Pakistan LNG reported in a statement on Saturday that in February, a supplier of liquefied natural gas (LNG) was unable to deliver spot cargo to the South Asian region, after previously submitting the lowest bid in a purchase tender.
Pakistan LNG closed a tender in late December to buy two LNG cargoes for delivery in February.
The second shipment, to be shipped in the last week of next month, was awarded to the lowest bidder, who later told Pakistan LNG that the delivery could not be made, the company in Pakistan said without naming the company.
A tender document posted on the website of Pakistan LNG suggests that the lowest bid on the second cargo was made by Emirates National Oil Company (ENOC). ENOC and Pakistan LNG did not respond to a request for comment immediately.
Pakistan LNG said it had approached the second-and third-lowest bidders within the bid validity period in its Saturday statement and they also refused to make a delivery.
This supplier’s bid default is linked to the recent supply shortages leading to high spot market price volatility coupled with additional purchases in North Asia, “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,”
The bid by ENOC for the cargo to be shipped between Feb 23 and 24 was 20.8483 percent of the Brent crude oil futures price, referred to as a slope rate.
This averages out to just over 11 dollars per million British thermal units (mmBtu). Spot Asian LNG prices last week for a shipment shipped in February rose to a record high of $32.50 per mmBtu.
According to the tender paper, the tender closed on December 28 and had a validity period up to January 11. The document also said that a $300,000 bond will be forfeited by bidders withdrawing from the tender during the validity period.
Due to restricted LNG tanker supply and record high spot prices, logistical difficulties have meant that some suppliers have not been able to deliver cargo on time, a trade source based in Singapore said.
Pakistan LNG, a government subsidiary that procures LNG from the international market, has stated that it is taking all steps, including the revocation of bid bonds, against the company that has failed to supply the shipment.