Pakistan is in talks with a number of countries, including Russia, to pen a liquefied natural gas (LNG) import deal in a bid to alleviate the ongoing energy supply crunch, as reported by Bloomberg.
The Ministry of Energy told the publication that it “will go for the most favorable deal” and is considering government-to-government contracts for importing the fuel.
This development comes as Pakistan struggles to battle blackouts due to a fuel crisis after the failure of long-term suppliers to deliver shipments. To keep the lights on, the government had previously resorted to buying LNG from the spot market, and in doing so, had incurred a debt that threatens to exacerbate inflation on a menacing scale.
Prime Minister Shehbaz Sharif’s government, which came to power on 11 April, hopes to secure a new long-term LNG contract to help lower fuel costs. Long-term contracts are substantially cheaper than current spot pricing, and market players expect this to bring some relief to the government.
Besides Pakistan, only a few other nations are reportedly prepared to sign new LNG contracts with Russia as most importers avoid Moscow subsequent to President Putin’s invasion of Ukraine. India and China are purchasing extra spot cargoes of Russian gas, some at significant discounts to parallel market prices.
Overall, benchmark Asian and European LNG prices are at a seasonal high as the Ukraine crisis aggravates an already tight market. Pakistan, a relatively impoverished country that relies heavily on energy imports, has been severely struck by the ongoing supply crunch. According to government figures, its LNG import cost jumped by 83 percent to $3.7 billion in the ten months ending April.
