Amid energy crunch, Pakistan to procure LNG at 'highest-ever price': Reports

On the brink of meeting its third consecutive energy crisis, the Pakistan LNG Limited (PLL) has taken a resolution to procure a Liquefied Natural Gas (LNG) cargo at the highest ever price of $30.60 per million British thermal units (MMBtu).

Local media Geo TV citing sources reported that the state-owned company, PLL, issued an emergency tender on November 2, seeking bids for spot cargoes after two LNG trading companies, ENI and GUNVOR, pulled out its deal to provide two LNG term cargoes due to be delivered on November 19-20 and November 26-27.

Pakistan receives skyrocketing bids for LNG trading firms

Sources further said that the PLL had received five bids with higher prices, ranging from $29.89 to $31.05 per MMBtu from international LNG trading companies for two spot LNG cargoes to be delivered in the last 11 days in November. Pakistan is now on the edge of massive gas and rationing shortage owing to the depleting local gas reserves and the failure of the Imran Khan government in procuring a sufficient quantity of LNG.

Pakistan Energy Minister Hammad Azhar, on November 1, had informed that the government has arranged 11 LNG cargoes for the current month, The News International reported.

LNG trade firms back out of deal with Pakistan

LNG dealing firms have stepped down from an agreement made with PLL to provide two cargoes for November for whopping monetary gains of up to 200% profit in the international spot market, according to the publication.

Notably, following an increase in fuel prices, Pakistan's cost of energy production has also increased. Almost two-third of the country's electricity generation is based on fossil fuels, reports say.

The spike in prices of crude oil has hit the highest mark during the past three years, with a price tag of $86 per barrel. Now with the rising cost of LNG, the energy crisis in the country is further deteriorating.

State-owned PLL in dilemma

Earlier, under tremendous pressure, the government, in September, was compelled to buy cargoes at the highest price to avoid power shedding.

The Imran Khan government had procured Liquefied Natural Gas (LNG) cargoes for September at the rates of $15.19 to $15.49 per MMBtu, the highest since 2015.

The state-owned PLL had initially cancelled the tender of eight cargoes for September and October, arguing that the rates were higher at $13.78 per MMBtu. However, PLL later procured four cargoes at the highest-ever rates.

What leads to energy shortage:

• According to BBC, the back-to-back COVID lockdown has cut down the production as well as transportation capacity of energy-producing industries.
• A large amount of energy got wasted in the reopening of the plants as it needs a deep cleaning.
• Pakistan has fewer gas storage facilities than some countries, leading to the country's export exchequer. 
• Some reports also alleged Russia behind the ongoing crisis, as it is a major gas supplier.

Inputs: ANI

Image: AP/PTI