Govt increases RLNG duty for Sui gas companies

• Increase due to rise in RLNG Brent prices.
• Ogra has cut RLNG prices seven times since January.
• Pakistan relies on LNG to meet almost a third of its requirements.

ISLAMABAD: The government has approved an increase of up to half a dollar per MMBTU or 3.8% in re-gasified liquefied natural gas (RLNG) prices for both Sui gas companies for October 2023. The news reported on Tuesday.

The Oil and Gas Regulatory Authority (Ogra) has issued a notification announcing that the price of RLNG for consumers of Sui Northern Gas Pipelines Limited (SNGPL) has increased by $0.496 per MMBTU (3.87%) since last month. Similarly, RLNG costs for Sui Southern Gas Company (SSGC) consumers have increased by $0.508 per MMBTU (3.8%) compared to September prices.

The Ogra spokesperson said, “As per the policy guidelines of the federal government, Ogra has fixed the RLNG prices for Sui Gas companies, with effect from October 1, 2023,” adding that the increase in RLNG prices is attributed to the rise in Prices RLNG Brent on the international market. Announced provisional prices for October RLNG sale.

The weighted average selling price for Sui Northern Gas Pipelines Limited (SNGPL) consumers is set at $13.3332 per million metric British thermal units (MMBTU), while Sui Southern Gas Company (SSGC) consumers will be charged $13.8716 per MMBTU.

In September, the RLNG prices set by OGRA were $12.8366 per MMBTU for SNGPL consumers and $13.3636 per MMBTU for SSGC consumers.

The variation in RLNG prices was notable throughout the year. Ogra has cut RLNG prices seven times since January, with two increases recorded in May, September and now October. The price started falling in January, down as much as 2.2%. This was followed by a further decline of 4.3% in February, 3.16% in March and 0.47% in April. It increased by 1.3% in May 2023, but then decreased again in June (2.55%), July (1.5%) and August (1.3%). In September, there was an increase of 3.08% in the price of RLNG.

The newly revised rates for RLNG include various components such as charges for LNG terminals, transmission losses, port charges and margins for state-owned importers, namely Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL).

They were determined based on the input of eight loads from PSO and one load from PLL.

In a notable development, the Asian Platts JKM (Japan Korea) LNG price increased to $18.585 per mmBtu on 23 October 2023, up 24% from the previous month when it was $14.99 per mmBtu on 25 September 2023. Similarly, from on August 25, 2022, (when the LNG price peaked at $69.955/mmBtu), its price decreased by $51.37/mmBtu or 73.4%. JKM is the benchmark LNG price rating for natural spot cargoes.

Pakistan relies on LNG imports to meet nearly a third of its energy needs. However, when comparing RLNG prices in October 2023 with those in October 2022, the cost to SNGPL consumers fell by only 9.8%, while SSGC customers saw a reduction of 8.65% over the year.