LNG firm moves int’l court against PSO

Pakistan Today

Liquefied natural gas (LNG) supplying company Gunvor has filed a case against the Pakistan State Oil (PSO) in an international court.

According to a local media report, PSO had signed a short term LNG contract with Gunvor for the supply of 100 mmcfd for a period of five years. Later, the Pakistan LNG Limited (PLL) also floated tenders for short term and long term contracts for supply of 100 mmcfd supply each, which were also bagged by Gunvor.

Similarly, the PLL also floated a tender for a long term supply contract which was won by an Italian firm, Ente Nazionale Idrocarburi (ENI), which had quoted the lowest price of 13.37 per cent of Brent to win a contract with PSO.

The PSO continued making excess payments to Gunvor on account of port charges for four and a half years; however, the PLL management later pointed out that Gunvor was receiving excess payments.

Following this, a legal opinion was sought from an international firm that had assisted Pakistani firms in finalising LNG supplies agreement with Gunvor.

Upon availability of the final port charges, the PLL, on November 9, 2018, notified Gunvor regarding the miscalculations applied by Gunvor in provisional invoices. The PLL followed up on the issue on August 10, 2020, to resolve this matter again.

After PLL’s management identified excess payments Gunvor was receiving, PSO deducted the excess payment. Subsequently, Gunvor filed a case against the PSO in an international court.

It may be noted here that the PSO had a supply contract for five years with Gunvor that expired in December 2020 whereas the PLL also has a five-year agreement with the company that would expire in December 2021.

Media reports state that PLL had also started deducting excess charges from Gunvor and therefore, it was possible that another state-run company – the PLL –would face a case in the international court. The PLL had also been making excess payments to ENI. The issue of excess payment had been brought into the knowledge of the PLL board that decided to stop excess payment. Invoices have been revised now as all parties had accepted that excess payment was made.

Further, PSO blacklists any company involved in litigation with it, therefore, PSO is likely to blacklist Gunvor.

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