Pakistan’s government is considering allowing power plants and private firms to directly import LNG procured on the spot market as the country has been struggling with an energy crisis since the Iran war crippled Qatar’s term supplies.
Pakistan’s Energy Ministry has proposed easing the existing regulation to allow private companies to directly import LNG, a source with knowledge of the deliberations has told Bloomberg.
Current regulations do not easily allow private players to tap the spot market, which has long been the realm of the state-owned importer Pakistan LNG Ltd.
However, the spiking spot LNG prices amid the Hormuz supply crunch has been putting a lot of strain on the government’s energy import bill and finances.
The move is seen as a way to curb government procurement costs and ensuring that more players could be able to participate in auctions for cargoes and for unused capacity at Pakistan’s two LNG import terminals.
Pakistan, which relied mostly on Qatari term supply before the war, has had to turn to expensive spot purchases which have pushed its power generation costs higher.
Pakistan has been struggling to keep the lights on after Qatar declared force majeure on its exports following Iranian strikes that caused damage to its Ras Laffan LNG export hub. Since then, Pakistan has been forced to turn to spot LNG markets and pay hefty premiums for the occasional shipment.
This summer, Pakistan has been paying top dollar for LNG supply as the renewed closure of the Strait of Hormuz and the stranding of cargoes from its term supplier Qatar have forced the South Asian country to seek liquefied natural gas on the spot market.
This week, Qatar extended the force majeure on LNG deliveries to Asia and Europe by another month through the end of November, as LNG cargo traffic through the Strait of Hormuz remains largely blocked amid the protracted U.S.-Iran stalemate over the chokepoint and pathways to end the war.
By Tsvetana Paraskova for Oilprice.com
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