PSO’s new LNG contract allegedly burdens RLNG consumers with $31mn: sources
ISLAMABAD: The Pakistan State Oil (PSO) has reportedly canceled an LNG term cargo from Qatar for September and bought a spot cargo in its place at a higher rate with an impact of $31 million on RLNG consumers, citing sources.
According to OGRA sources, PSO, which imports five term cargoes every month from Qatar under a 15-year agreement at price of 13.37 percent of the Brent, cancelled one LNG term cargo at the price of $9.6994 per MMBTU and purchased in its place an expensive spot cargo at $17.54 per MMBTU with an impact of $7.84 per MMBTU, resulting in burden of $31 million on RLNG consumers.
The sources said that the deal will result in an increase in CNG price by Rs8 per liter.
However, the PSO’s managing director has outright denied the cancellation, arguing under its annual delivery plan (ADP) in September, six cargoes were planned, four from Qatar and two from spot. All four cargoes from Qatar are coming and the PSO has simply cancelled the spot cargo of 16 September.
The PSO maximized its winter purchases during ADP. The Jan-Feb and Nov Dec cargoes were increased to six each instead of five, totaling 28 cargoes in winters against 20. The company ensured maximum savings by effective forward planning and contract management after contracting 24 consignments from the old contract and four from new QP contract at the cost of 10.2 percent of Brent.
Factually, under the new LNG agreement, Qatar will provide gas at 10.2 percent of the Brent from January 1, 2022. Under special provisions, Pakistan has already booked four LNG cargoes (two each for November and December) this calendar year which will help decrease the basket price of RLNG.
Earlier in February 26, 2021, Pakistan had signed a new 10-year LNG deal at 10.20 percent of Brent with the price opening clause after four years. This new GtoG (government-to-government) mode deal will help save $317 million a year and $3 billion in a decade when compared with the PML-N’s deal at 13.37 percent of Brent for 15 years with price opening provision after 10 years. Furthermore, under another provision, if Pakistan requires additional cargoes in the winter season in the current calendar year, it can import at price of 10.20 percent of Brent.