Pakistan may buy LNG on spot market amid Iran war supply disruptions: petroleum minister

Pakistan is weighing purchasing LNG in the spot market to compensate for supply shortages owing to the war with Iran, although it prefers government-to-government sales rather than spot deals due to higher premiums, according to Petroleum Minister Ali Pervaiz Malik in an interview with Reuters.

Qatar’s force majeure situation compelled Pakistan to incur additional expense through the purchase of spot cargo or resort to other sources of fuel before the summer season.

Due to the ongoing conflict in the region, spot LNG cargoes have risen to the range of $20 to $30 per mmBtu, said Malik, who further added that the purchase will be made if the cost is satisfactory for the power generation industry, taking into account the government-to-government sale arrangement with Socar of Azerbaijan.

Additionally, Pakistan has started moving its crude through the Saudi Arabian Red Sea port of Yanbu in place of Hormuz Strait to reduce the premium of insurance.

Pakistan depends on the imports of almost all of its oil supplies, mostly through the Strait of Hormuz, even after reducing its dependency on liquefied natural gas imports in recent times, because of the continued need for gas to meet the peak consumption in summers.

The country has started the commercial production from its largest producing gas and oil well in terms of volume in order to increase domestic production.

“We have made necessary arrangements to meet the needs of both domestic and industries,” Malik said, adding that the disruption in gas supply has not resulted in any curtailment, with eight out of 10 plants of fertilizer producing companies operational.

Other measures include the employment of expensive fuels such as furnace oil in order to avoid load-shedding, but that would increase energy tariffs.