Cut in gas supply to industry likely amid LNG crisis.

ISLAMABAD -- As foreign traders of liquefied natural gas (LNG) default on supplies amid gas shortages, the Cabinet Committee on Energy (CCoE) will meet here on Monday (today) to review the overall situation, including discontinuation of gas supplies to a large number of industries on a long-term basis.

Following reports that two state-owned foreign suppliers had declined to supply their two committed vessels for delivery in February, Pakistani authorities are reported to have salvaged at least one of the vessels through high-level diplomatic efforts. However, the government has confirmed that one vessel committed for the second half of February will no more be available as the successful bidder (ENOC of the United Arab Emirates) has defaulted.

'The second spot cargo, in the last week of February 2021, was awarded to the lowest bidder as per PPRA Rules, who conveyed inability to deliver as per its bid,' said a statement issued by the state-run Pakistan LNG Limited (PLL).

The LNG price in the spot market has become almost equal to that of crude - almost double the rate ENOC had committed to Pakistan through the lowest bid - about three weeks ago. The UAE's state-run company also gave up its bid bond, leaving the authorities high and dry.

Cabinet body meets today as two suppliers default

It said PLL had 'approached the 2nd and 3rd lowest bidders within the bid validity period, all of whom regretted to deliver the cargo at the prices they had offered in their respective bids'. It attributed the default to volatile spot market, indirectly conceding the importance of long-term supply contracts the government has been criticising.

Informed sources said SOCAR Trading, a subsidiary of Azerbaijan's state oil company, also faced problems in LNG supply in the second week of February, but strategic friendly relations did not let the supply go off. Also, a 2017 agreement with SOCAR for a possible long-term government-to-government cooperation came to PLL's rescue, the sources said.

'This bid default of the suppliers is associated with the recent supply shortages leading to high price volatility in the spot market, coupled with extra buying in North Asia. There is news in the market about numerous global companies defaulting on their bids, or even contracts in some cases, given the supply shortages and extremely volatile prices,' the PLL said. However, it did not officially say if the SOCAR vessel was secured.

It said: 'Suppliers who have regretted to...