Pakistan weighs spot LNG as Iran war hits supply, ramps up domestic oil and gas

Pakistan is considering buying liquefied natural gas (LNG) on the spot market to offset supply disruptions caused by the Iran war, but would favour government-to-government deals to avoid having to pay steep premiums, Petroleum Minister Ali Pervaiz Malik has told Reuters.

Qatar’s force majeure forced Pakistan to make costly spot purchases or find alternative fuels ahead of summer demand.

Spot LNG cargoes have surged to $20 to $30 per mmBtu (one million British thermal units) amid the Middle East conflict, Malik says, adding that purchases would depend on whether prices are acceptable to the power sector, including under existing government-to-government arrangements with Azerbaijan’s SOCAR.

Pakistan has also been routing some crude supplies via Saudi Arabia’s Red Sea port of Yanbu to bypass the Strait of Hormuz, with Malik saying insurance costs on that route were lower than routes crossing or near Hormuz.

Pakistan imports nearly all of its oil, much of it via the Strait of Hormuz, and remains exposed to supply shocks despite cutting its LNG reliance in recent years, as gas is still needed to meet the country’s peak summer power demand.

It has begun commercial output from its highest-ever producing oil and gas well, as it shores up domestic supply.

“We have arrangements in place to meet domestic and industrial requirements,” Malik........

© Dawn Business