Energy crises to worse in July due to LNG shortage as a muted response from bidders received in purchasing LNG.
Pakistan LNG Limited (PLL) has received another blow as Italy-based LNG trading company Ente Nazionale Idrocarburi (ENI) once again backed out of its term cargo, scheduled for delivery on July 8, 2021.
“The ENI also defaulted in May 2022 and has done that again for July’s supply at a time when Pakistan LNG Limited (PLL) has failed to acquire four cargoes from the spot international market,” senior officials of the Energy Ministry told The News.
Energy crises to worse in July due to LNG shortage as the ENI spokesperson also confirmed this development to The News. “All the disruptions in LNG delivery suffered by ENI have been caused by the LNG supplier who didn’t fulfil the agreed obligations.
ENI did not take advantage or benefit in any way from these defaults and applied all contractual provisions to manage such disruptions.”
Federal State Minister for Petroleum and Natural Resources Dr Mudsadik Masood Malik said that ENI with which PLL has a 15-year agreement is now defaulting on alternate months “warranting required action.”
He said across the world, LNG is not available through spot procurement as every LNG molecule has been committed to Europe. Energy crises to worse in July due to LNG shortage.
When asked if the government was going to purchase one spot cargo for which the PLL had received a bid at $39.8 per MMBTU, the minister said it was too expensive and was no longer feasible.
He further responded that the government was now left with the only option to import coal and furnace oil for power generation in July.
According to top sources, the backing out by the ENI has left the authorities at the Energy Ministry in the lurch, wondering on how to cope with the ongoing electricity crisis, which will now aggravate in July owing to the non-availability of RLNG of 400 mmcfd in the system.
Managing Director Pakistan State Oil, however, told The News PSO has managed five furnace oil and two LSFO (Low Sulfur Fuel Oil ) cargoes and there was no need to worry about the power generation in July.
He said that PSO will import five LNG cargoes from Qatar at 13.375 per cent of the Brent under the 15-year GtG agreement and three cargoes at 10.2 per cent of the Brent under the 10-year GtG deal with Qatar.
The Pakistan LNG Limited (PLL) has already moved the London Court of International Arbitration against Singapore-based LNG trading company Gunvor for defaulting seven times in providing term LNG cargoes.
Similarly, top officials say that ENI has also emerged as a chronic defaulter. The ENI has committed defaults five and a half times since January 2021, whereas the Singapore-based Gunvor has defaulted 7 times.
Under agreements, they said, Pakistan can penalize 30 per cent of the term cargo’s cost at the maximum in case of default.
