ISLAMABAD: Pakistan initiated legal action against a foreign company in the London Court of International Arbitration for failing to fulfill an agreement to deliver a liquefied natural gas (LNG) cargo to the country, according to sources familiar with the matter.
The court is anticipated to commence proceedings on Pakistan’s case in January, to be held in London, as per these sources.
Reportedly, Pakistan had entered into a 5-year contract with the company, where the LNG price was pegged at 11.62% of a barrel of crude oil (Brent) for short-term supply over this period.
Previous agreements involved Pakistan LNG partnering with Gunvor for a five-year deal at an 11.6247% Brent slope, concluding in July 2022.
Sources highlight that Pakistan had engaged in agreements with Gunvor, a commodity trader, and Eni, an Italian energy company, for the delivery of 10 LNG cargoes. Allegedly, both companies failed to meet the agreed-upon delivery schedules and instead supplied the commodity to other nations at higher prices.
Regarding the disruption in LNG delivery in February, Eni cited an event of force majeure. Eni has a 15-year commitment to supply Pakistan LNG with one monthly cargo from 2017 to 2032, priced at 12.14% of Brent, with the contract concluding in November 2032.
In response to the delivery disruption, Eni emphasized to Reuters that the situation was beyond their control and qualified as an event of force majeure, asserting that they do not benefit from this circumstance.
Sources indicate ongoing discussions between Pakistan and the other companies involved to resume cargo supply, clarifying that Pakistan hasn’t yet filed a petition against this particular company.
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