Pakistan’s growing dependence on imported liquefied natural gas is becoming a major issue with the surge in global gas prices.
The country has been compelled to pay the highest ever prices for spot shipments to top up the supply under long-term contracts.
The Chairman of Pakistan GasPort, Iqbal Z. Ahmed, remarked that the shortfall means that the country will “definitely” suffer from power outages in the winter.
“It will hit exports, industry, and general morale more than anything else. Electricity is not a luxury,” he added.
The energy crisis that had started in the UK reached China, and will undoubtedly affect the emerging markets that are already afflicted by sky-high fuel prices.
The struggling economies are bound to suffer during the winter season with an increase in the demand for gas and a hike in prices.
Pakistan had built on LNG import strategies over the last decade assuming that fuel is abundant and cheap. However, with the increase in the LNG rates, the situation has become complex. The country needs spot shipments in winter, but it is unclear whether the government will be able to afford it.
“LNG spot price levels are crazy. If this sort of trend continues it will be self-defeating for the LNG business because people will start switching back to other fuels,” Ahmed said.
There is a chance that the government might encourage the consumers to shift to electricity where possible, to save gas for industry and heating purposes.