Pakistan plans long term LNG purchase to overcome energy crisis

Tender floats amid report of negotiations with Qatar
Aug 07, 2022

The government of Pakistan, headed by PML-N, is planning to sign a long-term agreement for the purchase of liquified natural gas (LNG) to overcome the ongoing energy crisis in the country.

Pakistan LNG Limited, the government company tasked with the import of LNG, has floated tender inviting bids for the six-year agreement. It will be importing 72 cargoes per tender and one per month with 140,000 cubic meters of LNG per cargo.

The bids will be accepted between August 10 and September 14, when the winning bid will be announced.

The supply will likely start as early as January 2023.

The international tender has been floated amid reports that Pakistan is trying to secure a long-term supply agreement with Qatar, a major exporter of LNG.

Since the Russian invasion of Ukraine in February this year, LNG spot prices have shot up. European nations, which stopped buying Russian gas and LNG, are seeking more and more cargoes from the Mideast market.

Expensive LNG and canceled tender

Pakistan canceled LNG tenders in June for July supply when the sole bidder offered a price that would have delivered the most expensive cargo in the history of the country.

Qatar Energy Trading placed a bid of $39.8/MMBtu for July 30-31 delivery, according to S&P Global.

Compared to this pricey spot price, Pakistan bought LNG at $15 MMBtu in July 2021 for September 2021 deliveries.

Rising international LNG prices have deepened Pakistan’s energy woes with the government increasing gas prices for the commercial sector and factories reducing production.

The situation has also troubled ordinary motorists who have been deprived of cheaper CNG fuel as petrol prices go up.

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