Petroleum minister says country unlikely to buy spot LNG

KARACHI: Pakistan is unlikely to buy liquefied natural gas (LNG) cargoes on the spot market until at least the beginning of winter in November due to oversupply and high prices, the country’s petroleum minister told Reuters.

Extreme temperatures across Asia have pushed countries to seek more cargoes of LNG to address higher power demand, driving spot prices to their highest since mid-December. Asia spot LNG last traded at $12.00 per million British thermal units (mmBtu) on Friday.

However, LNG demand in the second largest south Asian LNG buyer was “subordinate to supplies”, the minister told Reuters, despite heatwaves baking the country of 300 million people with temperatures surging to a near-record.

“The question of getting more LNG when we can’t sell the amount of LNG that we already are obtaining from our long-term contracts, it does not apply,” Musadik Masood Malik, Pakistan’s petroleum minister, said in an interview.

Annual power use in Pakistan, which gets over a third of its electricity from natural gas, is expected to fall consecutively for the first time in 16 years, due to higher tariffs curbing household consumption.Poor and middle income households are still feeling the impact of the International Monetary Fund’s (IMF) bailout of Pakistan last year, which contributed to higher retail prices. A series of power tariff hikes over 12 months was a key part of the IMF programme which ended in April.Industrial demand has also remained tepid due to a cloudy economic outlook.