ISLAMABAD: Pakistan has stepped up diplomatic efforts with the United States (US), Iran and Qatar to secure the safe passage of an LNG cargo from Qatar through the strategically vital Strait of Hormuz, as rising tensions threaten energy supplies and power shortages intensify across the country.
Officials are working to ensure the safe transit of the vessel amid heightened security concerns in the Gulf. The move comes after a previous LNG cargo bound for Pakistan was reportedly blocked by US naval forces, forcing the vessel to turn back before eventually reaching the country after several days.
With Pakistan facing an acute shortage of gas for power generation, authorities are now leaving no stone unturned to secure the latest cargo. Pakistan LNG Limited (PLL) has floated a fresh tender for one spot LNG cargo of around 140,000 cubic metres, with delivery scheduled between September 12 and 16. Bids for the tender are due to be opened on Tuesday (today).
The latest tender follows the rejection of bids in two earlier procurement attempts, with PLL and its board finding the quoted prices excessively high. On Sept 4, the PLL rejected a spot LNG offer from BP Singapore at $26.7128 per million British thermal units (MMBtu) for delivery during Sept 8-12. The offer was the lowest among two bids received, with PetroChina quoting $26.98/MMBtu.
Earlier in the week, the PLL had also rejected a BP Singapore offer of $26.969/MMBtu for a Sept 4-8 delivery window. The repeated rejection of spot cargoes has left Pakistan facing a difficult choice:
pay sharply higher international LNG prices or risk fuel shortages for gas-fired power plants at a time when electricity outages are increasing across the country. The cost of expensive LNG is already putting pressure on the power sector. Available data shows that electricity generated using spot-procured RLNG cost an average of Rs47.38 per unit in July, compared with around Rs35.5 per unit in June.
The latest procurement effort therefore carries significant importance for both the energy and power sectors. While securing the cargo at a high price could further raise electricity generation costs, failure to obtain LNG could aggravate fuel shortages and deepen power outages.
Against this backdrop, Pakistan’s diplomatic push reflects the growing importance of ensuring uninterrupted LNG supplies through the Strait of Hormuz, a crucial energy corridor for global markets.
