Pakistan seeks bids for two LNG cargoes as power demand rises

ISLAMABAD: State-owned Pakistan LNG Limited (PLL) on Wednesday issued urgent tenders to import two liquefied natural gas (LNG) cargoes for delivery on May 12-14 and May 24-26 as temperatures rise and electricity shortages persist.

PLL set May 7 as the deadline for bids, with offers to be opened the same day, citing the immediate need to meet power demand after the LNG cargo imported in the last week of April was consumed.

The move comes after expectations within the authorities that the Middle East crisis would ease and the Strait of Hormuz would reopen did not materialise.

Last month, PLL had turned down two bids for the same delivery window, but accepted one cargo at $18.4 per million British thermal units (mmBtu).

Qatar, which is Pakistan’s long-term LNG supplier, had shown reluctance in sending LNG cargoes stranded in the Gulf because of the closure of the Strait of Hormuz. Earlier, three LNG cargoes from Qatar meant for Pakistan were sent back from the strait for security reasons.

Supply requirements and pricing

Both tenders seek 140,000 cubic metres of LNG on a delivered ex-ship (DES) basis. For Pakistan, each cargo of this size generally adds about 100 million cubic feet per day (mmcfd) of gas supply.

In April, the Oil and Gas Regulatory Authority (Ogra) notified a steep 19-22 per cent increase in the price of regasified liquefied natural gas (RLNG) for March, setting it at $12.50-$14 per mmBtu at the distribution stage for sale by the two Sui gas companies.

Data from the regulator showed the increase was driven mainly by higher terminal charges because of lower import volumes, along with a slight rise in import prices.

The basket RLNG price for March was calculated on the basis of only two cargoes, compared with eight cargoes each in February and March, after Qatar declared force majeure.

Those two cargoes were imported under two LNG agreements between Pakistan State Oil and QatarGas at an average delivered price of about $7.68 per mmBtu, compared with $7.45 per mmBtu a month earlier, but still well below $8.9 per mmBtu in March last year.

Import disruption and official response

PLL, one of the public-sector entities handling LNG imports, did not bring in any cargo last month. It had imported one cargo a few months earlier after a gap of nearly a year at about $7.65 per mmBtu through an older contract with a private entity.

The company, set up almost a decade ago for LNG imports, had not imported energy over the past year. It last floated an LNG tender in December 2023 for delivery in January 2024, but later withdrew that tender.

Amid criticism over loadshedding before the start of summer, the Power Division last week asked the Petroleum Division to arrange about 400 million mmcfd of LNG for electricity generation, while authorities were still hoping that international supply routes would reopen.

LNG imports had stopped in March after the Strait of Hormuz was closed following US-Israel attacks on Iran. In response, Iran targeted fuel installations in neighbouring countries, including Qatar, Saudi Arabia, the UAE and Kuwait, among others.

Qatar subsequently declared force majeure early last month on all of its global LNG contracts, including those with Pakistan.