Pakistan seeks Qatar LNG cargo as spot prices surge

Pakistan is stepping up efforts to secure an additional LNG cargo from Qatar by August 25-26 to avoid costly spot purchases as international LNG prices climb. Spot cargoes are currently priced at around $21.22 per MMBtu, while the landed cost in Pakistan is estimated at $22.30-$23 per MMBtu.

 

Authorities are exploring diplomatic and commercial channels with Qatar and other stakeholders to ensure the safe delivery of LNG amid security concerns surrounding the Strait of Hormuz. The government is reluctant to rely on the spot market because higher LNG prices could further increase electricity-generation costs.

 

Pakistan’s two LNG terminals, PGPC and Engro, are currently supplying around 130 mmcfd each, providing approximately 260 mmcfd to the national gas system.

 

The rising cost of LNG has already increased RLNG-based power generation costs. In July, electricity generated from RLNG cost an average of Rs47.38 per unit, up from Rs35.5 per unit in June. RLNG-based generation stood at 1,629 GWh, accounting for 10.78% of total electricity generation, while its generation cost reached Rs77.2 billion.

 

Recent spot LNG cargoes have also been expensive, including a July 27 cargo priced at about $21.88 per MMBtu, compared with $20.70 per MMBtu for a July 21-22 cargo and $18.23 per MMBtu for a July 15-16 shipment.

 

Securing a Qatar cargo would help Pakistan reduce its reliance on the increasingly expensive spot LNG market and limit pressure on gas supplies and power-generation costs.