Pakistan is Considering Killing 2 LNG Deals: Bloomberg

[StormBreaker]

The state-owned Pakistan LNG Ltd, which is the main buyer of liquefied natural gas, is considering canceling two long-term contracts because of a slump in market prices and abundant production, which have created opportunities for cheaper supply, reported Bloomberg.

Pakistan LNG Ltd. is weighing the possibility of exercising termination clauses in contracts it signed with Eni SpA and Gunvor Group Ltd. in 2017.


However, the report stated that as of yet, no final decision has been made and the company is seeking input from the Ministry of Energy.

According to Bloomberg calculations, canceling both deals may cost the Pakistani firm nearly $300 million in penalties.

Pakistan LNG passed on the questions to the energy ministry, which didn’t respond to requests for comment.

Gunvor declined to comment, while Eni didn’t respond to requests for comment.

The report stated that a glut of new LNG supply and sputtering demand growth have sent prices to record lows, straining more expensive long-term supply deals based on oil prices.

Pakistan LNG is still open to sourcing supplies through new or revised contracts if the pricing terms are more favorable, according to one person privy to the proceedings. The country is seen as one of the biggest growth markets for the fuel, with BloombergNEF forecasting imports growing 80% from last year’s level by 2023.

Under the terms of the contracts, which are posted on Pakistan LNG’s website, the company must give a 90-day termination notice and pay damages equal to the value of six cargoes, which is based on average Brent prices for the three months preceding the month the notice is served.

Bloomberg reported that this will be about $142.5 million for the Gunvor deal and $148.8 million for Eni.

SOURCE : ProPakistani

 

[Pandora]

Another economic landmine left by ishaq dollar.

 

[American Pakistani]

What kind of ch were doing such nonsense deals left right and center. Be it reko diq, electricity power ship or this lng.

 

[Pandora]

What kind of ch were doing such nonsense deals left right and center. Be it reko diq, electricity power ship or this lng.

Massive kickbacks were taken by PPP and PMLN for these deals. But not a single conviction all thanks to our judiciary and weak prosecutors.

 

[AZADPAKISTAN2009]

Not worth it

$300 Million dollars if we get the gas instead

a) We can use/sell it for the Textile sector and that sector will make more millions
also, companies selling gas internally can collect money from companies using gas

b) The gas can also be used for home supply of cooking gas in the cylinder, once again companies selling gas cylinder can collect money from the consumer

• Can't just give up $300 Million to cancel a contract , it is like a free gift for these Gas companies

If it was 1 million or 2 million sure why not

$300 Million Dollar is a huge money you can buy

• 300 civilian Transport helicopters with that much money (Air Ambulance)
• 15,000 Tractors can be bought for Farming distributed free to farmers (each tractor costing 20,000 dollars)
• 375,000 Laptops can be bought from China distributed free to students in Grade 9/ Grade 10
• Can buy 1,800,000,000 billion Tandoori Roti @ 24 rupee per roti distributed free for poor

People need to understand the size of the money being discussed it is not like chocolate kitkat bar , you make a deal and cancel and give up $300 million dollars

 

[Goenitz]

Kill the dealers too.. who put us in this condition.

 

[Flight of falcon]

Not worth it

$300 Million dollars if we get the gas instead

a) We can use/sell it for the Textile sector and that sector will make more millions
also, companies selling gas internally can collect money from companies using gas

b) The gas can also be used for home supply of cooking gas in the cylinder, once again companies selling gas cylinder can collect money from the consumer

• Can't just give up $300 Million to cancel a contract , it is like a free gift for these Gas companies

If it was 1 million or 2 million sure why not

$300 Million Dollar is a huge money you can buy

• 300 civilian Transport helicopters with that much money (Air Ambulance)
• 15,000 Tractors can be bought for Farming distributed free to farmers (each tractor costing 20,000 dollars)
• 375,000 Laptops can be bought from China distributed free to students in Grade 9/ Grade 10
• Can buy 1,800,000,000 billion Tandoori Roti @ 24 rupee per roti distributed free for poor

People need to understand the size of the money being discussed it is not like chocolate kitkat bar , you make a deal and cancel and give up $300 million dollars

I don’t mean to offend you but I can’t help asking... what is your education level? How did you come up with this gem of an analysis.... I mean loose billions in over price but save 300 million and buy tractors......

just curious where did you go to the school?

