The Economic Coordination Committee (ECC) is finaly likely to give its approval to the multibillion dollar LNG contract with Qatar in its meeting on Wednesday (today), after months of negotiations have resulted in Doha agreeing to cut the price.
Petroleum Minister Shahid Khaqan Abbasi visited Qatar on January 6 and demanded a cut in LNG prices, resulting in the country agreeing to match the price offered by Gunvor in a short term LNG supply contract for five years.
Pakistan State Oil (PSO) has awarded the five-year LNG supply contracts for 120 LNG cargoes to Gunvor and Shell. It was agreed that Gunvor will supply 60 cargoes at 13.37% of Brent crude price; similarly Shell will supply the same at 13.80% of Brent crude price.
Earlier, Pakistan and Qatar had finalised the deal at 13.9% of Brent oil.
“Qatar has agreed to match the price of Gunvor at 13.37% of Brent crude oil and petroleum minister will brief the economic decision making body for approval,” officials said.
Pakistan and Qatar will sign the commercial agreement following approval of the ECC.
During the visit, Qatari authorities had informed the petroleum minister that they had offered the price which was already very low. However, there were reports that India had finalised LNG deal at a price that was even lower. But contrary to reports, Petroleum Minister said that Indian price was higher by 20% compared to the price finalised with Qatar.
According to an official, Shell and Gunvor would also get LNG supply from Qatar to export to Pakistan.
Experts asserted that because the contract with Qatar was a long term one, prices should be much lower. The government also felt that if it takes gas from Qatar at the rate of 13.9%, they may be embroiled in corruption allegations.
Under proposed arrangement, this contract was for 15 years and it would be renegotiated after 10 years. There was a clause to end the contract if both sides failed to develop consensus regarding LNG price.
Under the proposed agreement, PSO will receive 1.5 million tons of LNG from Qatar gas in the first year and the annual volume will be enhanced to 3 million tons from the second year.
