PM takes 'serious notice' of confidentiality breach in Azerbaijan LNG deal

• PM Kakar seeks report from petroleum secretary on issue. 
• Petroleum ministry making new SOPs for purchasing gas.
• Official admits PLL board played foul to lower price of cargo.

ISLAMABAD: Caretaker Prime Minister Anwaar-ul-Haq took notice of the reported breach of confidentiality by Pakistan LNG Limited (PLL) which might jeopardise their LNG cargo deal with Azerbaijan.

PM Kakar also directed the secretary of petroleum to look into the matter and sought a report on the issue, The News reported Tuesday.

“Yes, the prime minister has taken serious notice of the confidentiality breach which may endanger the GtG agreement with Azerbaijan and to this effect, the top functionaries of the ministry remained busy and spent the whole day trying to find out why it had happened," confirmed officials of the energy ministry.

Energy Minister Mohammad Ali is also accompanying the premier during a visit to the United Arab Emirates (UAE) and the report will be submitted to the minister who will then explain to the prime minister on the issue, they added.

The official said the ministry was now in the process of making new SOPs for purchasing the gas through bids and in future, it will not use the price from SOCAR — Azerbaijan's state-owned company — under the GtG agreement to bargain with the bidder's price. 

He admitted that the PLL board and its management had played a foul by using the price offered by SOCAR under the GtG contract to further lower the price of LNG cargo from the lowest bidder. This will lead to mistrust not only among the LNG trading companies but also with the friendly country of Azerbaijan.

The official said that the PLL board and its management have made this wrong decision collectively which is why no one personally will be fixed for this wrong decision. The decision has helped save Rs800 million but it triggered mistrust among the LNG trading companies and Azerbaijan’s SOCAR with which PLL is in GtG agreement for LNG cargo a month.

Quoting the senior officers involved in the bidding process, The News reported that LNG's deal with Azerbaijan’s SOCAR may hit snags over breach of confidentiality as PLL used the price offered from SOCAR as a tool to bring down the bid price from the lowest bidder OQ trading, which was at $18.46 per MMBtu. However, the price was still higher than the previous spot cargoes procured by Pakistan LNG Limited.

The PLL Board met after the bids were opened and decided to contact SOCAR for its offer for January LNG cargo.

In return, SOCAR offered the LNG price at $17.96 per MMBtu, but PLL management cleverly contacted OQ trading and let it know about the SOCAR offer, which was under GtG, not the bidding process.

It asked the lowest bidder to match the SOCAR offer. The OQ trading revised down its offer to $17.95 per MMBtu than the SOCAR-offered price below one cent. This is how the PLL managed the LNG cargo for January at $17.95 by using SOCAR’s price as a tool to bargain with the lowest bidder.