Pakistan has failed at its first attempt to purchase liquefied natural gas (LNG) from the spot market, following a year-long hiatus. This is in spite of an announcement on 14 June that the nation had approved a purchase framework agreement with Azerbaijan.
This development is concerning for Pakistan’s 220 million citizens, who have faced multiple long-running power cuts because of gas shortages. The nation is heavily reliant on LNG imports to fuel its power plants, and its inability to compete amid spiking LNG prices has led to significant shortages.
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No companies responded to Pakistan LNG’s attempt to purchase six shipments of LNG, and while the exact reasons for this remain unclear, the increasingly weak standing of the Pakistani rupee could be to blame. Bloomberg reported that several overseas banks refused to accept letters of credit from Pakistani banks for LNG purchases, making suppliers hesitant to offer LNG for sale.
The ongoing energy crisis has forced the nation to import Russian oil for the first time ever, which it purchased at a discount due to ongoing western sanctions imposed following Russia’s invasion of Ukraine.
Pakistan’s oil and gas market has also seen a major shakeup as Shell recently announced plans to sell its entire Pakistani arm and divest entirely from the market there.
There has been no word yet as to how, or if, Pakistan’s agreement to purchase one LNG cargo per month from Azerbaijan at below market price will be impacted by the country’s failure to acquire LNG in this tender.
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