Page 6 - AsianOil Week 30 2022

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Pakistan is finding it
difficult to purchase
LNG on the spot market
at current prices.

Pakistan’s energy crisis

worsens economic crunch

PERFORMANCE FEARS are being expressed in international rains had disrupted gas infrastructure. However,
circles that Pakistan is facing an economic col- no major new gas discoveries have been made
lapse similar to what is being experienced by Sri in Pakistan and domestic gas production is in
Lanka. The high price of fuels, especially LNG, decline, making the country even more depend-
is exacerbating the country’s economic decon- ent on energy imports.
struction and contributing to inflation, which Pakistani media reported this week that
is causing serious consequences for the general domestic gas production has fallen to 3.4bn
population as well as commercial operations. cubic feet (95.9mn cubic metres) per day during
Not only is the country finding it difficult to fiscal year 2022 from the fiscal year 2012 output
purchase LNG on the spot market, but traders rate of 4.3 bcf (121 mcm) per day. Had produc- The high
are also reluctant to deliver oil and diesel, fearing tion stayed at the FY2012 rate, Pakistan could
Pakistan might not be able to pay for the cargoes. have saved $3-5bn per year, the media report price of fuels,
Imports of liquid fuels are also in decline. said. The country’s foreign exchange reserves are
Pakistan’s rupee depreciates daily against the estimated at slightly more than $8bn, according especially LNG,
US dollar, yet the government has expressed to media.
hope that the rate will reverse itself in the coming The high cost of energy has played a key role is exacerbating
months with improvements in export revenues in Pakistan’s energy and economic crisis. Half the country’s
and remittances. of the country’s LNG imports are delivered
But the energy crisis that Pakistan is fac- through long-term contracts, with the remain- economic
ing jeopardises the futures of Pakistan’s export der purchased on the spot market, but prices in
industries and hence its ability to earn foreign the latter are proving impossible for Pakistan to deconstruction
exchange and boost the rupee. Businesses in meet. In June, state-owned Pakistan LNG Ltd
the commercial hub of Karachi last week com- (PLL) posted a tender for 10 LNG cargoes for and contributing
plained to the government of days of inadequate delivery over the summer, but the company did to inflation.
gas supply and several days of no gas supply at not receive a single bid.
all. Industrialists in the city said the gas short- Previous tenders have also proved unsatisfac-
ages had caused them to miss export orders that tory. One tender placed by PLL saw only one bid
could amount to considerable sums. received from Qatar Energy at a price of 39.80
The Sui Southern Gas Co. (SSGC), which per million British thermal units ($1,100.87 per
supplies gas to the region, has tried to explain 1,000 cubic metres), putting the total price for
this away by saying that regional gas fields are the cargo at around $131mn, much more than
under maintenance and that the recent heavy government financial reserves could tolerate.™

P6 www. NEWSBASE .com Week 30 29•July•2022