Pakistan is facing challenges in securing Liquefied Natural Gas (LNG) for the upcoming winter season. The only bid received through an international tender issued by Pakistan LNG Limited (PLL) on June 13 is proving to be expensive for both the government and local consumers. This situation raises concerns about the affordability and availability of LNG in the country.
Lone Bidder Offers Higher Prices
The bidding process for three LNG cargoes scheduled for January and February 2024 concluded with only one bid from Trafigura Pte Ltd.
However, their bid of $23.47 per mmBtu for January and $22.47 per mmBtu for February is significantly higher (26 to 29 percent) than the prevailing LNG spot market prices. This substantial price difference poses financial challenges for the government and may impact the affordability of LNG for consumers in Pakistan.
Hopes Rest on Alternative Offer and Bilateral Agreements
While the current bid from Trafigura Pte Ltd has been deemed qualified, there is optimism that Azerbaijan’s state-run Socar Trading might submit a more cost-effective offer for LNG cargo.
This prospect not only raises hopes for a more affordable option but also questions the existing Government-to-Government (G2G) agreement with Socar. The tender process has prompted a reassessment of the bilateral price to ensure its reasonability based on comparable spot market bids.
