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Pakistan Rejects Costly LNG Cargo as Blackout Risk Deepens
By Irina Slav
Pakistan may have to extend rolling blackouts after it refused to pay three times the pre-war price for an LNG cargo, which was the only offer its latest emergency tender drew.
The single cargo, offered by BP, was priced at $27 per million British thermal units, Bloomberg reported, citing unnamed trading sources.
“The international LNG price is around $23.18 per MMBtu, whereas the bid received was $26.969 per MMBtu. The price was considered too high, so a fresh tender has been issued,” a senior Pakistan LNG Limited executive said, as quoted by Pakistani media. The new tender will be issued today, seeking the equivalent of 140,000 cu m of natural gas.
The price offered in the last tender by BP compares with $20.70 per mmBtu that Pakistan paid for an emergency LNG cargo in July. The July price was the highest that the country had paid for LNG since 2022, but it was soon topped by another cargo, bought for $21.88 per mmBtu.
The LNG price trend since then has clearly continued in a direction unfavorable for Pakistan. Power generation costs in the country surged by 38% in July from a year earlier as a result of the LNG price jump and the fact that Pakistan had to resort to purchases on the spot market after it lost supply under long-term deals from its main seller, QatarEnergy.
Last month, Pakistan was forced to reach out to spot markets again, after a cargo expected from Qatar never arrived. Qatar recently extended the force majeure on its LNG exports amid the continued blockade of the Strait of Hormuz, which is the Gulf state’s only outlet for its natural gas.
As a result of the Hormuz disruption, the government in Pakistan has had to resort to rolling blackouts. Recent reports mention periods of up to 24 hours in some parts of Karachi and extending to 12 hours in other parts of the city.
By Irina Slav for Oilprice.com
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