Pakistan seeks additional Qatar LNG Cargo amid surge in spot prices

Pakistan is making efforts to secure an additional liquefied natural gas (LNG) cargo from Qatar for delivery around August 25 or 26 as international spot LNG prices continue to rise

ISLAMABAD: Pakistan is making efforts to secure an additional liquefied natural gas (LNG) cargo from Qatar for delivery around August 25 or 26 as international spot LNG prices continue to rise, according to officials familiar with the matter.

The move is aimed at ensuring uninterrupted gas supplies while helping the country avoid another costly purchase from the international spot market. Officials said relevant authorities are pursuing the matter through both diplomatic and commercial channels as concerns over shipping and security in the region continue to affect LNG supplies.

International spot LNG prices have climbed to around $21.22 per million British thermal units (MMBtu). After factoring in freight, handling and other charges, the landed cost of a spot cargo in Pakistan is estimated at approximately $22.30 to $23 per MMBtu, making fresh spot purchases increasingly expensive.

Pakistan seeks Qatar supply

Authorities are reportedly reluctant to conduct another conventional spot tender because of the elevated prices prevailing in the global LNG market. Instead, efforts are being focused on obtaining additional supplies from Qatar, a key LNG supplier to Pakistan.

Officials said discussions are also being held with regional and international stakeholders to facilitate the safe movement and delivery of LNG cargoes. The objective is to secure the required supply without exposing the country to another high-cost spot purchase.

The National Coordination and Monitoring Committee is coordinating with Qatar, Iran and the United States over arrangements related to the safe passage and delivery of LNG shipments.

The consultations have gained importance as security concerns surrounding the Strait of Hormuz continue to create uncertainty for energy shipments. The waterway is a critical route for global energy trade, and disruptions or delays can have a direct impact on LNG availability and prices in importing countries.

LNG remains crucial for power generation

Pakistan faces growing pressure to maintain adequate LNG supplies because regasified LNG (RLNG) remains an important component of the country’s energy mix, particularly when domestic gas production and other sources of electricity generation are unable to meet demand.

The country’s two LNG terminals, operated by PGPC and Engro, are currently supplying around 130 million cubic feet per day (mmcfd) each to the national gas network. Together, the terminals are contributing approximately 260 mmcfd.

Any disruption in LNG arrivals could therefore affect gas allocations to power plants and increase pressure on the electricity generation system, particularly during periods of high demand.

Expensive LNG raises power generation costs

The financial impact of higher LNG prices has already become visible in the power sector. In July, the average cost of electricity generated using RLNG rose to approximately Rs47.38 per unit, compared with around Rs35.50 per unit in June.

The sharp increase was linked partly to the arrival of several expensive spot LNG cargoes during the month.

A cargo delivered on July 27 was priced at approximately $21.88 per MMBtu. Meanwhile, cargoes delivered on July 21 and 22 were priced at around $20.70 per MMBtu, while those arriving on July 15 and 16 cost approximately $18.23 per MMBtu.

The higher LNG costs have increased the expense of RLNG-based electricity generation, adding to the broader financial pressures facing the power sector.

Delivery schedule remains critical

Pakistan generated around 14,501 gigawatt-hours (GWh) of electricity in July, with the overall generation cost reaching approximately Rs139.37 billion.

Against this backdrop, the timing of the next LNG shipment has become increasingly important. Officials are working to finalize the berthing arrangements for a possible cargo arriving around August 25 or 26, but the final schedule remains subject to operational and security considerations.

Any delay in securing or receiving the additional cargo could place further pressure on gas allocations and electricity generation. It could also force authorities to consider more expensive procurement options if domestic supplies prove insufficient.