Gas Shortage Expected to Get Worse Within 2 Months

Pakistan is facing a severe gas shortage in January 2024 amid mixed signals from the State Oil Company of Azerbaijan Republic (SOCAR) on its scheduled delivery of liquefied natural gas (LNG) cargoes to the cash-strapped South Asian nation during the peak winter month.

The implied non-availability of SOCAR cargo will exacerbate the gas situation in January, forcing the government to limit domestic gas availability from 8 hours to 6 hours.

Moreover, SOCAR’s signals suggest that it may be unable to offer the price of distressed LNG shipment for January, reported a national daily.

SOCAR seems unwilling to give the LNG cargo for January amid strategic supply shifts in Western economies and distressed LNG availability. Notably, SOCAR is obligated to offer 45 days before cargo delivery and may seek a revised offer for January 2024.

Meanwhile, Pakistan LNG Limited (PLL) is preparing to market tenders for spot cargoes in January and has requested exemptions from two PPRA rules. Once the exemptions are granted, PLL will issue tenders for spot cargo for the month of January.

The government has already bought one cargo from Dutch firm Vitol based on its lowest bid. PLL purchased one cargo from SOCAR while keeping the price 10-20 cents lower than Vitol’s lowest bid. Market participants believe that the bids were last utilized to purchase one LNG cargo from SOCAR.

Pakistan will start getting four cargoes from Qatar at 10.2 percent of the Brent price in January 2024. At terminal one, the country already receives five cargoes from the same country at 13.37 percent of the Brent price.

ENI also offers short-term cargo at 12.05 percent of the Brent price. Because the demand for petrol in Sui Northern increased to 1,100 MMCFD, and 960 MMCFD in January, Pakistan needs two additional spot cargos in January.