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Winter blues: Consumers may get gas for 6 hours only in Jan

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1 year ago

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  • LNG cargo from SOCAR may not reach in January 2024. 
  • Gas shortfall to escalate to 470 MMCFD in same month.
  • Distressed LNG availability has become difficult: official. 

ISLAMABAD: As winter approaches in Pakistan, the country is likely to face a severe gas crisis as the LNG cargo from Azerbaijan’s state-owned company, SOCAR, may not reach in January 2024, the officials of energy ministry told The News. 

Before the impending non-provision of LNG cargo, the country was estimated to brave the gas shortfall of 360 million cubic feet per day (MMCFD) in the next month of December 2023, which will escalate to 470 MMCFD in January 2024 despite restricting the gas availability to the domestic sector just for 8 hours at cooking times only.

Now the expected non-availability of SOCAR cargo would further aggravate the gas crisis in January and force the government to reduce gas availability to the domestic sector from eight hours to just six hours.

“The vibes coming in from SOCAR suggest that it may not be able to offer the price of distressed LNG cargo for January,” relevant officials said.

During the previous government tenure headed by the then premier Shehbaz Sharif, a GtG deal was made with Azeri firm SOCAR, under which it is bound to provide one LNG cargo a month.

Pakistan and Azerbaijan on July 25, 2023, inked an agreement for one year, which is also extendable to another year. Under the agreement, SOCAR Trading Company-UK will offer one LNG cargo 45 days before the start of the relevant delivery window, and each offer for the cargo will have a set validity period during which PLL may accept the offer.

SOCAR seems evasive from offering the LNG cargo for January as the Western economies have started showing buoyancy, and distressed LNG availability has become difficult, the official opined, adding that the Azeri firm is bound to offer 45 days before the delivery of the cargo. 

The time is still there and SOCAR may come up with the offer for January 2024, said the official. 

Pakistan LNG Limited (PLL) is also planning to market its tenders for spot cargoes for January but PLL has sought the PPRA rules exemptions from the two issues, one from 30 days response time and the second from 15 days bid validity time. 

So far, the process is underway. Once, the exemptions are granted, PLL will go for tenders seeking spot cargos for January and it would have to respond and decide the same day after some hours.

When asked if the LNG trading companies would come up with bids for January like before, the government purchased one cargo from Vitol based on its lowest bid. 

However, the PLL purchased one cargo from SOCAR keeping its price 10-20 cents less than the lowest bid of Vitol. The market players believe that the bids were used last time to purchase one LNG cargo from SOCAR. The official said the impression was wrong, as SOCAR had offered its price separately under its process.

The government functionaries had earlier worked out that the gas deficit of 160 MMCFD would stay in December and 170 MMCFD in January in the Sui Southern System. However, in Sui Northern’s system, the gas deficit would be at 200 MMCFD in December and 300 MMCDF in January, and the gas shortfall will remain in December at 360 MMCFD which will increase in January to 470 MMCFD. 

However, in January, the gas crisis may increase because of the non-availability of LNG cargo from SOCAR. The officials said that from January 2024, Pakistan will start getting four-term cargo at 10.2% of the Brent from Qatar instead of three cargoes. The country is already getting five cargoes from the same country at 13.37% of the Brent at terminal one. ENI is also providing one-term cargo at 12.05% of the Brent price.

Since the demand for gas in Sui Northern goes up to 1,100 MMCFD, and 960 MMCFD in January, Pakistan needs two more spot cargos in the month. This seems difficult as the bidders will come up with inflated prices keeping in view their last bids experience. The local gas production has reduced to 3.19 bcfd, decreasing by 9-10% every year.

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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2 days ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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3 days ago

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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