RIM Market News >  Asian Viewpoints

Pakistan’s troubled long-term LNG deal

2019/07/23 10:31

By Kamlesh Trivedi

 

Pakistan is in a quagmire over its long-term procurement of LNG. Some believe that, by issuing a long-term buy tender, Pakistan has upset many among the long-term suppliers that the country had contacted earlier and secured offers through government to government negotiations. Pakistan has been sitting on an offer for long-term LNG from Qatar which Qatar claims it had scaled down twice to match Pakistan’s price expectations. Qatar claims initially that it had offered Pakistan 12.3% of Brent crude prices for 10 years of long term supply of LNG during government to government level negotiations. Later on, Qatar cut down the offer from 12.3% to 11.25% as Pakistan claimed it was sitting on offers from other suppliers at lower levels. Simultaneously, while negotiating with Qatar, Pakistan was also talking to at least five to six other suppliers, according to Pakistan media. While negotiating with other suppliers, Pakistan disclosed the price offered by Qatar, seeking further downward revision in their respective offers for long-term LNG. The trick worked for Pakistan apparently, as it received offers from Saudi Arabia, a new entrant in the LNG trading business, at as low as 10.3% for three years. However, clearly upset with Pakistan's business practices, Qatar lodged a formal protest with the Pakistan government.

It’s difficult to predict whether Pakistan will award its 10-year 240-cargo buy tender closed on Jul 18 or turn it into a mere exercise to collect price information for long-term LNG from leading global suppliers. Either way the, Pakistan's strategy has backfired and impacted its long-term relations with the world’s biggest LNG supplier and possibly many others. Currently, Qatargas projects supply term LNG to Pakistan under a 20-year contract for 1.3mil mt/year which can be further increased to 2.3mil mt/year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India : Energy Desk  Kamlesh Trivedi  +91-98795-50717
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