Pakistan LNG receives no offers for spot tender for winter
Pakistan LNG did not receive any offers in a tender seeking eight LNG cargoes for delivery over December to January, raising concerns about a potential power crisis in the South Asian country.
The country with a population of over 200 million has struggled with energy shortages and rising power prices, with electricity still not available 50 million people in the country who need it, according to a 2018 World Bank report.
It was not immediately clear if Pakistan LNG plans to re-issue the tender, but with spot gas prices expected to surge further during winter when demand for the super-chilled fuel typically rises, this is expected to push up the overall energy import bill for the country.
Spot LNG prices <LNG-AS> are already trading near record levels against the backdrop of power shortages in China and India. A spot LNG cargo, for instance, costs about $100 million currently, compared with just under $20 million in late February.
Pakistan LNG had issued the latest buy tender last month, with offers due by Oct. 11 and to remain valid until Oct. 26.
While supply globally is quite limited for winter amid a surge in demand, the main reason for the lack of offers is the validity period of 15 days for offers, two industry sources said, adding that this is too long given the daily price fluctuations.
Pakistan imports more than half of its LNG through long-term contracts, which buffers it somewhat from spot price volatility. But, the country still needs to import spot cargoes to meet domestic gas demand.
Still, that spot demand is expected to be lower this winter, compared with last winter, as a new 10-year deal between Pakistan and Qatar is expected to be effective from January, 2022.
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