ISLAMABAD: Italian oil giant ENI earned $550 million after partially reneging on a contract with Pakistan to supply liquified natural gas (LNG) cargoes over the last two years and instead selling them to other countries, according to an analysis by two non-profit groups.
The Italian company has a 15-year deal with Pakistan under which it is required to supply Pakistan with one LNG cargo a month from 2017 to 2032.
However, ENI failed to deliver a number of scheduled cargoes between late 2021 and early 2023, Bloomberg reported citing analysis by investigative non-profit Sourcematerial and Italian environmental group Recommon.
In a joint report, the non-profits said the LNG cargoes meant for Pakistan were delivered to Turkey instead.
ENI, which had cited an event of force majeure, had told Reuters earlier this year that the company “did not take advantage or benefit in any way from these defaults and applied all contractual provisions to manage such disruptions”.
It had also said the previous disruptions were caused by the company’s LNG supplier who did not fulfil agreed obligations.
Data analysed by Bloomberg showed that ENI failed to deliver at least four of 12 shipments in the year through February 2023.
As energy prices spiked last year following Russia’s invasion of Ukraine, countries rushed to buy LNG, which increased demand in the international market and caused shortages in many developing countries, including Pakistan.
Pakistan’s rates were at a fraction of spot LNG prices during the crisis’s peak and a 30% cancellation fee made it profitable for companies to cancel scheduled cargoes.
However, ENI has denied the report, saying it did not benefit from the situation and any undelivered cargoes were “beyond its control”.
“Only where mutually acceptable commercial solutions were not available, the contractual provisions for failed delivery were applied,” it said in its response.
Meanwhile, the government said the “non-supply of LNG cargoes by ENI are a contractual matter covered under the confidentiality provisions”.
The drop in LNG shipments had worsened the gas and power crisis in the country leading to a jump in prices amid soaring inflation and a countrywide breakdown in January 2023.
