Pakistan Forced to Buy Most Expensive LNG in 4 Years

Pakistan has been forced to purchase some of its most expensive liquefied natural gas (LNG) cargoes in years as the ongoing US-Iran war tightens global supplies and drive up spot prices across Asia, reported Bloomberg.

Pakistan LNG Limited recently secured a cargo for late July at around $21.88 per million British thermal units (mmBtu), marking the country’s highest LNG purchase price since 2022.

Bangladesh has also bought at least one cargo for August at similarly elevated prices.

The supply crunch stems from prolonged disruptions in the Strait of Hormuz, a critical shipping route that handles roughly one-fifth of the world’s LNG trade.

The situation worsened after Qatar, the largest LNG supplier to both Pakistan and Bangladesh, suspended scheduled exports earlier this year following security concerns in the region. Although expectations had grown for supplies to normalize, the producer has delayed restoring full exports.

Asian spot LNG prices have climbed to their highest level since late March, reaching around $20 to $21 per mmBtu, according to S&P Global Energy data.

While prices eased somewhat after the initial spike, they have steadily climbed again in recent weeks and are now roughly double pre-war levels, reflecting persistent supply concerns.

For Pakistan and Bangladesh, buying LNG on the spot market has become significantly more expensive than importing gas under long term contracts with Qatar.

The higher costs are expected to put additional pressure on government finances and could eventually translate into higher electricity and gas tariffs if sustained.

Pakistan, meanwhile, is increasingly relying on alternative sources of electricity generation. According to recent industry data, nuclear power generation rose by around 30 percent in June compared with a year earlier, while coal-fired generation increased 5 percent.

The country is also expanding renewable energy capacity as it seeks to reduce exposure to volatile global LNG markets and strengthen long term energy security.