 

[AZADPAKISTAN2009]

I am not in favour of handouts to companies for contract breaking fees

• If gas is expensive, use less conserve it
• No lump sum payment of 300 Million Dollar at once and no gas delivered

Lunatic idea , lets not get gas for 300 million, but lets give 300 Million Dollar in Charity


Option A:
Government gets gas from the company for $300 Million

Sells to internal Distributor
The distributor sells it to Factories
The distributor sells it to Consumers

• Distributor Pays Taxes to Government
• Distributor Pays the cost of Gas to government

Government recovers their money $300 Million Profit
Customers get gas
Factory gets gas

> Factory makes more products sells it and makes more money , earn Pakistan $100 million in profit from Textile sector


Option B:
Government just gifts $300 million dollars to the company gets nothing return

Government starts a new tender , the Judge Vultures come in lawyer vultures get into mix
and it is politicized

Distributor can't supply gas to people, and circular debt builds up

• Gas Shortages in Factory
• Gas Shortages in Homes

During this time Textile industry goes Thup

Takes 2-3 years to negotiate a new deal

Government then goes to IMF to ask for loan of 700 million to import gas

By the time gas comes 5 years have passed and now the price of gas is more expensive


Sounds familiar?

 

[AZADPAKISTAN2009]

Only an illusion that we will save cash by abruptly cancelling deals

In reality, if we cancel deals it will create chronic shortages inside the country because it takes time before deals are finalized in Pakistan and when supply starts

• Chaos with energy supply will mean civil disturbances
• Any fall back in Gas supply would mean , damage to the Textile sector which is just making positive strides

Don't try to fix something which does not require a fix

The Gas supply is functional and established (Don't touch it, The slow red tape environment in Pakistan will slow down the arrival of any new gas deal)

• Make money from the money that will be generated from the Textile sector

 

[cloud4000]

I don't understand why countries negotiate fix-rate contracts for oil and gas. Pakistan should seriously think of letting the market dictate prices. Living in the US, this is what I see here. The price of oil and gas goes up and down depending on the market. Just a thought.

 

[Nilgiri]

@niaz Comments?

 

[AZADPAKISTAN2009]

No need to touch a done deal, we also got 50,000-100,000 visas for Pakistani workers in Qatar


71,000 skilled, semi-skilled Pakistanis proceed to Qatar for job opportunities

 

[Flight of falcon]

I am not in favour of handouts to companies for contract breaking fees

• If gas is expensive, use less conserve it
• No lump sum payment of 300 Million Dollar at once and no gas delivered

Lunatic idea , lets not get gas for 300 million, but lets give 300 Million Dollar in Charity


Option A:
Government gets gas from the company for $300 Million

Sells to internal Distributor
The distributor sells it to Factories
The distributor sells it to Consumers

• Distributor Pays Taxes to Government
• Distributor Pays the cost of Gas to government

Government recovers their money $300 Million Profit
Customers get gas
Factory gets gas

> Factory makes more products sells it and makes more money , earn Pakistan $100 million in profit from Textile sector


Option B:
Government just gifts $300 million dollars to the company gets nothing return

Government starts a new tender , the Judge Vultures come in lawyer vultures get into mix
and it is politicized

Distributor can't supply gas to people, and circular debt builds up

• Gas Shortages in Factory
• Gas Shortages in Homes

During this time Textile industry goes Thup

Takes 2-3 years to negotiate a new deal

Government then goes to IMF to ask for loan of 700 million to import gas

By the time gas comes 5 years have passed and now the price of gas is more expensive


Sounds familiar?

I can’t stop shaking my head in disbelief.... Thankyou for your social science explaination of a complex economic question.

 

[AZADPAKISTAN2009]

Worry about your Native population in Canada blocking the trains whose land you are making a pipeline on

May be Canada can gift 300 million to Native Indigenous population so they won't block the train path

$300 million is such a small figure, why doesn't Canada goes and pays the Natives a cool free $300 million to 1 billion to use their land for Pipeline?

All Mega deals have a major impact on ties with the nations the deal were done with

 

[Flight of falcon]

I can’t stop shaking my head in disbelief.... Thankyou for your social science explaination of a complex economic question.

Sometimes it’s better not to correct the person making incomprehensible statements:......

like a patient of mine in Cleveland who asked me where I am from and I answered Pakistan... he then Asked me where is Pakistan and I joked next to Mexico.... hearing this he informed me that he thought so as I I look like a Mexican because of my brown skin....that’s when I inserted a needle in him and he slowly went to sleep with a sure fact in his head that Pakistan is next to Mexico.