KARACHI: The government on Saturday invited bids from international suppliers for two spot liquefied natural gas (LNG) cargoes to meet the country’s energy requirements, as contracted supplies from Qatar remain uncertain amid continued disruptions to shipping through the Strait of Hormuz.
The move comes despite reports that the United States and Iran are inching toward a short-term agreement aimed at easing regional tensions, raising hopes among energy importers such as Pakistan that LNG shipments from Qatar could resume more smoothly in the coming days. However, officials say Pakistan still needs immediate spot purchases to bridge potential supply shortfalls during peak summer demand.
The energy supply disruptions in the region stem from the war in Iran that began on Feb. 28 with joint US-Israeli attacks on Tehran, triggering weeks of conflict that prompted Iran to shut down the Strait of Hormuz, a vital shipping lane through which roughly one-fifth of the world’s oil and LNG supplies pass.
US President Donald Trump later announced a counter naval blockade targeting Iranian ports while declaring a ceasefire last month, though both sides have exchanged fire in the region in recent days.
“Bids are invited from reputed international suppliers, for the supply of two (02) LNG cargoes on a Delivered Ex-Ship (DES) basis at Port Qasim, Karachi,” reads a tender Pakistan LNG Limited (PLL) floated seeking two cargoes of 140,000 cubic meters each, equivalent to about 100 million standard cubic feet per day (mmscfd), for delivery during May 12-16 and May 24-28.
Last date for the submission of bids is May 11.
This is the second tender issued by PLL this week. The state-run procurer had earlier floated a tender on May 6 seeking two cargoes but rejected the offers amid expectations that easing regional tensions could lower spot LNG prices and allow stranded Qatari supplies to resume.
The rejected bids included $17.28 per million British thermal units (MMBtu) from BP Singapore Pte Limited and $16.98 per MMBtu from TotalEnergies Gas & Power Limited.
Other suppliers were Vitol Bahrain at $17.84 per MMBtu, OQ Trading at $18.58 per MMBtu, SOCAR Trading at $17.21 per MMBtu, and PetroChina International Singapore at $17.69 per MMBtu for the first cargo and $17.49 per MMBtu for the second.
However, continued uncertainty surrounding Qatari shipments appears to have pushed authorities back into the spot market despite the earlier rejection.
‘WAIT AND WATCH’
Officials at Pakistan’s energy ministry said May 6 bids were rejected after the authorities assessed that a potential breakthrough in US-Iran talks could pave the way for the resumption of LNG supplies from Qatar.
“It’s a wait and watch situation,” an official at Pakistan’s energy ministry told Arab News, seeking anonymity as he was not authorized to speak publicly.
“At least two LNG cargoes from Qatar are loaded but stuck at the Strait of Hormuz as movement is restricted,” he continued, adding that Pakistan’s gas demand has risen significantly amid peak electricity consumption during the summer season.
“An increased demand for power generation raised demand for the two spot cargoes,” the official explained.
Pakistan’s power generation rose six percent to 8,939 gigawatt-hour (GWh) in March because of a seasonal uptick in demand ahead of the summer months, Karachi-based market research firm JS Global Capital Ltd. said in its latest report.
The energy-deficient nation generated 24 percent of its electricity from hydel, 31 percent from coal, one percent from furnace oil, 22 percent from nuclear plants and 17 percent from gas, including 6 percent from imported LNG, in March, according to the report.
Power Minister Awais Leghari has said that Pakistan’s 3,400 megawatts electricity shortage was due to the closure of five LNG power plants.
In March, as the Iran conflict disrupted regional energy trade, Pakistan could only import $70.2 million worth of LNG, 69 percent down from $226 million last year, according to the Pakistan Bureau of Statistics (PBS).
The energy ministry official said Pakistan was likely to witness a significant surge in LNG demand in the coming months.
He said the country would need “four to five LNG cargoes next month” and would continue to require a similar number of cargoes each month through August.
“Power generation alone demands four to five cargoes per month while we need two monthly cargoes for our industry,” he explained.
Speaking to Arab News, Asif Inam, chairman of Sui Southern Gas Company, said whether Pakistan would continue to tap the LNG spot market or wait for Qatari supplies would depend on the war situation.
“If the Strait of Hormuz opens, then we don’t need to go for spot cargoes,” he added.
Energy expert Muhammad Saad Ali said a prolonged disruption of supply routes would push Pakistan toward the spot market.
“We are not getting LNG from our main supplier Qatar,” he said. “Naturally, we will look for any offers in the spot market.”
“Some of the RLNG volumes would be replaced with indigenous gas,” he continued while referring to re-gasified liquefied natural gas. “The rest we will have to import.”
