Pakistan fails to attract offers on 10-cargo LNG tender, energy crisis deepens

Quantum Commodity Intelligence - Pakistan LNG Limited (PLL), a wholly-owned subsidiary of Government Holdings Private Limited (GHPL), has failed to attract any offers from suppliers in its latest LNG tender, according to local media reports.

PLL tendered for 10 cargoes during the July-August-September window, but failure to attract interest is likely to increase the country's deepening energy crisis.

Pakistan sent the tender out on Monday for cargoes on a delivered ex-ship basis (DES) at Port Qasim, Karachi, with validity on offers until Thursday. Each cargo was for a volume of 140,000m3, according to tender documents.

Asian LNG prices have rallied by more than 70% since mid-June following the unscheduled outage of the US Gulf Freeport export terminal, with benchmark JKM futures for September closing Wednesday at $41.415/mmBtu.

Additionally, Europe has emerged as a major competitor for Asia in the international LNG market as it looks to build stocks ahead of the peak-demand winter season amid faltering Russian gas supplies. 

Benchmark Dutch TTF futures have more than doubled since mid-June, rallying from around €80/MWh for the Aug22 contract to close Thursday at €183/MWh, up 7% on the day.

Crisis

Pakistan is dealing with fuel shortages, particularly in its power sector, as electricity consumption spikes in the summer months, leading to power outages across the country.

The government formed an inquiry commission to determine the causes of the energy crisis in the country, reported Pakistan's Business Recorder.

Last month, Pakistan LNG Ltd (PLL) received a single bid from Qatar Energy at $39.80/mmbtu for an LNG import tender seeking a cargo in the July 30-31 window. It received zero offers for three other deliveries sought in July, noted the Business Recorder.

Last week Prime Minister Shehbaz Sharif said that the country scrapped the LNG tender for July to save the country's foreign exchange reserves.

Addressing a meeting on the energy situation, he said that accepting the tender would have drained the low level of reserves.

"We are trying to prop up central bank reserves," he said. "We imposed limits on import of raw material and machinery to save $2 to $3 billion for Pakistan."