Italian and Chinese majors vie for Pakistan’s mega LNG tender

Italian energy company Eni is among the bidders for a massive LNG tender from Pakistan. (Reuters)
Updated 20 July 2019

Italian and Chinese majors vie for Pakistan’s mega LNG tender

  • The country’s biggest supplier currently is Qatar, with which it signed a deal in 2016 for 3.75 million tons of LNG a year for 15 years

LONDON: Italian oil major Eni, China’s overseas energy unit PetroChina and two trading houses are vying to supply liquefied natural gas (LNG) to Pakistan in a tender worth billions of dollars.
The 240-cargo 10-year tender, worth up to $6 billion according to Reuters, was issued last month and closed on Thursday.
Pakistan is expected to be a significant top-five growth driver in global LNG demand, with WoodMac estimating the country will need 25 million tons a year as domestic supplies dwindle and its economy grows.
Eni, the trading arm of Azeri state oil company SOCAR, PetroChina International Singapore, a unit of PetroChina Co. Ltd. and global trading house Trafigura have reportedly all made offers.

HIGHLIGHTS

• Tender is to buy 240 LNG cargoes for 10 years.

• Deal worth billions at current oil price.

• Tender to be awarded in August.

“The technical bids for our long-term LNG supply tender were received and opened yesterday. Evaluations are underway,” Pakistan LNG said in emailed comments to Reuters.
The tender is keenly watched due to its size and because Pakistan, gripped by an anti-corruption drive under the government of Prime Minister Imran Khan, is expected to publish the lowest prices offered by the companies.
This will give a valuable insight into the opaque LNG market, which is characterized by closed bilateral trades, secret long-term supply agreements and an over-the-counter spot market.
Commercial offers are expected to be opened on Aug. 2, said a source, which is when tender issuer Pakistan LNG is likely to announce the prices.
Pakistan, like most Asian buyers, purchases LNG priced against Brent crude oil expressed as a price slope.
The country’s biggest supplier currently is Qatar, with which it signed a deal in 2016 for 3.75 million tons of LNG a year for 15 years. It also has a separate 15-year agreement with Eni.


Japan’s households tighten purse strings as sales tax and typhoon hit

Updated 06 December 2019

Japan’s households tighten purse strings as sales tax and typhoon hit

  • Falls in factory output, jobs and retail add to fears of worsening slowdown after Tokyo unveils $122bn stimulus package

TOKYO: Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1 percent in October from a year earlier, government data showed on Friday.

It is the first fall in household spending in 11 months and the biggest fall since March 2016 when spending fell by 5.3 percent. It was also weaker than the median forecast for a 3 percent decline.

That marked a sharp reversal from the 9.5 percent jump in September, the fastest growth on record as consumers rushed to buy goods before the Oct. 1 sales tax hike from 8 percent to 10 percent.

“Not only is the sales tax hike hurting consumer spending but impacts from the typhoon also accelerated the decline in the spending,” said Taro Saito, executive research fellow at NLI Research Institute.

“We expect the economy overall and consumer spending will contract in the current quarter and then moderately pick up January-March, but such recovery won't be strong enough.”

Household spending fell by 4.6 percent in April 2014 when Japan last raised the sales tax to 8 percent from 5 percent. It took more than a year for the sector to return to growth.

Compared with the previous month, household spending fell 11.5 percent in October, the fastest drop since April 2014, a faster decline than the median 9.8 percent forecast.

Analysts said a powerful typhoon in October, which lashed swathes of Japan with heavy rain, also played a factor in the downbeat data. Some shops and restaurants closed during the storm and consumers stayed home.

Separate data also showed the weak state of the economy.

The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, fell a preliminary 5.6 points to 94.8 in October from the previous month, the lowest reading since February 2013, the Cabinet Office said on Friday.

It was also the fastest pace of decline since March 2011, according to the data.

Real wages adjusted for inflation, meanwhile, edged up for a second straight month in October, but the higher levy and weak global economy raise worries about the prospect for consumer spending and the overall economy.

While the government has sought to offset the hit to consumers through vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Japan unveiled a $122 billion fiscal package on Thursday to support stalling growth and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.

A recent spate of weak data, such as exports and factory output, have raised worries about the risk of a sharper-than-expected slowdown. The economy grew by an annualized 0.2 percent in the third quarter, the weakest pace in a year.

Analysts expect the economy to shrink in the current quarter due to the sales tax hike.