2021

ISLAMABAD: The 100 percent state-owned company Pakistan LNG Limited (PLL) is in contact with Italian company ENI that has backed out of its term LNG cargo in August and wants the same cargo in the month of January 2022, a senior official at the Energy Ministry told The News.

“We have managed the term cargo from Gunvor in the current month of August because of the default by ENI. This is a breach of the 15-year term agreement by ENI, which is bound to provide a term LNG cargo every month at the levelized tariff of 12.14 percent of the Brent. The term LNG cargo’s price from ENI stands at $9 per MMBTU, keeping in view the current value of Brent.”

PLL is also in a five-year term agreement with Gunvor -- another LNG trading company at the price of 11.62 percent of the Brent. So, the term cargo from Gunvor, which was to be delivered in January, has been managed in the month of August. To a question, the official said that the 5-year term agreement with Gunvor will expire in June 2022.

“We don’t want to penalize ENI as PLL is exerting pressure on the defaulted LNG company to go for a swap with Gunvor and provide the LNG cargo that was to be delivered in August in the month of January 2022.” The PLL spokesman says that ENI is being asked to provide the LNG cargo in January 2022, which was due in August, and the company is not interested in imposing a monetary penalty.

The official said that ENI has apparently sold out the term cargo for windfall profit in the spot market and wants the PLL to penalize it. The official said that 30 percent of the cargo price is the penalty, which amounts to $9 million and ENI, after paying the penalty, will be in profit of $16 million. “Our estimate is that ENI has sold the term cargo valued at $25 million in spot market at $50 million, keeping in view the prevalent LNG prices.”

However, ENI’s top management, according to the official, told PLL that its supplier -- Eygpt based-EGAS Company did not provide the LNG cargo owing to which it remained unable to provide the term cargo to PLL, which was due in August. PLL says that it is in agreement with ENI not with its supplier. “So, ENI has committed sheer violation of the 15-year agreement.”

PLL and ENI signed a 15-year term agreement in May 2017 under which ENI was to provide an LNG cargo per month up to 2032. Under the deal, ENI was to provide per month cargo at 11.6247% of the Brent for the first two years, 11.95% for the following two years and 12.14% for the remaining 11 years. ENI is bound to provide to Pakistan LNG Limited a total of 180 cargoes in 15 years at the PGPL terminal moored in Port Qasim.

Backing out of LNG term cargo: PLL not keen to penalise ENI

www.thenews.com.pk

Suppliers are deliberately defaulting on their term cargoes for twice the profit in Spot markets, and here our media pandits are fooling us with elaborate analysis of how we could have saved millions by securing spot cargos 3-4 month before the delivery date.

 

[farok84]

Evaluation Report - Supply of Liquefied Natural Gas (LNG) PLL/IMP/LNGT42 (Spot - Oct - Nov 2021)

View attachment 772809

https://www.paklng.com/LNG/T42/FinalEval_T42.pdf

https://twitter.com/x/status/1430162827050987524

Link to Bid Document (tender validity) mentioned in tweet. BidDocumentT42



"The official said that there is no doubt that the spot market is bullish and buoyant but PPRA rules are also causing further hike in the spot LNG prices. Under the PPRA rules, the period of keeping the bids validated from the date when prices are opened to the date of awarding of contract have increased from 10 to 15 days. This means that PLL cannot award the contract before 15 days. Earlier, 10 days for making bids intact were fixed and the period of 10-15 days is the main cause for hike in bids as suppliers add premium and cover the risks of fluctuation of LNG prices in the said period. In risk, dollar price variation also matters."

