Pakistan to save $300mn annually from Qatar LNG deal: Imran Khan

[farok84]

Since it was signed only last Friday, I do not know the exact price; rumors are that the selling price is at 10.2% of the Brent. Should this be true, the new price is indeed about 10% cheaper than the 2016 contract.

Dear Niaz Sb,

The price for PMLN signed contract was 13.37% of Brent. The price for PTI signed contract is 23.7% cheaper compared to PMLN's. The price can also be renegotiated after 4 years of supply that is in 2026, as opposed to 10 years in PMLN contract. I have shared Nadeem Babar's conference in earlier posts, where he has detailed these things. This price is indeed extremely favorable to Pakistan and is at a discount to the going 10.6%.

 

[niaz]

Oh so next you are going to excuse the previous government dumping billions into artificially fixing the PKR rate?

Most honorable Sir,

For the record, I have no political affiliations. In my opinion, Pakistan saw the best governance during the first 7 years of Ayub Khan (1958-65)and the first 3 years of Musharraf, that is before he was snared in by the Chaudhry brothers of Gujarat. Therefore I have no love for either PML-N or PPP gov't.

I was asked my opinion about an LNG contract which I gave to the best of my ability. I would gladly accept my culpability if you could point out where I have used baseless arguments or wrong facts, but kindly stick to the LNG contract because it has no relation to what the previous gov’ts may have done with the PK Rupee rate.

The emotional outburst by the PTI supporters against anyone who dares to criticize their superhero is however quite common. You are therefore welcome to get as mad as you wish. It would not change the LNG market or my views.

 

[LeGenD]

It would be better if members are not so reactionary to potential difference of opinion. Any argument or POV can be addressed with maturity.

 

[hussain0216]

Most honorable Sir,

For the record, I have no political affiliations. In my opinion, Pakistan saw the best governance during the first 7 years of Ayub Khan (1958-65)and the first 3 years of Musharraf, that is before he was snared in by the Chaudhry brothers of Gujarat. Therefore I have no love for either PML-N or PPP gov't.

I was asked my opinion about an LNG contract which I gave to the best of my ability. I would gladly accept my culpability if you could point out where I have used baseless arguments or wrong facts, but kindly stick to the LNG contract because it has no relation to what the previous gov’ts may have done with the PK Rupee rate.

The emotional outburst by the PTI supporters against anyone who dares to criticize their superhero is however quite common. You are therefore welcome to get as mad as you wish. It would not change the LNG market or my views.

So they wasted billions trying to artificially fix our currency, because?

 

[niaz]

Dear Niaz Sb,

The price for PMLN signed contract was 13.37% of Brent. The price for PTI signed contract is 23.7% cheaper compared to PMLN's. The price can also be renegotiated after 4 years of supply that is in 2026, as opposed to 10 years in PMLN contract. I have shared Nadeem Babar's conference in earlier posts, where he has detailed these things. This price is indeed extremely favorable to Pakistan and is at a discount to the going 10.6%.

Thanks for the info, new deal is indeed about 24% cheaper and undoubtedly Nadeem Baber has done a good job for Pakistan.

 

[Path-Finder]

@WebMaster @Horus a question for ye Gentleman?

 

[Hakikat ve Hikmet]

IK is a Pashtun, so a hard bargainer by nature....

 

[LeGenD]

Dear Niaz Sb,

The price for PMLN signed contract was 13.37% of Brent. The price for PTI signed contract is 23.7% cheaper compared to PMLN's. The price can also be renegotiated after 4 years of supply that is in 2026, as opposed to 10 years in PMLN contract. I have shared Nadeem Babar's conference in earlier posts, where he has detailed these things. This price is indeed extremely favorable to Pakistan and is at a discount to the going 10.6%.

These are the kind of responses that are valuable. Thanks.

