Gas crisis likely to be severe in January

Islamabad: The gas crisis in the country is likely to be severe in January.

According to the details, senior officials of the Ministry of Energy told a private news organization that there is a high possibility of unavailability of low-cost Liquefied Natural Gas (LNG) cargo from Azerbaijan's state-owned company State Oil Company of the Republic of Azerbaijan (SOCAR) in January 2024.

The country was projected to have a shortfall of 360 million cubic feet per day (mmcf/d) of gas in December 2023, rising to 470 mmcf/d in January 2024, prior to non-delivery of incoming LNG cargoes. Although the availability of gas for domestic sector is limited to only eight hours during cooking hours.

Concerned officials said specific feedback from SOCAR suggested it would not be able to offer low-cost LNG cargo for January.

During the government of former Prime Minister Shehbaz Sharif, a GTG contract was signed with Azeri firm SOCAR under which it is obliged to supply one LNG cargo per month.

Earlier on July 25, 2023, Pakistan and Azerbaijan signed an agreement for one year, which can be extended for another year.

Under the agreement, SOCAR Trading Company UK will offer an LNG cargo 45 days prior to the start of the relevant delivery window (delivery period) and each offer for the cargo will have a fixed maturity period during which the Pakistan LNG Limited (PLL) offer will be accepted.

SOCAR is pulling back from offering LNG cargoes for January as Western economies begin to show recovery and cheap LNG becomes harder to come by.

The Azeri firm is bound to make an offer 45 days before cargo delivery, so there is still time and SOCAR can come up with an offer for the month of January 2024, the official added.

PLL is also planning to market its tenders for spot cargoes for January. But PLL has sought exemption from Public Procurement Regulatory Authority (PPRA) rules in two respects. One from 30 days response time and another from 15 days bid validity time and still in progress.

Once the waiver is granted, PLL will go for tenders for the spot cargo for the month of January and will have to respond and make a decision on the same day after a few hours.