Liquefied natural gas (LNG) imports into Pakistan were just started six years ago, but the country’s growing dependency on the super-chilled fuel is threatening to convert the country into a living nightmare.
The increase in global gas costs as a result of European gas shortages has propelled Asian LNG prices to all-time highs for this time of year, according to Bloomberg. As a result, Pakistan has been forced to pay the highest prices in history for spot shipments to augment supply under long-term agreements, or perhaps to forego such shipments altogether.
As Iqbal Z. Ahmed, chairman of Pakistan GasPort (which owns and operates one of Pakistan’s import terminals), said in an interview, power disruptions would “unquestionably” occur throughout the country during the winter months. According to the report, exports, industry, and overall morale will be negatively impacted more than any other aspect of the economy. “Electricity is a necessity, not a luxury,” the author asserts in his book.
With the global energy crisis currently devouring countries from the United Kingdom to China, emerging markets, which are already struggling to keep up with sky-high fuel costs, are on the verge of being swallowed up by the global crisis. It is possible that economies that cannot afford the fuel would simply come to a grinding halt when winter in the Northern Hemisphere increases heating demand and spot prices rise even further.
The assumption that LNG will continue to be plentiful and inexpensive for the foreseeable future, as it has been for several years, has guided the development of LNG import strategy in emerging countries like a Pakistan for more than a decade now. Because of the dramatic increase in the price of Asian LNG this year, this came to an abrupt halt.
However, more than half of Pakistan’s LNG is acquired under long-term contracts, which provides some protection from the volatility of the spot market price of natural gas. According to traders who requested anonymity due to the fact that the conversations are not publicly available at this time, Qatar has agreed to increase supply as a result of the term agreements.