ISLAMABAD: Pakistan has won an arbitration case in London Court of International Arbitration (LCIA) against the international commodity trader Gunvor Group Limited over charging excessive payment for liquefied natural gas (LNG) supplies.
According to sources, LCIA has made a decision in favour of state-owned oil giant-Pakistan State Oil- in a case which was initiated by the Gunvor in 2020 following the deduction of excess payment by PSO. The LCIA has, however, now awarded $14.6 million along with other costs to PSO.
PSO was approached for comments on said LCIA decision. But it did not offer official words citing ‘confidentiality’.
An official source in the petroleum division while talking to Pakistan Today/Profit on condition not to be named confirmed that LCIA has sided with PSO and awarded $14.6 million to PSO as well as the other costs in an arbitration case which was initiated by Gunvor in 2020 against the PSO.
Earlier, the PSO had signed a short-term LNG supply contract with Gunvor for supply of 100 Million Cubic Feet per Day (MMCFD) for a period of five years and made excess payment to Gunvor on account of port charges for four and half years for LNG shipments to Pakistan.
However, the management of Pakistan LNG Limited (PLL) had later on pointed out that Gunvor was receiving excess payments from PSO. After the PLL management had identified excess payments Gunvor was receiving, the PSO deducted the excess payment.
Subsequently, Gunvor filed a case against the PSO in the international court (LCIA).
It is pertinent to mention that Pakistan has been facing severe energy crisis as global LNG suppliers i-e Italy-based Eni and Swiss Gunvor have been cancelling promised shipments of LNG following a hike in the price of LNG in the international market mainly owing to Russia-Ukraine war.
The LNG shortage caused by the defaults has been taking its toll on the country’s resources as Pakistan has been opting for the expensive diesel to generate power while LNG-fired output dropped to the lowest owing to LNG shortages.
