LNG Suppliers refuse February delivery to Pakistan

January 18, 2021

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LNG suppliers refused to supply Liquid Natural gas(LNG) to Pakistan in February.

As per media reports on Sunday, Pakistan Liquefied Natural Gas Limited (PLL) provided the first spot shipment to SOCAR Trading UK Ltd., and the second spot shipment was awarded to the lower bidder who declared inability to deliver according to its proposal.

Thus, PLL approached the 2nd and 3rd lowest bidders during the bid period, but they all refused to deliver the product at the prices indicated in their bids.

This withdrawal from suppliers was due to a recent shortage of supply, which led to high price volatility in the spot market, as well as additional purchases in North Asia. Market reports also show that many global companies are not fulfilling their bids or even in some cases signing contracts due to lack of supply and highly volatile prices.

Suppliers who have expressed regret over supplies following the PLL tender include state-owned enterprises and major international LNG dealers.

PLL has taken all actions required by law under its tender, including forfeiture of performance bonds, against bidders who were unable to deliver goods in accordance with their bids.

PLL is also working on order confirmation at current prices and is exploring alternatives if the additional purchase order is confirmed in February.

Early in the month, Pakistan has allowed the private sector to import LNG by issuing import licenses to at least two companies.

According to the details, the Oil and Gas Regulatory Authority (OGRA) has issued 10-year LNG import licenses to private companies, stating that imports to the private sector will promote market competition and possibly lower utility prices.

Likewise, PLL has also announced a tender for the privatization of dormant LNG terminals for the private sector for a period of six months from February to July 2021.