Page 5 - AsianOil Week 25 2022

AsianOil COMMENTARY AsianOil

May 31 stood at $4.29bn, marking a year-on- yet to decide the timeline for issuing the ten-
year increase of 86.3%. Now, though, it is becom- der. According to Abbasi, Islamabad intended
ing more difficult for the country to secure spot to speak with LNG suppliers in the Middle
purchases. East, including Qatar, the United Arab Emir-
Pakistan is not alone in this. Other cash- ates (UAE), Saudi Arabia and Oman about a
strapped countries are also struggling with rising potential long-term contract. Separately, the
spot prices of LNG. For example, it emerged this government said recently it was not ruling out
week that Thailand was curbing LNG imports a potential gas supply agreement with Russia,
owing to high prices, with the move potentially which has been selling oil and gas to Asian buy-
putting the country at risk of fuel shortages. ers even as its energy exports are being shunned
In Pakistan’s case, the country is also increas- by – primarily – Western countries.
ing domestic prices in an effort to meet condi- Abbasi also said the government was open to
tions required by the International Monetary signing a 30-year contract in an effort to secure
Fund (IMF) to secure a much-needed bailout. supplies for an even longer period. LNG supply
The Pakistani government reportedly needs at agreements currently rarely exceed 20 years, so
least $41bn in the next 12 months in order to get such a deal would be unusual if Islamabad man- This marks the
through the economic crisis. And the high cost aged to strike one.
of fuel is starting to hit consumers. It also remains to be seen how attractive the third time in June
prices that Pakistan wants for a long-term supply that Pakistan has
What next? deal will be to potential sellers. This has not been
The government is now trying to conserve specified, but Abbasi said the government would failed to complete
energy where possible, and has cut working retain a clause allowing sellers to pay a 30% pen-
hours for public servants, introduced planned alty if they cannot deliver a shipment. an LNG tender for
blackouts and ordered certain businesses in This clause is present in existing deals, and
cities including Karachi to shut early. Pakistani indeed has recently been used by Eni and Gun- July.
Prime Minister Shehbaz Sharif pledged this vor Group, which have both cancelled several
week to take further steps to end blackouts. scheduled cargoes to Pakistan in the past year,
Additionally, it was reported earlier this exacerbating energy shortages in the country.
month that the country was seeking to sign a No further information has emerged since
new long-term LNG purchase deal in an effort early June on any progress towards a long-
to secure gas supplies and ease the power short- term supply deal. News could come soon, and
ages. Shahid Khaqan Abbasi, a former Pakistani a long-term supply agreement would certainly
prime minister who now oversees the energy be helpful to Pakistan at this time. But as Europe
sector for Sharif, told Bloomberg at the start of accelerates efforts to phase out imports of Rus-
June that the government intended to float a sian gas, competition for long-term supply will
tender to purchase one cargo per month of LNG also be high, and this could complicate attempts
for 10-15 years. At the time, the government had to negotiate a deal.™

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