Pakistan LNG Limited (PLL) has scrapped a tender to secure liquefied natural gas (LNG) cargoes for the month of March amid dip in global gas prices. However, it secured one LNG cargo for the month of February at lowest rates in a fresh tender from Qatar Petroleum (QP) Trading.
Earlier, Azerbaijan firm Socar had won a contract of one LNG cargo at a price of 23.43% of Brent price for month of February. In another window, Emirates National Oil Company (ENOC) had won a contract for supply of one LNG cargo by quoting a price of 20.8% of Brent.
However, due to the sharp increase in global prices of gas, ENOC refused to supply LNG, whereas Socar committed to supply the gas. PLL had sought fresh bids for two LNG cargoes; to arrange for the one that ENOC had refused and one additional LNG cargo.
Around nine companies participated during the bidding process, of which Qatar Petroleum succeeded to win a tender for supply of one LNG cargo at 16.3% of Brent.
However, PLL decided not to secure another LNG cargo as it required only one cargo to fill the demand of LNG companies.
According to a statement, LNG procuring company, Pakistan LNG Limited has arranged one more LNG cargo at a lower price for the month of February 2021 through an urgent tender.
The price is approximately 22% lower than the price of the bidder that withdrew its bid earlier for same cargo.
The Petroleum Division said that this also puts to rest the argument that ordering very early necessarily guarantees a better price.
To put things in perspective, the time period between the bid submission date and delivery date of cargo for the recent urgent tender was 35 days as compared with 49 days for the earlier tender in the same delivery window.
Tender cancellation for March
Due to rise in global LNG prices, which surged to an alltime high, traders had quoted prices close to 26% for month of February 2021 due to rise in demand in the world.
Pakistan was ready to materialise LNG cargoes on highest prices but all traders except Socar had refused to provide LNG.
However, in the retendering process, PLL has secured LNG cargo at 16.3% of Brent following dip in demand of LNG globally. Keeping in view the decline in LNG prices globally, PLL has decided to scrap the tender for month of March.
It decided to float fresh tender to secure lowest prices as it did in second round of fresh bids for the month of February.
PLL had received lower rates to procure three LNG cargoes on the spot for the month of March compared to bids received for February.
Three companies were declared successful for providing three cargos for March. ENI was to supply LNG cargo in the second week of March at 22.24% of Brent. Vitol Bahrain was to supply second and third cargoes at 17.81% and 17.19% of Brent, respectively.
Keeping in view the lower prices quoted by Qatar Petroleum (QP) trading for month of February, PLL has also decided to retender to seek fresh bids for LNG cargoes for month of March.