Pakistan State Oil (PSO) has started to invite bids from international suppliers for three cargoes to be delivered in the next three months, opting for spot buying of liquefied natural gas (LNG) after a gap of three years, a tender issued on Wednesday revealed.
Each cargo of 143,000 cubic meters needs to be delivered on:
- November 21-22, 2020
- December 21-22, 2020
- January 21-22, 2021
This is especially relevant after Pakistan has allowed for spot buying of LNG, a much cheaper option as compared to the fixed contracts; the likes of Qatar Gas and ENI. The government is importing additional LNG from the open market now at a lower slope.
The months of December and January see a sharp seasonal spike in demand for gas, and this year the demand-supply gap is expected to be wider than ever considering the higher demand and reduced supply.
Owing to this supply gap, the government expects 250-400 million metric cubic feet per day of gas shortfall in the Sui Southern Gas Company system in the coming winter. Sui Northern Gas Pipelines that feed Punjab, Khyber Pakhtunkhwa and Kashmir would also face 300-350 mmcfd shortfall in the peak winter season.
Oil and Gas Regulatory Authority (Ogra) said that the power sector is the main consumer of natural gas, accounting for approximately 38 percent, while the domestic sector’s demand is around 22 percent; and finally, fertilizer is 16 percent. Up to 45 percent of Pakistan’s power sector energy mix is based on natural gas.
The gap between demand and supply can be bridged through enhancement in indigenous gas exploration and production through incentivizing this sector, import of interstate natural gas through the development of cross-country gas pipelines and increased import of LNG, according to OGRA.