 

[Norwegian]

I give trillion out of 10 for your chawal. what a load of manure. so that lanky and the qatari letter generator residing in qatar who negotiated high prices are good boys and now the lower price is a chip on the shoulder for the current gov that is just poignant.

What @niaz is saying is that both deals were equally good even if the latest one is cheaper than the former. So we can send current negotiators to jail along with Shahid Khaqan Abbasi.

 

[Turingsage]

LNG prices are crashing. India is negotiating to DELINK from Brent crude price as LNG in spot markets is CHEAPER when NOT linked to Brent.

https://www.spglobal.com/platts/pla...st-news/20200130-jkm-brent-prices-diverge.jpg

• LNG | NATURAL GAS | OIL | METALS
• 29 Jan 2020 | 06:40 UTC
• Singapore

Oil-linked LNG deals add to India's discomfort as gas prices plunge

HIGHLIGHTS
Potential deal re-negotiation with Qatar a win-win for all: Platts Analytics
Qatar may ask for bigger volume commitment for any price flexibility
Platts JKM at 10-year low, has dipped below the $4/MMBtu mark
Singapore — India is stepping up pressure on Qatar to re-negotiate term LNG deals and move away from oil-linked contracts as gas prices hit multi-year lows, but any flexibility in the future may come at the cost of a larger volume commitment, analysts told S&P Global Platts.

Like the rest of Asia, the bulk of India's LNG term import deals are oil-linked, but falling spot LNG prices amid bulging global supply have resulted in a pushback from Asian buyers, who are seeking to either re-negotiate those deals or diversify procurement to spot markets

Qatar's energy minister Saad al-Kaabi held talks recently with India's petroleum and steel minister Dharmendra Pradhan amid hopes that India and Qatar might look into re-negotiating annual LNG contracts.

"Al-Kaabi and I explored ways to make LNG more affordable for a price sensitive market like India, especially in our long-term contact," Pradhan said in a tweet after his meeting with Kaabi.
Mounting pressure
However, some analysts said India may have an upper hand in the future as it won a price concession from Qatar in 2015 in exchange for a higher volume commitment.

"This is clearly a good time for LNG buyers to request a re-negotiation in their oil-indexed long-term contracts and buyers globally will continue to make these requests," said James Waddell, senior global gas analyst at Energy Aspects. "Spot cargoes are abundant and around half the price of gas under typical oil-indexed contracts. We see this situation continuing at least through 2021."

The benchmark for spot Asian LNG prices, JKM, has plunged to a more than 10-year low, falling below $4/MMBtu for the first time since July 2009 due to a wave of new supply from Australia and the US amid slowing demand.

S$P Global

 

[Path-Finder]

What @niaz is saying is that both deals were equally good even if the latest one is cheaper than the former. So we can send current negotiators to jail along with Shahid Khaqan Abbasi.

forgive me, people back then were shouting at the top of their lungs that this is A BAD DEAL!! Sheikh Rasheed was leading the charge at that time. many other journalist were reporting on this chor party making an expensive deal through saiful rahman as the frontman in qatar for that haram tubbar and kakki bassi.

the qatari letter was an offset of this deal! let me remind you of this. one of the biggest chawal in the history of Pakistan was the qatari letter.

 

[farok84]

Sir timing is very important in these type of contracts. Sir we have seen historic highs after Covid as well.
Apart from that have you gone through the different clauses? There is a huge difference.

https://twitter.com/x/status/1365270593071816704

This is the cheapest declared contract right now? Is that correct?


I expected a much more balanced review.

Hi,

That tweet part regarding port charges was massively confusing, atleast to me. It was giving impression that the new contract is FOB based, which indeed would have been an anti climax but like our older contracts this contract too is DES based.

Qatar has been quite generous to sweeten the deal by agreeing to pay for the port charges or atleast some part of it. It wouldn't make too much of a difference per mmbtu ($0.024/mmbtu if they pay full $80k/ cargo) but goes a long way towards building goodwill and trust.

