Pakistan faces challenging winter months with potential natural gas shortages as the Qatari and UAE LNG flows from the Strait of Hormuz remain severely disrupted, the head of the Pakistani state-owned LNG importer said on Thursday.
Masood Nabi, chief executive officer of Pakistan LNG Limited (PLL), told the WPC Energy Congress in Riyadh that winter for Pakistan will be challenging, Upstream reports.
The main bottleneck for Pakistan is not the availability of gas but the heavily disrupted LNG transit through the Strait of Hormuz, the executive noted, although the South Asian country considers if it would be possible to raise its domestic natural gas production to offset some of the LNG supply lost in the Middle East.
Last year, Pakistan sourced 99% of its LNG imports from Qatar, under term contracts.
Pakistan has been struggling to keep the lights on after Qatar in March 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 the spot LNG market and pay hefty premiums for the occasional shipment.
Pakistan has had to turn to expensive spot purchases, which have pushed its power generation costs higher.
Some, but surely not all, LNG cargoes from Qatar have reached Pakistan in recent months following direct assurances from Iran to Pakistan that it would be safe for the vessels to transit the Strait of Hormuz.
Term supplies from Qatar are cheaper than the spot LNG cargoes, for which Asian and European buyers compete ahead of the winter, driving up prices.
Pakistan will have to pay in excess of $1 billion to secure LNG for the winter months, as spot prices soar amid massive disruptions to Qatari term supply.
With supplies from Qatar disrupted, Pakistan will have to purchase an additional 10 cargoes on the spot market for deliveries between November 2026 and February 2027, at double the price at which LNG is being imported from Qatar, to ensure gas volumes for the winter.
By Charles Kennedy for Oilprice.com
