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Thursday, May 16, 2024

Qatari LNG bid: Opportunity or another challenge?

Pakistan received the most expensive bid for a single cargo shipment from Qatar which has added to the list of growing challenges

On Thursday, Pakistan received the most expensive bid for a single cargo shipment for next month, out of four planned purchases. Notably, in less than a month, this was the 2nd attempt to buy Liquified Natural Gas (LNG) cargoes under spot deals.

In order to cope with the growing challenge of nationwide shortage and fulfilling the demand of power sector, Pakistan LNG Limited proposed a tender for supplying four cargos for the coming month of July.

Read more: Country faces electricity shortfall?

LNG bids were invited to deliver natural gas by July 3, July 8, July 25, and July 30, 2022, according to the delivery schedule. However, amid global fuel shortage, the country’s tender to buy four July cargoes received a single bid, and at a staggering high price. At a record high price of around $40 per million British thermal units, only Qatar Energy offered LNG.

The news was also shared on Twitter by Stephen Stapczynski, Bloomberg Business reporter covering energy & commodities, “Pakistan’s energy crisis is set to get worse as it struggles to procure enough LNG. Pakistan’s tender to buy four July cargoes, received a single bid amid a global fuel shortage, Qatar offered LNG at nearly $40/mmbtu, that would be a record high for Pakistan if purchased.”

In such challenging situation, countrywide energy crisis are at the verge to deteriorate as war between Russia and Ukraine continue to raise the LNG prices to record high as Europe rushes to stock up on fuel in the absence of gas from Russia.

Read more: Pakistan secures last minute bid on LNG cargo to defer crisis

Regarding the single bid received from Qatar, some stakeholders suggested to reject the bid for being too expensive. They emphasized the rejection claiming that the cost of import will be touching skies if government accepts this cargo. Also, the government should choose a strict conservation plan over purchasing expensive cargo.

However, during the PTI regime, Miftah Ismail being the former Finance Minister at that time claimed that LNG bought by the PTI government was more than 3 times costlier than that was bought by PMLN and it caused $65 million loss in just one cargo.

No doubt, it is difficult for a country like Pakistan to turn down even such a costly LNG cargo. LNG demand for the power sector would be strong in July, as hydropower could not ramp up due to river water shortages.