Everyone has 20/20 hindsight. The decision at any given time is made based upon situation at that point in time. One also cannot compare Indian price with Pakistan; even if the contracts are signed at roughly the same time; the supplier may have different reasons for offering different prices.
Since I have spent almost my entire working in the oil industry, perhaps I know a little more than an average person. Permit me to analyse the deal like I would professionally.
Firstly the Pakistan – Qatar LNG deal
ISLAMABAD: The government claimed on Wednesday that it had secured a favourable price of Liquefied Natural Gas (LNG) from Qatar for 15 years under an agreement signed in Doha. The price is lower than offered under comparable gas import options.
In a position paper, the government confirmed that the difference of port charges of $430,000 per ship would be paid by the Pakistan State Oil, instead of Qatargas, and would be recovered from consumers through its sale price.
The paper noted that the Qatar Liquefied Gas Company Limited 2 (QG2), which would be supplying LNG to PSO, would pay $320,000 per ship as port charges against actual charges of $750,000. The difference would be picked up by PSO and made part of sale price.
The PSO would be the LNG buyer delivered ex-ship (DES) at 13.37 per cent of Brent, while QG2 will be the seller from 2016 to 2031. It said that Qatargas had previously offered LNG DES price of $6.56 per MMBTU at $40 price of Brent which had now been reduced to $5.35 per MMBT
http://www.dawn.com/news/1238783
Evidently the deal is $5.35 DES (discharge ex ship) based on $40 per bbl Brent crude. Currently Brent price is close to $56 per bbl; at 13.37% of Brent, LNG price delivered ex ship to Karachi comes to
$7.487 per mm Btu.
We must not forget that India is a far larger market and as a rule, bigger the market, the more competition, thus cheaper the price. India imports about 20-million tons a year of LNG and plans to expand the capacity to 50- million tons in next 5 years. Pakistan imports, after expansion of receiving facilities, will still be less than 5 –million tons per year. Understand Pakistan’s deal with Qatar is initially for 1.3-million tons expanding to 2.3-million tons
Looking at India and other world prices as of Dec 2016 per the link below. India has many suppliers, some may be supplying at a lower price, but the average delivered price to India is $8.64 per mm Btu.
https://www.ferc.gov/market-oversight/mkt-gas/overview/ngas-ovr-lng-wld-pr-est.pdf
Regarding the other suppliers. ENI is not a major LNG player. Based upon date available with me, ENI contract portfolio is rather small, a total of 4.7-millin tons in 2015. Admittedly ENI has made some gas discoveries in Africa but it will be quite some time before ENI become a major player in the world market. Qatar on the other hand is the largest LNG exporter in the world exporting about 78-million tons of LNG annually.
Guvnor is a trading company with strong links to Russia. Should the market move and LNG become a scarce commodity, a trading company by nature would maximise its profits and find some clause in the contract to reopen the prices. Besides, Qatar is virtually next door and with less than 5 -6 days sailing time, I would be willing to pay slightly more for the security of supplies. Given the choice and security of supply, any competent manager / entrepreneur would prefer to deal with the producer directly
I am not fan of Nawaz Sharif but I do not like criticism with the ‘Journalist Spin’. Nearly all large suppliers have an office or an agent in Pakistan. Agents only make money when there is business. In my opinion this article has been engineered by agent of ENI in Pakistan who has missed out because the principal did not get the business.
Did NS or his family thru an intermediary benefit from this deal? Probably. But is it a good deal for Pakistan? In my opinion it is. Additionally, please be aware that gas situation is Pakistan is very precarious. Pakistan’s largest ever gas find at Sui is going to disappear in about 10 years and we need more & more suppliers including ENI & Gunvor. If you don’t believe me here is the link.
http://tribune.com.pk/story/417282/alarm-bells-ringing-sui-gas-reserves-to-end-in-10-years/
P.S. 1 mm Btu roughly equals 1000 cft of gas.
for the topic starter and anti-Nawaz posters hehehehe 
