Pakistan is 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.
So far this month, Pakistan has issued several tenders for July delivery and is apparently willing to pay up to secure supply.
In the latest tender, state-controlled importer Pakistan LNG Limited has accepted an offer from TotalEnergies Gas & Power Limited for a spot cargo for delivery on July 27-28, at a price of as much as $21.88 per million British thermal units (MMBtu), an official source told Pakistani outlet The Nation.
The $21.88 per MMBtu price is the highest Pakistan has paid for an LNG cargo since the Iran war began in February and upended global LNG flows.
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The previous record-high price since the war began was set just last week, when Pakistan LNG bought a cargo for delivery this week via a tender. The cargo was bought at a price of about $20.70 per MMBtu, the most expensive cargo of liquefied natural gas on the spot market in four years.
The last time Pakistan has paid such sums for an LNG cargo was in 2022, when spot prices in Asia spiked to record highs after the Russian invasion of Ukraine and the slashed pipeline gas supply from Russia to Europe.
Pakistan, which has historically received nearly all its LNG from Qatar under long-term fixed deals, has faced problems in procurement since the Iran war began and halted traffic through the Strait of Hormuz.
This has forced Pakistan to the spot LNG market several times this year, and at least five times this month alone.
Moreover, Pakistan is looking to buy additional spot LNG cargoes for July and August delivery as the fresh halt to Strait of Hormuz traffic disrupted shipments from Qatar again.
The Pakistani government is close to finalizing a plan to buy on the spot market at least one additional LNG cargo for delivery this month, and as many as six for August delivery, unnamed sources familiar with the development told Bloomberg on Friday.
By Tsvetana Paraskova for Oilprice.com
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