Thursday, November 30, 2023

LNG deal: Govt assures confidentiality to Azerbaijan in future

Azeri ambassador expressed dissatisfaction over breach of GtG LNG supply agreement's confidentiality clause

A file photo of a vessel carrying liquefied natural gas (LNG). — Reuters/File
A file photo of a vessel carrying liquefied natural gas (LNG). — Reuters/File

  • Authorities developing new SOPs to ensure confidentiality.
  • Petroleum Division secretary meets Azerbaijan’s ambassador.
  • PLL used SOCAR's price offer as tool to bring down bid price.

ISLAMABAD: The government has assured Azerbaijan that the confidentiality of its liquefied natural gas (LNG) deal will not be breached in the future, as it escalates its efforts to protect the government-to-government (GtG) agreement to procure the natural gas supply from the State Oil Company of Azerbaijan Republic (SOCAR), The News reported.

Last week, the GtG deal with Azerbaijan on offering one LNG cargo a month landed in the red zone because of the confidentiality breach allegedly done by Pakistan LNG Limited (PLL).

The PLL used the price offered from SOCAR, an Azeri state-owned company, as a tool to bring down the bid price from the lowest bidder OQ trading, which was at $18.46 per MMBtu, senior officials involved in the bidding process told The News.

The authorities are, therefore, in the process of developing new standard operating procedures (SOPs) to ensure that the monthly price offers made by the Azerbaijan state-owned company will remain confidential and won't be used in the open global market for price discovery with LNG bidders.

Petroleum Division secretary, in this regard, assured Azerbaijan’s Ambassador to Pakistan, Khazar Farhadov, during a meeting held on November 28, 2023 (Tuesday).

In the meeting, the Azeri ambassador expressed dissatisfaction over the breach of the confidentiality clause of the GtG LNG supply agreement, as reported by a senior official of the energy ministry to The News.

Caretaker Prime Minister Anwaar-ul-Haq Kakar has already taken serious notice of the breach of confidentiality by Pakistan LNG Limited (PLL), as reported in The News story published on November 26, 2023, and directed the petroleum secretary to investigate the breach with SOCAR, an Azeri state-owned company and submit report.

An official said: "We have explained the whole episode to the ambassador, stating it was a collective decision of the PLL management and its board to obtain the price offer from SOCAR for LNG cargo for the month of January in the GtG deal, which was at $17.96 per MMBtu. This was intended to be used as a tool to further lower the lowest bid price of OQ Trading Company, which was at $18.46.

The difference was $1.6 million, but the board instructed OQ Trading not only to match the price offered by SOCAR but also to come up with a new price, lowering it by one cent compared to the $17.96 per MMBtu offered by SOCAR. In return, OQ Trading did the same and managed to win the contract."

With assurance that such practices would never be repeated in the future, the ambassador was pacified, the official added.

Earlier this week, Caretaker PM Kakar has also taken notice of the reported breach of confidentiality by PLL.

PM Kakar also directed the petroleum secretary to look into the matter and sought a report on the issue.

“Yes, the prime minister has taken serious notice of the confidentiality breach which may endanger the GtG agreement with Azerbaijan and to this effect, the top functionaries of the ministry remained busy and spent the whole day trying to find out why it had happened," confirmed officials of the Energy Ministry.