In an unusual development, state-owned Pakistan LNG didn’t receive a single offer in a $1 billion liquefied natural gas purchase tender, according to traders with knowledge of the matter. That illustrates both the extent of the global fuel shortage and also the reluctance of suppliers to sell to a country in the depths of an economic crisis.
It’s the fourth time in roughly a month that Pakistan — which is already suffering frequent blackouts — has failed to complete an LNG purchase tender. The relatively poor country is reliant on energy imports, meaning it’s been hit especially hard by soaring prices. Inflation has topped 20%, and the government is negotiating with the International Monetary Fund on a financial rescue package.
Europe’s Plan to Quit Russian Fuel Pushes Pakistan Into Darkness
Already elevated Asian gas prices started rising further over the last few weeks on increasing supply disruptions from Russia to the US. Global LNG flows are being redirected to energy-starved Europe, where utilities are willing to pay more than emerging markets. Thailand and India have also been curbing purchases due to the high prices, but they’re not in as perilous a situation as Pakistan.
The world’s fifth-most populous country was looking to buy 10 LNG cargoes from the spot market for delivery from July to September via the tender that closed on Thursday. Pakistan bought almost half of its LNG on the spot market last year, with the rest coming under long-term deals, according to data compiled by BloombergNEF.
Even if the Pakistan tender had garnered offers from suppliers, the traders said it wasn’t clear that the government would have been able to make any purchases due to the soaring prices.
Story by Stephen Stapczynski with Bloomberg
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