Pakistan is seeking to secure another LNG cargo from Qatar for arrival around August 25 or 26 as international spot prices surge, with authorities looking to avoid another expensive purchase from the spot market.
Officials familiar with the matter said the government is using diplomatic and commercial channels to arrange the additional cargo amid security concerns around the Strait of Hormuz. Spot LNG prices are currently around $21.22 per million British thermal units, while the landed cost of a spot cargo in Pakistan is estimated at $22.30 to $23 per MMBtu.
The government is particularly reluctant to procure another cargo through the regular spot tendering process because of the high international prices. Instead, authorities are focusing on securing supplies from Qatar while also consulting regional and international stakeholders over the safe movement and delivery of LNG cargoes.
The National Coordination and Monitoring Committee is in contact with Qatar, Iran and the United States regarding arrangements for the safe passage and delivery of LNG shipments. The discussions come as regional shipping routes remain affected by the security situation around the Strait of Hormuz.
Pakistan is under pressure to maintain LNG supplies because regasified LNG remains an important fuel source for power generation when domestic gas and other generation sources are insufficient. The country’s two LNG terminals operated by PGPC and Engro are currently supplying about 130 million cubic feet per day each, providing a combined 260 million cubic feet per day to the national gas system.
The urgency has increased after expensive spot cargoes pushed up the cost of RLNG based power generation. In July, the average cost of electricity generated from RLNG reached Rs. 47.38 per unit, up from about Rs. 35.5 per unit in June.
The higher generation cost followed the arrival of several costly spot LNG cargoes. A cargo delivered on July 27 was priced at about $21.88 per MMBtu, while cargoes delivered on July 21 and 22 and July 15 and 16 were priced at about $20.70 and $18.23 per MMBtu, respectively.
Pakistan generated 14,501 GWh of electricity in July at a total generation cost of about Rs. 139.37 billion. Although RLNG accounted for only With the timing of the next LNG carrier still dependent on the finalization of the berthing schedule after August 25 and 26, any delay could put additional pressure on gas allocations and power generation.
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