Pakistan has bought a cargo of liquefied natural gas, paying a premium of around $1 per million British thermal units to regional spot market prices in a move highlighting the continued disruption in LNG flows out of the Persian Gulf, despite diplomatic efforts to settle the conflict that caused the disruption.
Pakistan LNG Ltd. bought the cargo for prompt delivery, Bloomberg reported, citing unnamed trading sources. The price the state gas company paid stood at $16.74 per mmBtu, compared to Asian spot market prices “in the 15s”. The seller of the cargo was BP.
Pakistan has relied on Qatar’s term LNG supply for years, but the war in the Middle East has led to the shutdown of Qatari LNG production and exports. Without Qatar’s LNG, Pakistan was reeling from an intensifying energy crisis with power outages and fuel rationing. The country has also struggled to afford an alternative supply of liquefied natural gas from other parts of the world due to the war-related price premium.
Between April and June, Pakistan launched four tenders for prompt LNG cargoes. Some of these ended without a deal because even the lowest offer prices were deemed too high by the Pakistani company. Stoked by the surge in energy commodity prices, the country’s inflation soared by 11.7% in May, the latest figures from the state statistics agency showed earlier this month. Core inflation also rose significantly, by 9% on the year and 8% from April.
Pakistan received its first LNG cargo in two months in May, all the way from the United States. The price for that cargo, of 140,000 cu m, was $18.40 per mmBtu. Then, earlier this month, Pakistan LNG signaled there was urgent demand for more liquefied gas, issuing a tender with a deadline for offers on June 29 and delivery between June 30 and July 4.
By Irina Slav for Oilprice.com
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