Oil and Gas Regulatory Authority (Ogra) has reportedly refused to include cost of RLNG diversion in the annual determination of Estimated Revenue Requirement (ERR), as well as, in the Review of Estimated Revenue Requirement (RERR) of the gas companies, saying that any such act will have significant impact on the prescribed prices besides legal obligations, sources close to Secretary Petroleum told Business Recorder.
Ogra offered these comments on a summary of Petroleum Division titled “liquidity requirement of PSO for import of LNG and petroleum products” in the country.
The summary is likely to be discussed by the ECC in its next meeting. Pakistan State Oil Company Limited (PSO) and Pakistan LNG Limited (PLL) are engaged in import of Liquefied Natural Gas (LNG) in the country to meet the deficit in gas demand and supply. The re-gasified LNG (RLNG) is predominantly supplied to the consumers by Sui Northern Gas Pipeline Ltd (SNGPL) and a smaller volume to the consumers of Sui Southern Gas Company Ltd (SSGCL).
On SNGPL, the major consumer of RLNG is power plants which on annual average consume up to 70% of RLNG whereas the balance of RLNG is supplied to industry export, industry non-export, fertilizer, commercial sector, CNG, cement and domestic (supply volume increases in winters). On SSGCL network, RLNG is supplied to K-Electric, industry export/ non export and CNG.
During the period from Nov-22 to Feb-23, maximum LNG being imported by PSO in terms of number of LNG cargoes under long term contracts with Qatar Energy are as follows: nine PSO’s term cargoes in November, December 2022 and January 2023 and eight in February and March 2023 whereas one cargo of PPL for December, 2022 and January, February and March 2023. This implies total number of LNG cargoes in November 2022 were nine, 10 in December, 10 in January, 9 in February, and 9 in March.
Under the term contracts, the delivered cost of each cargo at present price for the month of October 2022 was $ 45 million so the cumulative financial impact of forex on 10 cargoes comes around to $ 450 million each month.
Power sector is the largest consumer of RLNG which on a yearly average consumes up to 70% of imported LNG while rest of the LNG is sold to other consumers. The current Ogra notified RLNG tariff for the month of October, 2022 is $ 13.7080 per mmbtu for consumers on transmission network and $ 14.7850 per mmbtu for consumers on distribution network.
The sources said, PSO is importing 8-9 LNG cargoes per month whereas as per the executed contracts with LNG suppliers, PSO is obligated to clear the invoice on 15th day after completion of unloading of cargo and 10th banking day after receipt of invoice from supplier whichever is later.