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Latest issue of The LNG Markets
Highlights of Issue :

A global rebound from Covid-19 combined with extraordinary demand for winter LNG cargoes, lowest EU gas storage level in five years and gas supply trouble in the US- first due to hurricane Ida and now hurricane Nicholas has pushed natural gas and LNG prices to its record high level.
Early in September, Hurricane Ida disrupted sizable feed gas supply in the US and now on Sep 14 hurricane Nicholas knocked out Freeport LNG liquefaction facility on the Texas Gulf Coast.

Kamlesh Trivedi



Trade Overview
Steep rise in winter prices feared by Asian European importers

Pakistan LNG awarded Oct cargoes at above $20

Pakistan LNG Ltd, the state run LNG importer has short listed Trafigura and PetroChina International for four cargos to be supplied during October and November. Out of the four cargoes, state-owned PLL believed to have awarded all three October cargoes to trading major Trafigura for delivery at an abovee $20/million British thermal unit price.

For three of the four cargoes, Trafigura had quoted prices ranging from $19.8477 for Oct 8-9 delivery window to as high as $20.9677 for a Nov 12-13 delivery window. PetroChina had quoted lowest price of $20.3888 for a Nov 6-7 cargo. Trading major Trafigura had successfully qualified for the supply of two more cargos to PLL which included one for Oct 23-24 delivery window at $20.2877 and another for Oct 28-29 delivery window cargo at $20.7777.

While Pakistan has been struggling to keep an average LNG price low, most end-users in industry and in the power sector have been considering use of furnace oil (FO) replacing RLNG. FO is being offered by the domestic refineries at around $12/mBtu (Pakistani Rupee 85000/mt) price equivalent to LNG, which is far lower compared to expensive spot LNG. Even a mix of long term and spot LNG is unlikely to help much to Pakistan to cut down its import cost. Pakistan consumes 60% of long term and around 40% spot LNG. Although most of the long term LNG volume has been contracted at an average of $10 but because of exorbitant spot prices, end users in Pakistan would end up paying around $15 for a mix of long term as well spot LNG.   

Since spot prices for LNG entering winter months, are unlikely to show any weakness in the coming weeks, end-users in Pakistan in power sector are left with no option but to scale down power generation and reduce their fuel consumption or switch to FO.

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