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January 23, 2021

After backing out by ENOC Govt gets better LNG price from Qatar Petroleum Trading

Business

 
January 23, 2021

By Khalid Mustafa

ISLAMABAD: In a welcoming development, Qatar Petroleum Trading (QPT) has bailed out Pakistan by offering the lowest bid at 16.33 percent of the Brent for the later part of February through an urgent tender. The QPT offer is 22 percent lower than the price of ENOC which backed out of its bid.

“Pakistan LNG Limited issued the emergency tender after backing out by ENOC that had won an LNG cargo for delivery on February 23-24 with the lowest bid at 23.4331 percent. PLL opened emergency tender on Thursday and got seven bids from various LNG trading companies for two time slots with healthy competition,” a senior official of the Petroleum Division told The News.

The government received the lowest bid from Qatar Petroleum Trading (QPT) at 16.33 percent of Brent for delivery of LNG cargo on February 25-26. The official, however, built his argument saying that LNG prices are market driven not the timing driven by putting to rest the narrative that ordering very early necessarily guarantees a better price.

The official also disclosed that PLL has formally decided not to disclose the bids result and keep the prices secret arguing the prices are the strategic secretes and when the result is made public, for bidder it becomes difficult to satisfy other countries (buyers) when their bids are found much lower in Pakistan. ‘However, making the result not public is the breach of PPRA rules, but strategy not to make public the bids ofall LNG trading companies can yield dividends in shape of less price.’

To a question the official said that as many as 7 LNG trading companies that include B.P Singapore, Petro China, BB Energy, TOTAL, Vitol, Trafigura, QP trading submitted their bids for two LNG cargoes for the next month of February, but Pakistan chose bids for one cargo for February 25-26. The official said that PLL this time adopted a strategy seeking emergency bids for two cargoes which resulted in healthy competition and the government managed the lowest lowest price at 16.33 percent of the Brent.

However, Pakistan LNG Limited (PPL) also issued a two paragraph press release without mentioning the name of the LNG trading company which came up with the lowest bid. However press release says PLL has one more LNG cargo at a lower price for the month of February 2021 through an urgent tender. The price is approximately 22 percent lower than the price of the bidder that withdrew its bid earlier for the same cargo.

PLL press release also puts to rest the argument that ordering very early necessarily guarantees a better price. To put things into perspective, the time period between the bid submission date and delivery date of cargo for the recent urgent tender was 35 days as compared with 49 days for the earlier tender in the same delivery