ISLAMABAD: Pakistan, which is facing a severe gas shortage that has crippled its power sector and industries, will receive a liquefied natural gas cargo from Italy’s ENI SpA on Jan. 18 as scheduled, averting a potential supply disruption, government offcials said on Wednesday.
ENI, one of the long-term LNG suppliers to Pakistan, had earlier indicated that it might not be able to deliver the cargo. However, the company later confirmed that it would honor the contract as per the LNG term agreement.
“Some days back, ENI communicated to Pakistan LNG Limited (PLL) that it may not be able to provide the scheduled LNG cargo which was to be delivered on January 18 next year arguing that its supplier has some serious problems in ensuring the cargo supply,” a senior official of the Ministry of Energy told The News. “This panicked the top mandarins in the petroleum division who asked PLL management to pursue that ENI to ensure the provision of the LNG cargo.”
ENI signed a 15-year term agreement with state-owned PLL in May 2017 under which ENI was to provide an LNG cargo per month up to 2032. Under the deal, ENI was to provide per month cargo at 11.6247 percent of the Brent for the first two years, 11.95 percent for the following two years, and 12.14 percent for the remaining 11 years.
ENI is bound to provide PLL with a total of 180 cargoes in 15 years at the PGPL terminal moored in Port Qasim.
When ENI first communicated, the official said, some weeks back that it would not be able to provide cargo in January 2024, the top notches in the ministry turned upset and started working on more gas load management. However, later on, ENI confirmed to the relevant authorities that it would not back out but rather would provide the cargo on time.
This is how the surge in the current gas crisis with more deficit of 250 mmcfd would have lasted for two weeks in January 2024 which is now averted.
In the past, it was ENI that defaulted on supplying four LNG cargoes in 2021-22. “It first defaulted in January 2021 by providing half LNG cargo instead of a full one. Later, it backed out from providing cargoes in August, November, March and May 2022,” the official added.
Both ENI and Gunvor emerged as habitual and willful defaulters to earn windfall profits by diverting term cargoes meant for Pakistan to international markets when LNG prices increased over 25 to 32 dollars per MMBTU. “Singapore-based Gunvor defaulted seven times, PLL took both ENI and PLL to the London Court of International Arbitration (LCIA) seeking compensation.”
Gunvor has also signed a 5-year term agreement with PLL in 2017 under which it was bound to provide LNG cargo a month. The agreement with Gunvor expired in July 2022.
