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For all those who think that PMLN colluded with Qatar to ripoff Pakistani citizens: Bangladesh, years after Pakistan signed its RLNG deal with Qatar, “buys LNG at 12.65% of the three-month average of Brent crude plus an additional 50 cents/MMBtu.” https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/050818-bangladeshs-petrobangla-inks-10-year-deal-to-buy-lng-from-oman-trading-international
Bangladesh, like Pakistan, also makes capacity payments. “The daily payment the Petrobangla owes to Excelerate Energy is around US$ 232,000 (Tk 19.72 million), no matter it re-gasifies less or the entire capacity of the FSRU, according to the deal.” https://thefinancialexpress.com.bd/trade/petrobangla-counts-payment-even-as-capacity-remains-unused-1540526100
Worth noting that since Pakistan signed its deal with Qatar, global gas prices have declined and the sector has become more competitive. But as we see from the above stories, Pakistan’s numbers are quite close to the numbers Bangladesh has agreed to.
And if you want additional details, read this thread by @HaiderKAbbasi https://twitter.com/haiderkabbasi/status/1152906138859515905?s=21
In 2017, India renegotiated its deal and the price declined to “13.9% of the prevailing Brent oil price for the 1.44 million tonnes long-term LNG in place of 14.5% of the price of Japan crude imports.” This renegotiation was considered a success. https://www.livemint.com/Money/MpJAxVSQwMExq5KmfpYGJL/The-gains-from-the-Gorgon-LNG-contract-renegotiation.html
Pricing details are not disclosed when long-term deals are negotiated. “Without giving specific details, Pradhan said the gas price was negotiated depending on many factors like project location, duration of contract and pricing formula.” https://m.economictimes.com/industry/energy/oil-gas/india-renegotiated-gazprom-lng-deal-to-save-up-to-rs-9500-cr-oil-minister-pradhan/articleshow/65038175.cms
Another crazy number being bandied about by people like @KlasraRauf is regarding the profits of the terminals. Engro, which holds 58% of the Elengy company, said it made $31m in profits during 2017, which is ~Rs3.4bn at a USD rate of 110 per PKR (rate in Dec ‘17).
The profitability actually decreased from 2016 to 2017. Journalists who make absurd claims on primetime television without conducting their due diligence give a bad rep to the entire profession. One expects them to do more robust research and not act irresponsibly!
Int’l investors want to invest in LNG terminals in Pakistan. But if previously signed deals become controversial, then investors will hesistate and demand more guarantees. Why? Because the political and economic risk ratings go up, leading to higher IRR and ROE requirements.
This is why folks making absurd claims on primetime TV should be called out. Yes, do your research and go after corruption. But don’t make ridiculous claims that are easily refuted by desktop research!
When deals with higher ROE and IRR needs are signed, these same people will ask “why did you guarantee such high profits?” They will yell CORRUPTION without realizing that when you make investors nervous at a time when you need FDI, you guarantee higher returns to attract them.
