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Pakistan has dropped plans to procure LNG cargos for next year after its tender only attracted two offers that featured a 30% premium to market prices.
Per a Bloomberg report that cited unnamed traders in the know, the offers had come from Trafigura and the delivery dates had been in January and February 2024.
This is not the first time Pakistan is being forced out of the LNG market because of prices. Last year, when the suspension of Russian pipeline gas deliveries turned Europe into a major LNG buyer, importers such as Pakistan were essentially priced out of the market.
Even supplies that should have been locked in under long-term contracts were affected when Eni announced early this year it would not be able to deliver its contracted once-monthly LNG cargo to Pakistan due to circumstances outside its control.
Other suppliers of LNG to Asian countries also chose to breach their contracts amid sky-high prices on the spot market.
This has made Pakistan’s energy situation quite precarious, with blackouts plaguing the country last year for months and power rationing becoming unavoidable.
This year, the price situation has largely normalized and this has allowed Pakistan and other poorer Asian nations to return to the LNG market. As the latest news from Pakistan suggests, however, this return may well have been temporary.
Based on the reported premium asked by Trafigura for LNG deliveries to Pakistan next year, commodity traders’ expectations would be for yet another strong jump in prices come heating season.
Demand from the rest of Asia is also seen rebounding as is demand from Europe. The latter has been lukewarm so far this year because of the mild winter last year that saw a lot of gas remain in storage. That gas is basically unsellable as it was bought at record prices and any resale would lead to massive losses.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.