* Deal worth close to $1 bln depending on oil price
* Pakistan-Qatar seek to clinch bigger deal (Recasts, adds price detail, background)
By Oleg Vukmanovic
MILAN, Jan 15 (Reuters) - Pakistan State Oil has backed outof a nearly $1 billion deal to buy liquefied natural gas (LNG)from Royal Dutch Shell after receiving a lower pricefrom Qatar, two sources with knowledge of the matter said onFriday.
The deal shows how top exporter Qatar is being forced tobecome more competitive in an oversupplied LNG market as it alsocloses in on a bigger 15-year deal to supply Pakistan with gas.
The setback to Shell may stir unease from its investorsalready worried about the impact of the downturn in the oilmarket on its $48 billion acquisition of BG Group, whichwhen finalized will turn it into the biggest LNG trader.
Shareholders of both companies will later this month vote onthe deal, which is expected to be completed by Feb. 15.
Shell declined to comment, while Pakistan State Oil companyand Qatargas did not immediately return requests for comment.
Pakistan was to buy 60 LNG cargoes from Shell after the oilmajor submitted the lowest price in a tender finalised late lastyear.
Before officially awarding the cargoes, Pakistani officialsmanaged to clinch a more favourable deal with Qatargas eventhough it was not in the original tender, the sources said.
Pakistan's minister of petroleum, while finalising a delayedlong-term LNG import deal with Qatar, in parallel arranged forthe additional 60 shipments, they said.
Qatargas will supply the cargoes at a price of 13.37 percentof a barrel of crude oil, one of the sources said. This is thesame price level at which trading house Gunvor will deliver 60cargoes to Pakistan over the same 2016-2020 period.
With oil prices at $30 a barrel, 60 cargoes should fetch around $770 million, although a rebound in prices to $40 abarrel would put the price-tag at around $1 billion.
Gas giant Qatar is becoming commercially sharper, usingtraders and tenders to grab new customers, and fighting to holdon to its share in the prized Asian market as demand wanes andcompetition intensifies. (Addditional reporting by Ron Bousso in London; Editing byJason Neely and Mark Potter)
