Low-Price LNG Imports Can Help Solve Pakistan's Energy Crisis

[RiazHaq]

LNG spot prices hit a new low of $4 per mmBTU as the supply continue to significantly outstrip demand. It's creating opportunities for Pakistan to get access to large supply of cheap fuel for its power generation.

With softening demand from China and 130 million tons per year (mmpta) of additional LNG supply set to reach market over the next five years, gas research firm Wood Mackenzie sees continuing downward pressure on global LNG spot prices.

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[TD="class: tr-caption"]LNG Price History Source: WSJ[/TD]
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“The entire industry is worried because it is hard to tell when China’s demand will pick up again,” said an LNG strategist at a Malaysian energy company who attended the Wood Mackenzie conference in Singapore, according to Wall Street Journal. “Rising demand from smaller countries such as Pakistan, Egypt and Bangladesh is not enough to offset the declining demand from north Asia.”

As recently as two years ago, LNG shipped to big North Asian countries like Japan and Korea sold at around $15 to $16 a million British thermal units. This month, the price has already hit $6.65 a million BTUs, down 12% from September, according to research firm Energy Aspects. It expects prices to fall further in Asia next year, to under $6 per million BTUs, as a wave of new gas supply in countries from the U.S. to Angola to Australia comes on line, according to Wall Street Journal.

Petronet LNG Ltd, India’s biggest importer of liquefied natural gas (LNG), is saving so much money buying the commodity from the spot market that it’s willing to risk penalties for breaking long-term contracts with Qatar.

This is a great opportunity for Pakistan to take advantage of historically low LNG prices to alleviate its severe load-shedding of gas and electricity. Recently, Pakistan has launched its first LNG import terminal in Karachi and started receiving shipments from Qatar. Pakistan has also signed a $2 billion deal with Russians to build a north-south pipeline from Gwadar to Lahore. But the country needs to rapidly build up capacity to handle imports and distribution of significant volumes of LNG needed to resolve itsacute long-running energy crisis.

http://www.riazhaq.com/2015/10/will-pakistan-benefit-from-lng-glut.html

 

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[RiazHaq]

#LNG glut to steal coal market share as gas replaces #coal in power generation. #Pakistan #India #China http://reut.rs/1HdNoIQ via @Reuters


* LNG competition to cast doubt over new coal power capacity
* LNG supply to grow by 35 mln tonnes in 2016-Energy Aspects
By Sarah McFarlane
LONDON, Oct 29 (Reuters) - A wave of liquefied natural gas due to hit energy markets over the next couple of years is expected to displace tens of millions of tonnes coal demand globally, helped by government initiatives to move away from polluting power generation.
Both coal and LNG are oversupplied after higher prices during the past decade triggered investments in new projects and expansion plans. At the same time the gap between their prices has narrowed as LNG has become more competitive, particularly where governments penalise coal via taxes or emissions trading schemes.
"There is a monstrous amount of LNG coming into the market, on pure cost economics you can say coal is cheaper than LNG at any realistic price, but it's going to be used somewhere and if it is coming in the volume that's forecast, it will be displacing coal," a coal trader said.
"New coal generating capacity is less likely to be realised in a world awash with LNG."
One of the biggest factors in how much switching occurs will be what the world's largest coal consumer China does.
Environmental concerns and a desire to help financially distressed domestic coal miners has led to a dramatic fall in Chinese coal imports, with shipments down 30 percent in the first nine months of the year, compared with the same period a year ago.
Smog has emerged as a major problem for the government, which has relied on coal and highly polluting heavy industries to fuel its economic growth, especially in northern regions.
"In China, gas will be cheap, gas will be oversupplied, LNG will be oversupplied for the next 3-5 years and that will give an opportunity for policymakers to work harder to switch from coal to gas, but it will take time," said Torbjrn Trnqvist, chief executive of Swiss-based trade house Gunvor.
"Everyone in Beijing knows what the problem with coal fire stations in China is and they will go for gas."
Beyond China, Europe is also seen as a region where switching is likely to take place.
Trevor Sikorski, an analyst at consultancy Energy Aspects, said around 130 million tonnes of thermal coal was vulnerable to being replaced by gas for power generation on an annual basis in Europe.
Sikorski suggested that given the amount of new LNG projects due to come on line in the coming two years, gas prices could be low enough to encourage this level of switching by 2017.
Energy Aspects forecasts some 35 million tonnes of additional LNG supply hitting the market next year, a 16 percent increase on 2015.
Earlier this month oil and gas industry bosses again urged governments to ditch coal in favour of less polluting natural gas, which emits around half of the CO2 coal does, in power plants and heavy industry.
"LNG will continue to cannibalise the coal market, coal's not going to die, but it's hard to be bullish," said Jeffrey Landsberg, managing director of U.S. based consultancy Commodore Research. (Reporting by Sarah McFarlane, editing by David Evans)

 

[RiazHaq]

#Pakistan Minister Shahid Khaqan Abbasi finalizes $16 billion #LNG deal with #Qatar for 1.6 billion tons a year. http://af.reuters.com/article/nigeriaNews/idAFL9N0VZ00F20151109 …

DOHA Nov 9 (Reuters) - Pakistan has finalised a $16 billion liquefied natural gas (LNG) deal with supplier Qatar and shipments are expected to begin next month, Pakistani energy minister Shahid Khaqan Abbasi said on Monday.

The amount is 1.5 million tonnes per year, the minister said, adding that the two sides had agreed a price.

The two sides have agreed a price, he said without elaborating.

"We have finalised the deal. The first shipment is expected in December," he said. "We are hopeful for similar deals in the future." - Reuters

 

[RiazHaq]

#Qatar Clinches 15-Year Contract to Supply #LNG to #Pakistan. 20 million tons a year for 66% of power http://bloom.bg/1QVqfBB via @business


Qatar Liquefied Gas Co., the world’s biggest producer of liquefied natural gas, signed a 15-year contract to supply Pakistan State Oil Co. with 3.75 million metric tons of fuel annually, the Qatari company said.
The supplier, known as Qatargas, plans to deliver the first cargo in March, the company said Wednesday in an e-mailed statement. Qatargas didn’t disclose the contract’s value. A proposed deal with Qatar for 1.5 million tons of LNG per year was worth $16 billion, Pakistan’s Petroleum Minister Shahid Khaqan Abbasi said during a visit to Doha in November.
Pakistan plans to import as much as 20 million tons of the super-chilled gas annually, enough to feed about 66 percent of Pakistan’s power plants. A fuel shortage has idled half the nation’s generators. A 75 percent drop in LNG prices since 2014 has reduced the cost of the South Asian country’s energy needs.
Qatargas, with annual capacity of 42 million tons, will supply Pakistan State Oil from joint venture plants it operates with ExxonMobil Corp. and Total SA. Pakistan State Oil shares rose 1.7 percent, the most since Feb. 4, to close as the leading gainer by points in Karachi’s benchmark 100 share index.
Talks between Qatargas and Pakistani officials date back to 2012. Pakistan intended to buy 3 million tons of LNG per year, split between long-term and shorter contracts. The country’s state oil company decided to cancel a tender for 60 cargoes of the fuel in January.