Islamabad (Bloomberg): Pakistan has indicated it is considering signing a liquefied natural gas purchase agreement with several nations, including Russia, to ensure supply and alleviate a severe shortfall.
The government “will pursue the most advantageous contract,” according to a statement released by the Ministry of Energy to Bloomberg News. According to the statement, Pakistan is considering a government-to-government contract for the import of power plants and industrial petroleum.
Due to President Vladimir Putin’s invasion of Ukraine, only a few countries are prepared to sign new LNG contracts with Russia, and most importers avoid the country. India and China are buying more Russian gas on the spot market, with some of it at a significant discount to market prices.
Pakistan is currently experiencing blackouts due to a fuel shortage, following the failure of numerous other long-term suppliers to deliver shipments. To keep the lights on, the government had to buy LNG on the spot market, building up debt that threatens to push inflation even higher.
Prime Minister Shehbaz Sharif – whose government came into power after ousting Imran Khan through a no-confidence motion in the national assembly last month – aims to sign a new long-term LNG contract to help reduce fuel costs. Long-term contracts are significantly less expensive than current spot rates, which could bring some relief to the government.
As the situation in Ukraine exacerbates an already tight market, Asian and European liquefied natural gas spot prices are trading at a seasonal high.
Pakistan, an impoverished country that relies heavily on energy imports, has been hit particularly hard by rising gasoline prices. According to government figures, the cost of importing LNG in Pakistan jumped by 83 per cent to $3.7 billion in the ten months ending in April.