Pakistan State Oil saved approximately $295 million on LNG imports by taking a number of cost-cutting actions in 2021.
In a statement, the state-owned oil company said, “Through prudent planning and strategic thinking, PSO has enabled considerable savings and created value for end-users”.
PSO scrapped the spot tender for October 22 and October 23, and replaced it with cargo under a long-term contract with Qatar Gas, using contractual provisions and prudent rescheduling.
In addition, PSO arranged 28 cargoes instead of 20 under long-term contracts for use in the months of January and February, and November and December.
The company did this to avoid high spot prices during these months, so it could meet demand during the winter months at the lowest possible rates, which allowed PSO to save $295 million.
PSO also made additional savings by reducing the number of spot cargoes to four from 12 in 2021, using contractual provisions, while increasing long-term cargoes through contracts to 7o from 60.
The company also managed to reduce the scheduled suspension period of LNG supply caused by the FSRU [Floating Storage Regasification Unit] Exquisite’s dry-docking period. It cut the suspension period to approximately 60 hours from 90 hours, by bringing the FSRU laden with cargo under a long-term contract with Qatar Gas.
PSO stated that this curtailed downtime for the industry and allowed the economy to save on costs.
Pakistan has been struggling with a sharp surge in global LNG prices, with PSO forced to cancel a number of cargo tenders as the bid prices it received were too expensive.
A report by S&P Global reads, “A tight global gas market – triggered by a cold, long winter, competition between Asia and Europe for LNG cargoes, low storage levels, and constrained Russian gas flows to Europe – has pushed prices across the globe to record highs.”
S&P Global Platts Analytics projects that Pakistan’s LNG imports will fall about 10 percent year-over-year this winter.