Pakistan gets costlier bids for seven LNG cargoes

ISLAMABAD: Pakistan LNG Limited here on Tuesday received bids for seven LNG cargoes to be delivered in October-November period, ranging from $17.1447 to up to $25 per MMBTU. Out of the seven...

www.thenews.com.pk

https://www.paklng.com/LNG/T43/FinalEval_T43.pdf

https://twitter.com/x/status/1433662824417423361

Emergency tenders: PLL again gets costly LNG bids for Oct-Nov

ISLAMABAD: Amid the bullish prices of spot LNG in international market, Pakistan LNG Limited got 12 bids for five cargoes for October-November in the range from $19.8477 up to $22.4866 per MMBTU...

www.thenews.com.pk

Emergency tenders: PLL again gets costly LNG bids for Oct-Nov
Khalid Mustafa
Friday, Sep 03, 2021

ISLAMABAD: Amid the bullish prices of spot LNG in international market, Pakistan LNG Limited (PLL) got 12 bids for five cargoes for October-November in the range from $19.8477 up to $22.4866 per MMBTU — again on the higher side in response to the emergency tender opened here on Thursday.
The PLL had earlier issued a tender on July 24, seeking bids for seven cargoes for October-November and it opened the bids on August 24 for seven cargoes at price range from $17.1447 to up to $25 per MMBTU. But it didn’t take the decision to honour the bids because it could hold the bids’ validity for 15 days after opening date of August 24. It went for the emergency tender with the aim to get cheaper prices and got the five lowest bids on Thursday, which were also on the higher side.
By getting bids in response to the emergency tender, however, PLL has put itself in a position to decide to honour some bids which it had earlier got on August 24 relatively at lower prices for October-November.
The PLL on Thursday declared five LNG trading companies technically fit for the bids. The five companies include PetroChina International, Gunvor Singapore, Vitol Bahrain, Total Gas & Power and Trafigura. They came up with a total 12 bid prices ranging from $19.8477 up to $22.4866 per MMBTU.
Trafigura submitted its lowest bid of $19.8477 for the time window of October 8-9, $20.2877 for October 23-24, $20.777 for October 28-27 and $20.9677 for November 12-13. And PetroChina International submitted the lowest bid at $20.3888 for the cargo to be delivered on November 6-7.
The PLL is likely to retain the two bids Total Gas & Power submitted in earlier tender opened on August 24, one with price at $17.1449 per MMBTU for the cargo to be delivered on October 17-18 and $17.53350 per MMBTU for the delivery window of November 16-17. Likewise, PLL may also honour the bids Vitol Bahrain submitted in the earlier tender, which was opened on August 24 as it had come up with the price of $18.9966 to be delivered on October 27-28.
The same company had also submitted its price at $19.6966 per MMBTU for cargo to be delivered on November 11-12 and $20.9266 per MMBTU for the cargo that is to be provided on November 26-27.
Energy experts said that LNG prices have increased more than the price of furnace oil, which is why Bangladesh has decided not to rely on LNG anymore to cater to energy demands and it has decided to use furnace oil for power generation. India has also started feeling the heat of increasing spot LNG prices in the international market.
A Power Division source said that in the wake of massive surge in the price of spot LNG cargoes being purchased by PSO and PLL, the basket price of RLNG has increased manifold and almost all IPPs of 2002 power policy are being run on furnace oil because of lower furnace oil prices as merit policy.

 

[farok84]

https://www.paklng.com/LNG/T44/AdLNGT44.jpg

https://www.paklng.com/LNG/T44/BidDocumentT44.pdf

 

[Path-Finder]

 

[Xone]

The present govt of PTI does not like to import cheap LNG for the people. Cheap things are not allowed to be imported in the best interest of the people.

 

[Patriot forever]

The present govt of PTI does not like to import cheap LNG for the people. Cheap things are not allowed to be imported in the best interest of the people.

LNG is getring more expensive than even furnace oil.

Same can be said about imported coal.

It is now cheaper to produce electricity from furnace oil than LNG or Imported coal.

Not only is the corruption marred LNG and coal power plants more expensive to run but also the 18% to 32% return on investment and 1.2t capacity payments are extra. The lust for money of the corrupt exiled baboon has destroyed this country.

 

[POPEYE-Sailor]