Pakistan is tapping the spot LNG market for the first time in nearly three years as the lack of fixed-term Qatari supply has triggered a power crisis and widespread outages.
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.
The de facto closure of the Strait of Hormuz has trapped about 20% of daily global LNG flows. In addition, Iranian drone and missile strikes on energy infrastructure in the region has damaged Qatar’s key LNG liquefaction complex Ras Laffan.
Qatar’s state firm QatarEnergy expects the damage to the Ras Laffan LNG complex, the world’s single largest LNG-producing facility, to cost it about $20 billion per year in lost revenue and to take up to five years to repair.
QatarEnergy has been forced to declare force majeure for up to five years on some long-term LNG contracts.
The LNG crunch has sent Asian and European gas prices to the highest levels in three years.
Despite the high spot LNG prices for Asia, Pakistan appears to have no choice but to tap the spot market for the first time since 2023 as the energy crisis has intensified in recent weeks with power outages and fuel rationing.
Amid worsening blackouts and industries forced to shut down due to gas shortages, Pakistan LNG Ltd, the state-owned firm, has issued a rare tender to buy three LNG cargoes for delivery between late April and the middle of May, Bloomberg reports.
In the purchase tender, Pakistan LNG Ltd is asking potential suppliers to submit offers by Friday, April 24, according to a notice quoted by Bloomberg.
Four tankers loaded with Qatari LNG before the war and signaling Pakistan as their destination have been trapped in the Gulf since early March, unable to move past the Strait of Hormuz, according to vessel-tracking data Bloomberg has compiled.
By Tsvetana Paraskova for Oilprice.com
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