KARACHI, PAKISTAN: Vitol Bahrain has offered to provide one LNG cargo of 140,000 cubic meters to Pakistan LNG Limited (PLL) at the rate of $12.77/mmbtu.
PLL had invited bids for the supply of two LNG cargoes of 140,000 cubic meters each to be delivered on July 08-09, 2021 and July 12-13, 2021.
However, just one supplier Vitol Bahrain participated in the bidding and offered to provide one LNG cargo for July 08-09 delivery window at the rate of $12.77/mmbtu.
Earlier this year, the LNG price had jumped to the highest level and even suppliers refused to deliver the committed volumes. However, a new wave of the Covid-19 pandemic has now hit the entire world and restrictions have pushed LNG demand down.
According to S&P Global, LNG prices hit double-digit levels for summer procurement as China recovery drives energy price surge, but regional uncertainties remain.
It may be mentioned here that in its last tender that opened on June 02, 2021, Pakistan LNG Limited (PLL) had received the lowest offer of $10.293/mmbtu for the cargo to be delivered on July 28-29, 2021 by BP Singapore. The highest offer was $11.98/mmbtu for August 27-28, 2021 delivery by Trafigura.
Since April this year, LNG importer sought open tender in fixed dollar rate instead of historic pattern of inviting bids in Brent Crude slope as defined in percentage of oil price.
Except for a few emergency tenders a couple of months ago, the PLL had always sought bids as percentage of Brent Crude price and with longer terms for bidding, bid evaluation, award of contract and holding bidders for longer period. This resulted in various forms of limitations and higher bid prices as suppliers had to hold on their ships and LNG. This was unlike private spot players who could make final decisions on a short notice.
Economists have been expecting this post-COVID rebound, and the bullish factors supporting energy prices have come together rapidly, including the so-called great demand rotation as consumers return, less permanent damage to discretionary spending than expected, and fiscal policies that helped businesses pull through.
However, despite the accelerated recovery, pandemic-hit supply chains have not fully recovered; factories are still struggling to restore shipments of raw materials, oil and gas projects are still struggling to bring in technicians and engineers for repairs on time, and capital spending has not fully normalized — all of which are exacerbating the price squeeze and commodity price inflation.