New Recruit
Gas crisis round the corner
Top sources say that a high-level meeting is to be held today in the Petroleum Division to look into the new situation
By Khalid Mustafa
November 01, 2021
File photo
ISLAMABAD: In a shocking development, two LNG trading companies, GUNVOR and ENI, have willfully defaulted on their commitment for the current month of November, 2021 to provide Pakistan two LNG cargoes for mammoth monetary gains up to 200 percent profit in the international spot market.
Under the term agreements with Pakistan LNG Limited (PLL), Italy-based ENI was to deliver the LNG cargo on November 26-27 and Singapore-GUNVOR on November 19-20. Both the companies have backed out from providing the LNG cargoes, putting the top authorities of Energy Ministry in the lurch. The situation may expose the PTI government to a severe political backlash from masses in the current month of November.
ENI is in 15-year term agreement with Pakistan LNG Limited (PLL) under which it is bound to provide an LNG cargo every month at 11.95% of the Brent and GUNVOR is also in five-year term agreement and bound to provide a cargo at 11.6247pc of the Brent. Under the contract, in case of default, PLL can impose a penalty of 30 percent of the contractual price of one cargo to each LNG company and both the companies are ready to pay the penalty as profit in the spot market is huge, prompting them to sell Pakistan’s term cargo to the international market. PLL has inked the term agreements with both the companies to avoid purchase of LNG cargoes at higher prices, but both the companies have backed out and defaulted on the agreements at a time when the spot LNG prices are hovering at $30-35 per MMBTU.
Top sources in both the gas distribution companies said that a high-level meeting is to be held today (Monday) in the Petroleum Division to look into the new situation. It may decide to contact the Italian government on a war footing, asking to influence the ENI to show respect to the 15-year term agreement inked with PLL.
When contacted, Secretary Petroleum Dr Arshad Mehmood confirmed the development, saying that the minister will be chairing a meeting today (Monday) morning to gauge the situation and to strategise a way forward in consultation with the Petroleum and Power Division officials.
The managing director of Pakistan LNG Limited (PLL) could not be contacted for confirmation of the default by two LNG trading companies. Sources insisted that the gas crisis, which was to start haunting the masses in December, January and February, will now appear in a big way because of the default of two LNG trading companies in later part of the ongoing month of November -- a lean month in terms of cold.
The Italy based ENI on Saturday (October 30) informed Pakistan LNG Limited (PLL) that it will not deliver the term cargo on November 26-27. Interestingly, ENI has committed the default three times, including the latest one. ENI first defaulted in January 2021 by providing half of term cargo and then it did not provide a full term cargo in August and now it has backed out of its term cargo, which was due in later part of November.
ENI has apparently communicated to the Pakistan LNG Limited (PLL) that its supplier has cancelled the cargo in the wake of commercial considerations and logistic issues, so it is not possible for it to deliver the term cargo in November. The top sources said that ENI has emerged as a habitual defaulter for monetary gains by repeatedly selling the term cargoes of Pakistan in spot market wherein LNG prices have jacked up to 200 percent ($30-35 per MMBTU).
The Singapore-based GUNVOR first time committed the default of its term cargo, pleading that at the loading port, system breakdown occurred, which is why it may not deliver the term LNG cargo on November 19-20.
It is pertinent to mention that the PLL has already received no bids for eight spot cargoes, four each for December and January because of the highest-ever LNG prices. The absence of eight spot cargoes in December and January will increase the gas deficit up to 600mmcfd, triggering massive gas loadshedding in the country.
And like i dont know that..leykin khata hey tu khilata be hey..
See taxes are lower than in plmn. This is exactly what he said.
Actually plmn enjoyed the lowest international prices in decade and stability and instead of moving the country forward they used that opportunity to do money laundering by keeping artificially currency and bought properties abroad.
Now they have released all the anti state baboons by using that haram stolen wealth.
Alas..how would have predicted LNG will get this expensive
Alas..how would have predicted LNG will get this expensive
Why was contract done with only 30% penalty price
Why was contract done with only 30% penalty price
