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Pakistan is looking for a six-year LNG contract due to a serious scarcity in the international market.

In the face of a serious LNG shortage in the international market, Pakistan has published a two-part tender seeking bid prices from reputable international LNG trading organisations for a six-year contract.
Since the five-year LNG term deal with GUNVOR expired in July 2022, Pakistan LNG Limited (PLL), the country’s fully-owned firm, has now issued a tender for a six-year term agreement. Bids from reputable international LNG suppliers are being solicited for term cargoes on a delivered ex-ship (DES) basis at Port Qasim in Karachi.

If Pakistan receives the best pricing bid, it will purchase 72 LNG cargoes over the next six years, with each cargo containing 140,000m3 of LNG.According to a senior Energy Ministry official, PLL has launched a two-part tender.

The first leg of the tender invites offers for only one year, 2023, beginning in December 2022 and ending in December 2023, during which 12 LNG cargoes will be delivered to Pakistan, one cargo per month. Part two will see Pakistan seek 60 LNG cargoes over a five-year period, from January 2024 to December 2028 – one cargo every month.

Bidders will be required to submit bids for both portions of the term tender. However, based on the bidders’ responses, Pakistan will have two options: accept both offers for one-year and five-year contracts, or bid exclusively for the second portion of the five-year agreement.

Pakistan, on the other hand, will not consider offers for a one-year deal. Energy experts argue that the term tender should not be issued at this time because the EU, US, and Japan put sanctions on Moscow following Russia’s invasion of Ukraine, and the LNG producing countries and LNG trading corporations are over-committed with European countries.

They may be unable to enter into contracts with a country like Pakistan, whose economic position is too uncertain and LC confirmation charges are prohibitively expensive. Official sources suggest that Argentina, which has a worse economy than Pakistan, recently inked a term arrangement at 15% of Brent on a prepayment basis.

“As a result, we are hopeful that LNG trading companies will show up with reasonable bid rates for two portions of the tender.” Pakistan currently relies on LNG cargoes under long-term agreements. It receives 6 cargoes per month from Qatar under a 15-year agreement at 13.37 percent of Brent, 2 cargoes from Qatar under a 10-year contract at 10.2 percent of Brent, and one cargo from ENI under a 15-year arrangement at 12.14 percent of Brent.