Gas crisis to worsen as supplier won’t deliver LNG cargo in Feb

The going gas crisis is going worsen as an Italian company responsible for delivering a LNG consignment scheduled for in the beginning of February will not be able to do so, citing unavoidable circumstances [force majeure].

It also means there will be negative effects on overall situation energy situation by raising the cost of power generation and the resultant tariff for electricity consumers.

According to a Ministry of Energy official, ENI had informed that it would not be able to ship the LNG cargo on due date – February 6-7.

“The gas deficit will soar as imported LNG will reduce to 700mmcfd as only five cargoes, at the price of 13.37 percent of Brent, and two cargoes, at 10.2 percent of Brent under government-to-government agreements with Qatar, would be available in February.”

He added that the absence of the LNG cargo from ENI at the cost of 12.14 percent in the month of February would further aggravate the gas crisis – a state of affair that has been affecting domestic users in some main cities, with little to no pressure. 

The government under its gas load management plan promised gas supply to domestic consumers for cooking times in winter — three hours in the morning from 6am to 9am, two hours from 12 noon to 2pm for lunch, and three hours from 6pm to 9pm for dinner. The ground realities speak otherwise.

Relevant authorities say the impact of ENI backing out will come in the shape of reduced supplies to the power sector and the projected supply of 325mmcfd to the sector next month will not be available.

The reliance on furnace oil-based electricity will increase, translating into costlier power for the end consumers as captive power plants are going to get at 50 percent while supply to fertilizer plants, compressed natural gas (CNG) and local industry shall remain discontinued.

Earlier, the Petroleum Division had claimed that the ENI from January 2023 onward will not default but that is not the case.

When contacted, ab ENI spokesperson also confirmed the development, saying: “February delivery disruption is beyond the reasonable control of ENI and due to an event of Force Majeure. ENI does not benefit in any way from the situation.”

According to the senior official, ENI defaulted five times in 2022; it failed to provide LNG cargoes in the months of March, May, July, September, and November.

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