PSO seeks first spot LNG in three years

SINGAPORE: Pakistan State Oil (PSO) is seeking a liquefied natural gas (LNG) cargo for delivery in April through a tender after a five-year contract with commodity trader Gunvor expired in December, three industry sources told Reuters.

If awarded, this will be the state-owned company’s first spot purchase in about three years, two of the sources said.

PSO last sought spot cargoes in October, for delivery over November to January, but did not award the tender as demand had dropped amid the coronavirus pandemic and a surge in hydropower generation, one of the sources said.

“With summer approaching, which is when power generation demand usually increases, PSO will likely need more LNG,” the source said, adding that the company will probably regularly issue tenders seeking one to three LNG cargoes a month going forward.

The company has no immediate plans to sign another mid-term contract though there are discussions in place with potential suppliers, and plans to focus on the spot market instead, the source said.

“There’s been a lot of turbulence in (prices) recently, so PSO is a bit cautious of signing longer-term deals,” the source added.

Asian spot liquefied natural gas (LNG) prices fell for a third week as a warmer season approaches in the northern hemisphere, reducing the heating demand that sent prices to a historic high last month.

The average LNG price for March delivery into Northeast Asia was estimated at around $7.20 per million British thermal units (mmBtu), traders said. That’s 80 cents lower than the previous week.

Cargos for April delivery were estimated at $6.60 per mmBtu. That’s about five times lower than the record high of $32.50/mmBtu on Jan 13.

In the latest tender, PSO is seeking the LNG cargo for delivery over April 15 to 16, according to a document seen by Reuters. The tender closes on March 2.

After five-year contract with Gunvor expired in December, PSO received extra volumes from its long-term supplier Qatar Petroleum for delivery over January to March, two sources said.

Gunvor declined to comment, while PSO did not immediately reply to an email requesting comment.

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