Pakistan’s RLNG prices have taken a sharp downward turn in September, with rates falling by around 21 percent across the two Sui gas networks.
The Oil and Gas Regulatory Authority (OGRA) notified the latest reduction for sales at the distribution stage. Cheaper LNG cargoes from Qatar mainly contributed to the decline.
The September RLNG price is also around 47 percent lower than July’s rate. In July, Pakistan purchased five expensive cargoes from the international spot market.
RLNG Prices Fall Across SNGPL and SSGCL
The average delivered ex-ship (DES) LNG price fell significantly in September. It dropped to $10.06 per million British thermal units (mmBtu).
The average DES price stood at $12.12 per mmBtu in August. Meanwhile, it reached $18.96 per mmBtu in July.
Consequently, lower LNG costs have reduced RLNG prices across both major gas distribution networks.
For SNGPL, the transmission-stage price fell 19.99 percent to $13.99 per mmBtu. It stood at $17.49 per mmBtu in August.
At the distribution stage, SNGPL’s price dropped 20.14 percent to $15.196 per mmBtu. The previous rate stood at $19.02 per mmBtu.
Similarly, SSGCL’s transmission-stage price declined 21.53 percent to $12.611 per mmBtu. It was $16.07 per mmBtu in August.
At the distribution stage, SSGCL’s price fell 21.57 percent to $14.22 per mmBtu. The August rate stood at $18.13 per mmBtu.
Why Did RLNG Prices Drop?
Cheaper imported LNG cargoes played a major role in the latest reduction. Two September cargoes were priced considerably below the levels seen during previous months.
In July, supply disruptions linked to the US-Iran conflict pushed Pakistan toward expensive spot-market purchases. The country bought five costly cargoes during that period.
The lower September prices could consequently help reduce fuel costs for power producers.
Supply Chain Costs Still Push Prices Higher
Despite cheaper LNG cargoes, several supply-chain costs continue to increase the final RLNG price.
Public-sector entities add margins and other charges before the gas reaches consumers. As a result, SSGCL’s distribution price remains around $3.3 per mmBtu above the average DES price.
SNGPL’s distribution price remains around $4.2 per mmBtu higher than the average DES price.
Pakistan State Oil (PSO), Pakistan LNG Ltd (PLL), and port authorities also charge margins and retainage costs. These charges account for 3.77 percent of the DES price.
Distribution Losses Remain a Concern
System losses add another cost to the RLNG supply chain. SNGPL currently records system losses of 8.97 percent, while SSGCL reports losses of 12.55 percent.
SSGCL supplies consumers across Sindh and Balochistan. Its distribution losses have increased from around 10.6 percent last year.
Meanwhile, SNGPL serves Punjab and Khyber Pakhtunkhwa. Its distribution losses have risen to nearly 9 percent from 7.47 percent in October last year.
Therefore, while cheaper LNG cargoes have pushed September RLNG prices lower, supply-chain costs and distribution losses remain significant factors in final pricing.
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