Pakistan is paying record prices for liquefied natural gas (LNG) as disruptions in supply have forced the country to turn to the spot market. The state-controlled importer Pakistan LNG Limited accepted an offer from TotalEnergies Gas & Power Limited for a cargo at a price of $21.88 per million British thermal units (MMBtu) for delivery on July 27-28, according to an official source cited by The Nation. This price marks the highest Pakistan has paid for LNG since the onset of the Iran war in February, which has significantly impacted global LNG flows.
Key Details
In recent weeks, Pakistan has issued multiple tenders for LNG, responding to supply shortages caused by renewed closures in the Strait of Hormuz and disruptions from its primary supplier, Qatar. The previous highest price for a cargo was approximately $20.70 per MMBtu, set just last week. Historically, Pakistan has relied on Qatar for nearly all of its LNG through long-term contracts, but the current geopolitical situation has forced the country to seek additional supplies on the spot market.
Background
The Pakistani government is reportedly finalizing plans to procure more spot LNG cargoes, with at least one additional cargo for July and as many as six for August under consideration. This shift is a direct consequence of the ongoing supply challenges stemming from the Iran conflict, which has halted traffic through the vital shipping route.
The surge in LNG prices is likely to affect Pakistan's energy costs, potentially leading to increased inflation and higher utility bills for consumers. The situation may also influence global LNG markets, particularly in Asia, where similar supply disruptions could drive prices higher. Investors will watch for further developments in the Strait of Hormuz and any announcements regarding additional LNG procurements by Pakistan.