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Pakistan losing LNG bidding war to Europe as energy crisis deepens


Amid a spiralling energy crisis brought on by the Russian invasion of Ukraine putting pressure on global fuel reserves, Pakistan’s energy minister has admitted that the country simply cannot compete with the buying power of European countries.

According to State Minister for Petroleum Musadik Malik, Pakistan’s failure to find a bidder for liquefied natural gas (LNG) slots had forced Islamabad to shift to alternative sour­ces of energy for power generation, which would take a month or so to yield results.

“The situation is that we have carried out two rounds of tenders of three to four tenders each, but no one responded to them,” he said in reply to a journalist’s question on Saturday.

“Since supply from Russia is suspended due to the war with Ukraine, European countries are also buying gas from everywhere it’s available. As a result, LNG, which was priced at $4 two-and-a-half years ago, is no longer available for even $40. So, Russia’s war [with Ukraine] created a real crisis,” he said.

Malik was speaking a day after the country failed to find a bidder for three LNG slots and received the highest-ever rate for another slot for the last week of July, as European customers lapped up spot market quantities.

The state-run Pakistan LNG Ltd (PLL) had floated a tender on June 16 for four shipments — one each in the first and second weeks, and two in the last week, of July. However, no bidders came forward for the July 2-3, 8-9, and 25-26 delivery windows.

This was the third futile attempt by PLL to secure an LNG shipment in the first week of July. The earlier two tenders, issued on May 31 and June 7, attracted only two and one bidders, respectively, but none was technically responsive. Hence, the bids were returned unopened.

The minister told reporters point-blank: “We don’t have enough energy right now. The gas is not available and we can’t afford such expensive gas. So what we are doing is arranging alternatives. The recent increase in production and imports of coal and furnace oil is part of the same strategy,” said Malik, referring to the import of five ships worth of furnace oil within a month and a larger amount of coal to keep power plants running.

Malik expressed confidence that the upcoming monsoon would help turn the tide of the power crisis by stemming electricity usage and boosting hydropower capacity.

However, he cautioned that power shortages and load-shedding could go on for weeks, adding that the situation was only likely to improve after July 15.

Malik said the Shehbaz Sharif’s government would have to pay a “political price” for measures to combat the energy crisis, but termed them critical for saving the teetering economy that was brought to the brink of collapse by the Pakistan Tehreek-i-Insaf (PTI) government’s failure to foresee the growing energy demand. The PTI government led by cricketer-turned-politician Imran Khan fell in April to a no-confidence vote triggered by Sharif and Malik’s Pakistan Muslim League Party.

“We know what the political price of all these tough decisions is,” Malik said, adding: “Don’t you think we know that these decisions will hit our vote bank? We know it well. But what other options do we have?”

“Should we sit idle and keep watching as the country turns into Sri Lanka? The PTI government did the same. They planted the landmines for the country’s economy for their political gains. We are here to save the country, not our politics,” the state minister said.

Dawn

Asia News Network

Pakistan losing LNG bidding war to Europe as energy crisis deepens

Published : June 26, 2022

By : DAWN