Hi,
The guy raised some good points, specially regarding lack of exploration contracts but he did injustice by comparing spot to term contracts, and spoiled it for me, maybe it was inadvertent (also Qatar contract term is 2016 - 2031). Apart from that, he asked some valid questions regarding a) take or pay clause, b) lack of storage and ragasification facilities. I will add volumes sought and cargo flexibility to that list too. There are ample shortcomings in all LNG contracts signed during PMLN term, whether it is for imported LNG or regasification and storage facility or in our case lack of it, regardless it was due to their corrupt intent, incompetency or lack of planning and vision, we are stuck with them. PTI needs to get out of this blame game mindset and stop media trials, and start actual trials. They have been in government for 2 and half years, blaming and tweeting about it, not gonna solve or change anything.
IMO, it is futile to discuss benefits of spot over long term (there aren't many) - the comparison is flawed in too many ways. Spot is volatile, and depends on too many factors, just the last month unplanned shutdown of QGT4 up-ticked it, no economy can survive solely on it. PMLN was not wrong in inking long term contracts, term contracts offer security for importer's economy which no spot can ever offer. They were wrong in the way they negotiated and inked those contracts. One can also argue about opting for LNG all together and lack of exploration contracts but these flashy titles of 230% lower price shows naivety and lack of understanding of market, which surprisingly PTI officials have propagated themselves, which takes away all the seriousness out of discussion.
PMLN signed 2 long and 1 short term import contracts.
1. QatarGas II (ExxonMobil operated and not just Qatar) - (13.37% of brent, 2.25 million tonnes/ year or 3 cargoes/ month for 1st year from 2016 Q1 till 2017 Q1, and 3.75million tonnes/ year or 5 cargoes/ month, from 2017 Q2-2031)
2. ENI (ENI operated Indonesian field) - (1cargo/ month for 15 years, total 180 cargoes, Price: 11.6247% for the first two years (2017 through 2019 - 24 cargoes), 11.95% for the following two years (2019 through 2021 - 24 cargoes), then 12.14% for the remaining 11 years (2021 till 2032, 132 cargoes) , Contract Term: 2017-2032)
The wrong doings in above are self explanatory.
3. Gunvor Singapore (Gunvor operated Indonesian field) (1 cargo/ month for 5 years term for 11.6247% of brent, total cargoes 60 - Contract term 2017-2022)
All these contracts are on 'take or pay' basis.
I haven't read much on Pakistan's Shale prospect, but there was a feasibility report some years ago that US funded, shale requires investments , the way things are going, government can't commit to it, so it will be an expensive affair involving international players and foreign money (if we can find any willing to invest, in first place). No international operator, whether American (Exxon) or Chinese (CNPC) will agree to invest in Pakistan without a contract that heavily favors them. And then there will be fracking issue, all this will require careful planning. PMLN miserably failed in that section, I am not too hopeful about PTI too.
and plant became operational in April 2019 , Dont tell me that it was built in 6 months after PTI came to government.
. Lets see if they can achieve Rs 4 price.
Those contracts looked messed up because you were comparing dirt cheap prices of oil and gas during peak corona lock down period with a contract that commenced during normal times ( for that time it was the cheapest price) ? Go and check yourself . If it wasnt why the same contracts worked previously and demand of power and gas was well coped with . But suddenly everything started disappearing ? Simply , if you dont forecast demand and dont import on time you cannot blame others for it you will have gas and electricity shortage , Thats why i am calling it incompetence thats why we are only getting gas 3 hours daily in winters.
