Pakistan looks to LNG spot market amid disruption of deliveries from Qatar

Pakistan has issued a tender for an LNG cargo on the spot market amid concerns of further disruption of supplies from Qatar following worsening relations between Iran and the US, Arab News reported on July 9.

State-operated Pakistan LNG Limited (PLL) is seeking bids for a cargo of the super-chilled fuel of about 140,000 cubic metres for delivery to the South Asian country on July 15-16.

Pakistan is taking action to attempt to prevent blackouts and load shedding after its biggest gas utility cautioned about disruptions of supplies from Qatar. Sui Northern Gas Pipelines Limited (SNGPL) notified LNG-based power producers on July 8 that from July 14 to August 3 it was declaring force majeure.

Pakistan is likely to face an increased bill on the spot market with cargoes currently selling fro around $16-$17 per million British thermal units (mmBtu). Pakistan’s long-term contracts with QatarEnergy came at a price of between $10-$12 per mmBtu.

LNG-fired power plants are an integral part of the country’s electricity system with imported LNG supplying about 18% of Pakistan’s electricity generation last year.

However, Islamabad has been actively seeking to reduce its dependence on imported LNG, with the super-cooled fuel projected to be responsible for around 10% of of total electricity generation this year as cheaper domestic sources, alongside renewables, coal and nuclear power, reduce reliance on imported gas.

Summer is a period of particularly high-demand with increased electricity needed for air conditioning. From April to August, Pakistan generally uses four or five LNG cargoes a month for its LNG-fired power plants.

Pakistan has done well to significantly reduce its dependency on the super-chilled fuel in recent years. Only six years ago, LNG’s share of the energy mix was as much as 40%, however, the country has now leaned into cheaper domestic and lower-cost energy sources.

Over the same time frame, renewable energy capacity has expanded from just 4-6% to up to 20% currently, while nuclear energy is also expected to account for around 20% of electricity generation this year.