Pakistan made gas savings worth over $600 million by playing some of the largest gas firms against each other over the first 10 years of a supply deal.
According to a report from Pakistan State Oil (PSO), the deal came together with Qatar – the world’s largest liquefied gas supplier – back in 2016. It was a rare high-stake deal, the kind that’s carried out behind closed doors, away from public eyes.
Earlier, the supply agreement came to a halt after Qatar refused to lower prices for LNG. In 2015, after Qatar’s refusal, Pakistan had to make it public in the open market to purchase 120 cargoes in two tenders, which soon after brought in bids from BP Plc and Royal Dutch Shell Plc as well as other suppliers.
Negotiations were still underway with QatarGas Operating Co., and the purpose of the tender was to “fetch maximum number of bidders and best price option”. Ultimately, “the strategy helped bring down prices with QatarGas and saved $610 million,” according to the report.
Timeline of How Pakistan Saved Millions Off Gas Supply Deal
Here’s a timeline of how the supply deal got carried out, according to Pakistan State Oil presentation to Senate Standing Committee on Petroleum:
- 2013-2015: Negotiations stall after Qatar refuses to sell below 13.9% of Brent oil price
- Nov. 2015: Pakistan floats two 5-year tenders that get bids from the likes of Shell, BP and Gunvor
- Dec. 2015: Gunvor offers lowest price in first tender at 13.37%, Shell lowest in second at 13.83%
- Jan. 2016: Pakistan resumes negotiations with Qatar, which agrees to match Gunvor’s bid
- Jan. 2016: Pakistan also awards first tender to Gunvor, moves second tender volumes to Qatar deal
After receiving numerous offers, Pakistan decided to inform Qatar of the lowest bid from Guvnor Group Ltd., a Swiss entity, pushing the Middle East supplier to agree to supply on an equal price. Pakistan still bought some of its LNG from the Switzerland-based group, and awarded it the first tender.
However, the second tender ended up in a final deal with Qatar, bulking it up by 25 percent. The presentation is subject to further scrutiny from head of the Senate Mohsin Aziz, who believes this matter needs further investigation as import of LNG may cause concerns in the future.
The deal with Qatar, in the end, was settled for 3.75 million metric tons over 15 years of time. This comes in response to the country’s declining production of LNG as it turns to importing fuel from the international market.
Via Bloomberg
We had a Govt of patriots in the past… Hope current one follow
So the former minister S.H. Abassi played a good game for Pakistan. Lets see what the current players come up with,,,,