Pakistan is grappling with a severe economic crisis and a dwindling foreign exchange reserve, making it increasingly challenging to secure liquefied natural gas (LNG) supplies.
This difficulty in procurement has been exacerbated by the surge in LNG prices following Russia’s invasion of Ukraine last year. LNG plays a critical role in Pakistan, where more than a third of electricity generation relies on natural gas. However, local gas reserves are insufficient to meet the growing demand for electricity in a country with a population exceeding 230 million, resulting in frequent power outages.
To address this issue, Pakistan Gasport is actively exploring options for LNG imports from various sellers in countries like Oman, the United States, and the United Arab Emirates. According to the company’s spokesperson, Pakistan Gasport has received encouraging offers from these countries, indicating potential solutions to the LNG supply problem.
Pakistan Gasport operates the largest LNG import and regasification terminal in the country, situated at Port Qasim. Historically, LNG imports have been facilitated by Pakistan LNG, a state-run entity.
However, the impending cargo would mark a significant milestone as it would be the first to be imported by a private sector company in Pakistan.
The spokesperson also expressed optimism about the future of LNG prices, expecting them to decrease in the coming years, which would make spot purchases more attractive.
They highlighted a target price of 12% of the Brent crude oil price as the threshold for cargo imports to Pakistan, equivalent to approximately $11 per million British thermal units (mmbtu).
This price point is notably lower than the current average Asian LNG prices of around $13 per mmbtu. Anticipating substantial growth in Pakistan’s LNG demand, the spokesperson forecasted an increase from the current 10-12 million metric tons to 30 million metric tons in five years.?