PLL uses the price offered by SOCAR as a tool to reduce the bid price from the lowest bid OQ trades
- PLL uses SOCAR’s bid price as a tool to lower the bid price.
- SOCAR had offered an LNG price of $17.96 per MMBtu.
- The Azerbaijan-based company may take legal action against PLL.
ISLAMABAD: The GtG agreement with Azerbaijan to offer one cargo of LNG per month has landed in the red zone due to the alleged breach of confidentiality by Pakistan LNG Limited (PLL), The news reported on Sunday.
PLL used the price offered by SOCAR, an Azerbaijani state-owned company, as a tool to lower the bid price from the lowest OQ-negotiated bidder, which was $18.46 per MMBtu, senior officials involved in the process said submission of tenders. The news.
OQ Trading on Friday offered the lowest bid of $18.46 per MMBtu for an LNG cargo to be delivered on January 8-9, 2024, followed by Vitol Bahrain at $18.58, QatarEnergy Trading at $19.43 and Trafigura at $19.64 per MMBtu. OQ Trading offered the lowest bid, but the price was still higher than previous spot cargoes procured by Pakistan LNG Limited.
Earlier, SOCAR refrained from offering the price of a cargo for the month of January due to higher LNG prices. However, PLL’s Board of Directors met after the bids were opened and decided to contact SOCAR for its bid for the January LNG cargo.
In return, SOCAR offered the LNG price at $17.96 per MMBtu, but PLL management smartly contacted OQ trading and informed them of SOCAR’s offer which was under GtG and not the bidding process.
He asked the bidder to match SOCAR’s offer. The OQ deal revised its offer down to $17.95 per MMBtu from SOCAR’s bid of less than one cent. This is how PLL managed the January LNG cargo at $17.95 using SOCAR’s price as a tool to negotiate with the highest bidder. This may warrant legal action by SOCAR.
PLL after receiving the price offer from SOCAR did not contact again for a further reduction but preferred to ask OQ trading to match its price. The price under the GtG contract cannot be matched with the offer price.
The sources said the price difference between the lowest bid price of $18.46 per MMBtu from OQ trading and SOCAR’s offer was $1.5 million per cargo, but then the lowest bidder gave a price of $0.01 cheaper to get the order. A cent reduction means a $32,000 reduction in the LNG cargo price.
“This has fundamentally upset SOCAR as it believes that PLL has breached the sanctity of confidentiality, which is against the spirit of the GtG agreement. It says that PLL has no right to use the price offered under the GtG contract with the bidders price. SOCAR had the bid under its contract at $17.96 per MMBtu with a lower price impact of $1.5 million per cargo compared to the bid price offered by OQ trading at $18.46 per MMBtu ,” officials said citing SOCAR management, which got upset after the confidential breach.
When contacted, SOCAR did not respond in detail but confirmed that privacy had been breached. However, this scribe repeatedly contacted PLL MD Masood Nabi who did not respond to calls. A question was also sent to him on WhatsApp but he did not respond to the calls.
The question from The news Correspondent reads, “I have learned that PLL has awarded the contract to OQ trading at $17.95 per MMBtu against the lowest bid of $18.46. It also became known that PLL asked SOCAR to give its bid immediately after the opening of bids for January. SOCAR offered the price under the GtG contract at $17.96 per MMBtu, but PLL in breach of confidentiality asked OQ trading to match and offered a cent lower price at $17.95 per MMBtu. Don’t you think PLL fouled SOCAR and can take legal action? Please answer in detail.”
The same question was sent to the chairman of the PLL board and the representative of the Petroleum Directorate, but the secretary did not receive a response.
Originally published on The news
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