Pakistan has purchased a liquefied natural gas (LNG) gas shipment for January delivery in an effort to bridge the demand and supply gap during the current winter season.
According to Bloomberg, state-run Pakistan LNG Limited (PLL) bought the cargo from Oman’s OQ Trading. The shipment has been purchased at a premium to the spot market largely due to the country’s credit risk.
Bloomberg did not quote a price for the shipment, however, according to journalist Ali Khizar, Pakistan bought the cargo at a negotiated price of $17.95 per MMBtu who added that Pakistan is paying $57.4 million for this cargo which is $3 million above the market.
Reportedly, PLL used the rate offered by the State Oil Company of Azerbaijan Republic (SOCAR) to reduce the bid amount from the lowest bidder OQ trade.
SOCAR was initially hesitant to offer the price of one cargo for the month of January due to increasing LNG costs. However, once the bids were opened, the PLL Board contacted SOCAR for delivery in January. SOCAR offered a rate of $17.96 per MMBtu, but PLL contacted OQ Trading, the lowest bidder.
PLL asked the UAE-based bidder to match the SOCAR offer. The company improved its offer to $17.95 per MMBtu.