By my calculations, the price for this contract is 23.7% cheaper and not 31% from PMLN's contract. Am I doing math wrong here?

Point 3 of tweet, talks about volume flexibility, this will come into play in 2024 when we start to import 48 cargoes/ year and fruits of it will be enjoyed by next government. For 2022 and 2023 we will still be relying on spot purchases to replenish our winter demand. We will still be importing 8 cargoes/ month till 2024.

 

[Path-Finder]

https://twitter.com/x/status/1365364905449259008

 

[Jungibaaz]

Honorable Jungibaaz,

As I understand it, This is a 3.0 tons per year 10-year contract with slightly lower prices. Since it was signed only last Friday, I do not know the exact price; rumors are that the selling price is at 10.2% of the Brent. Should this be true, the new price is indeed about 10% cheaper than the 2016 contract.

We must remember that the 3.75-million tons per year 2016 contract was signed before the sharp decrease in the worldwide energy demand resulting from the Covid-19 shut-downs. Therefore shouting from the top of the roof about the savings compared to the previous contract is no more than simple propaganda.

Anyone with any experience of trading in commodities would know that no ‘Charity’ is involved the international contracts. The seller always wants the highest price whereas the buyer aims for the lowest. The outcome is determined by the prevailing market conditions. I don’t deny that Nadeem Baber is a competent negotiator and has done a good job in 2021, but Shahid Khaqan Abbasi had also done equally well in 2016.

I get the impression that the PTI gov’t carries a ‘Chip’ on its shoulders and therefore is continuously trying to prove that they are better than the previous gov’t. In my humble opinion, neither Nadeen Baber nor Shahid Khaqan Abbassi deserves kudos because both had the responsibility to get the best deal for their country.

Thanks for the info, new deal is indeed about 24% cheaper and undoubtedly Nadeem Baber has done a good job for Pakistan.

Thanks for your assessment. I suppose this deal is in line with prices that Qatar has negotiated for other contracts recently, this is from Q3 20:

Qatar Close to Clinching Another New LNG Buyer

The pricing offered by both sellers is expected to be similar to QP's recent deal with Sinopec for 1 million tons/yr of LNG over 10 years with a competitive oil slope priced at 10.19% of Brent on a delivered basis (LNGI Sep.8'20). Despite not known as a low-cost supplier, or a trader, Chevron also emerged as the surprise winner in Taiwan's CPC's tender with a price likely at 10.2% of Brent on a delivered basis that set a new benchmark for Asian deals (WGI Jul.29'20).

https://www.energyintel.com/pages/eig_article.aspx?DocID=1084611

So based on my admittedly limited understanding and your comment on prevailing market conditions, our negotiated price more or less matches the above examples at 10.2% of Brent. So it's good, but perhaps not at any extra-ordinary discount? As for the previous deal, I'm unable to find any reliable estimate for the going price for 15 years at that time, nor am I able to wrap my head around the price difference then vs now and the difference in tenure.

@niaz @farok84 @Turingsage Gentlemen, if you'll indulge me for a moment with a question or two. Since these are long term contracts, how does the price (as a % of Brent) change with term of the contract (10yr vs 15yr etc.), is it higher for a longer contract due to more price risk in the long term? And since these prices are being quoted as a % of Brent, how much of a difference are we talking about in relative terms between a deal today at a price of 10.2% of Brent vs 13.37% of Brent at the start of 2016?

The second question is a little tricky, I mean to judge exactly how much better this deal is than what we had previously, while factoring for changes in energy prices between then and now, to judge if this deal is an example of better negotiation rather than just prevailing market conditions.

Many thanks.

 

[H!TchHiker]

Lol...Halal long term contract ...last I know qatar was supporting corrupt sharif's to rescue them and offering billion of dollars for that ...politican are really joke from either sides..tomorrow if government changes and they get cheaper spot prices same rhetoric will appear ..or why no competitive bids ? If there isn't any