ISLAMABAD: As winter approaches in Pakistan, the country will face a severe gas crisis as Azerbaijan’s state-owned company، LNG cargo from SOCAR cannot reach January 2024, the Ministry of Energy officials told The News.
Prior to the non-delivery of LNG cargo, the country estimates that 360 million cubic feet per day (MMCFD) will face a gas shortage in the next month of December 2023, Which will increase to 470 MMCFD in January 2024, although gas availability to the domestic sector will be limited to only 8 hours during cooking hours.
Now the expected unavailability of SOCAR cargo will exacerbate the gas crisis in January and force the government to increase the availability of gas to the domestic sector by eight hours Reduce to just six hours.
“ Vibes from SOCAR indicate that it may not be able to offer the price of troubled LNG cargo for January, said the relevant authorities of ”.
In the last government period, led by then-Prime Minister Shahbaz Sharif, a GtG agreement was signed with the Azeri firm SOCAR، Under which he is obliged to provide one LNG cargo per month.
Pakistan and Azerbaijan signed a one-year agreement on July 25, 2023, which is extended to one year. Under the agreement, SOCAR Trading Company-UK will offer an LNG cargo 45 days before the start of the relevant delivery window, And for cargo each offer will have a fixed period during which PLL can accept the offer.
The official said SOCAR seems reluctant to offer LNG cargo for January as Western economies begin to show up، And the disturbing availability of LNG has become difficult, he added, adding that the Azeri firm is bound to offer cargo 45 days before delivery.
The official said that time is yet to come and SOCAR may come up with an offer of January 2024.
Pakistan LNG Limited (PLL) is also planning to market its tenders for spot cargo for January but PLL has given PPR AK rules are exempt from two issues, one from a 30-day response time and the other from a 15-day bid time.
So far this process is ongoing. Once, after getting a discount، PLL will go for spot cargo search tenders for January and will have to respond and decide on the same day after a few hours.
When asked if LNG trading companies would bid for January as before، So the government bought a cargo from Vitol based on its lowest bid.
However, PLL bought a cargo from SOCAR which cost 10-20 cents less than Vitol’s lowest bid. Market players believe that the bids were last used to buy an LNG cargo from SOCAR. The official said the impression was incorrect, as SOCAR had offered its price separately under its action.
Government workers had earlier worked out that the 160 MMCFD gas deficit in the Sui Southern system would remain in December and 170 MMCFD in January. However, in the Sui Northern system, the gas deficit will be at 200 MMCFD in December and 300 MMCDF in January, And the gas shortage will remain at 360 MMCFD in December, which will increase to 470 MMCFD in January.
However, in January, the unavailability of LNG cargo from SOCAR could exacerbate the gas crisis. From January 2024, Pakistan will start receiving four-term cargo from Qatar at 10.2% of Brent instead of three cargoes, officials said. The country is already getting five cargoes from the same country at 13.37% of Brent on Terminal One. ENI is also providing a term cargo at 12.05% of Brent’s price.
As gas demand in Sui Northern goes up to 1,100 MMCFD and 960 MMCFD in January, Pakistan needs two more spot cargo a month. This seems difficult because bidders will bring expensive prices keeping in mind their last bid experience. Local gas production has declined to 3.19 bcfd, declining to 9-10% per year.
