Already struggling for money, the government of Pakistan went ahead and bought LNG at the most expensive rates since 2015, when Pakistan began importing the natural gas.
Bloomberg reported on Thursday that Pakistani government lost its bet that the LNG prices would be going down in the international market, and was forced to buy LNG for prices higher than ever before.
According to international media agency, the Pakistan bought four cargoes of LNG this week for September delivery at around $15 per million British thermal units.
Reportedly, the government had cancelled a tender for September earlier in July under the forecast that the prices would go down.
According to national media outlet The News, state-owned Pakistan LNG Limited (PLL) first cancelled the tender of eight cargoes for September and October, arguing that the rates were higher at $13.78 per mmBtu.
So, as per the new agreement Gunvor will provide PLL with the first cargo during September 6-7 at a rate of $15.397 per mmBtu, the second cargo on September 12-13 for $15.497 per mmBtu and the third one on September 17-18 for $15.397 per mmBtu. PetroChina will provide LNG cargo on September 27-28 for $15.199 per mmBtu.
The price hikes have come as the global supply of natural gas saw a plunge that has sent rates from the U.S. to Europe surging as importers compete for a finite amount of readily available fuel, Bloomberg reported.
This would be a burden for the Pakistani government who has been trying very hard to keep the current account for the country positive, and struggling to keep the foreign reserves from falling.
It is worth mentioning that Pakistan has witnessed a single month’s record highest import figure of $6.3 billion in June this year while the current account deficit jumped to $1.3 billion in this period.
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Bloomberg reported that Pakistan and other nations that forecasted lowered prices and building of LNG reserves in the foreseeable future are affected by this development, as the current spot price for Asian LNG is trading roughly 67% above the 10-year average.