Pakistan seeks six-year LNG supply contract amid energy crisis
Aug 07, 2022
Islamabad [Pakistan], August 7 : Amid the severe energy crisis, Pakistan sought a six-year Liquefied Natural Gas (LNG) supply contract from international trading companies, by issuing a two-part tender seeking bid prices.
Pakistan is heading towards a severe energy crisis in the coming months without the proper LNG supply required to generate electricity, fuel industries, and household consumption.
Last month, the 5-year LNG term agreement with GUNVOR with Pakistan LNG Limited (PLL) expired. Now the country's fully-owned company released the tender for a term agreement for six years.
The News International reported that bids are invited from international LNG suppliers for term cargoes on a delivered ex-Ship (DES) basis at Port Qasim, Karachi.
As per the publication, if Pakistan gets the price bid, it will purchase 72 LNG cargoes in six years, which means one cargo having an LNG quantity of 140,000m3 every month.
The ongoing Russia-Ukraine war, emergency gas purchases by European countries and the continuing disruption in the global energy supplies because of the last two COVID-19 pandemic years have increased LNG prices significantly, thus making it difficult for a financially doomed country like Pakistan to purchase gas cargoes at affordable rates.
Citing a top official at the Energy Ministry, PLL has issued a two-part tender, as per The News International.
Under the first part of the tender, bids are invited for only one year -- 2023 starting from December 2022 to December 2023 under which 12 LNG cargoes will be delivered to Pakistan, one cargo a month.
Under part two, Pakistan will seek 60 LNG cargoes for 5 years starting from January 2024 to December 2028 -- one cargo every month, The News International reported.
At present, Pakistan is relying on LNG cargoes under long-terms agreements. It is getting 6 cargoes per month from Qatar under a 15-year agreement at 13.37 per cent of the Brent, 2 cargoes again from Qatar under a 10-year contract at 10.2 per cent of the Brent, and one cargo under a 15-year agreement from ENI at 12.14 of the Brent.
Pakistan is perhaps the worst hit by the ongoing global LNG supply crunch.
Consequently, the Shehbaz Sharif-led government has limited options to address the issue, which include buying gas at a high rate or in the sports market; maximising electricity generation from other fuels or facing more load shedding in the coming months. Several cities in Pakistan, including Lahore and Karachi, are facing up to 10-18 hours of load shedding per day.
