Pakistan LNG awards cargo contracts to quench surging power demand

Pakistan LNG Limited, the country's second biggest importer of LNG, on April 21 awarded contracts for some of the cargoes it sought after inviting bids for seven cargoes -- six LNG spot parcels and an emergency shipment -- to tide over an acute power shortage in the country.

An evaluation report by PLL showed that it had received bids from various parties, including QatarEnergy Trading, Vitol Bahrain, TotalEnergies and OQ Trading, for a total of 12 bids for seven LNG cargoes, with suppliers' offers ranging between $24.15-$31.778/MMBtu.

After an evaluation of the spot cargoes, PLL picked two cargoes from QatarEnergy Trading, one for May 12-13 delivery at $24.15/MMBtu and another for June 6-7 delivery at $27.65/MMBtu, while also shortlisting another cargo from TotalEnergies for May 27-28 delivery at $26.87/MMBtu and another for June 16-17 at $29.04/MMBtu.

The company did not receive any bids for the June 1-2 window, according to the document.

Meanwhile, PLL also called an emergency tender after Eni, which was supposed to supply a cargo under firm agreement for May 1-2, declined to send the shipment, according to sources.

In this regard, PLL accepted a bid from Total Energies Gas & Power for the urgent cargo requested for May 1-2 delivery at $29.67/MMBtu, according to the evaluation report.

In 2017, PLL had inked an agreement with Eni for 15 years supply of LNG. According to the agreement with Eni, from the fifth to the 15th year, it has to supply LNG at a 12.14% slope of Brent.

Pakistan is already getting seven LNG shipments from Qatar under two government-to-government agreements. Five of these cargoes will arrive at 13.37% slope of Brent under a 15-year deal and two cargoes a month at 10.2% slope of Brent under a 10 year deal.

Pakistan's summer needs

The demand for electricity rises significantly during Pakistan's summer, which lasts from May to July, and consumers usually experience load shedding for eight to 12 hours per day during this period.

Power generation rose 16.2% to 10,418 GWh (14,003MW) in March to cater to rising demand, compared with 8,965 GWh in the same month last year.

The rise was due to higher generation from fuel oil, wind, coal and nuclear plants as the government tapped alternative sources to meet surging demand, latest data from the National Electric Power Regulatory Authority showed.

Coal accounted for 25%, hydroelectric around 18%, RLNG for 19%, nuclear around 15%, fuel oil 11% and gas 10% of the total power generation in March, according to the data.

While alternative fuel sources are being tapped, LNG is set to play a vital role in fulfilling the country's energy needs. Pakistan's LNG imports for the nine months ended March 31 amounted to $3.32 billion, rising 92% from $1.73 billion during the same year-ago period, according to the Pakistan Bureau of Statistics.

Meanwhile, the Turkmenistan-Afghanistan-Pakistan-India pipeline is also being explored but it is still seen as a long term solution to meet Pakistan's growing energy needs.