Islamabad: The government has set a target to purchase 18 cargoes of liquefied natural gas (LNG) from November to February to meet the increasing demand for gas during winter. The relatively cheap supply of gas from Qatar will be preferred, however, in case the supply is not restored, the alternative of purchasing LNG from the global market can be adopted.
The Petroleum Division has briefed Prime Minister Shehbaz Sharif on the demand and availability of gas. During this, the arrangements for gas and import supply required to meet domestic needs during winter were discussed.
Under the proposed plan, cargoes can be purchased from the spot market if LNG supply from Qatar is not available. The spot purchase price cap is being considered at $30 per million British thermal unit (MMBTU). Given the global market prices and available supply, the cost of imported gas will be a key issue.
On the other hand, there is a risk of widening the gap between domestic gas availability in the country and the expected winter demand. According to the Petroleum Division, the total domestic gas availability in the Sui Northern and Sui Southern systems is about 1.4 billion cubic feet per day, while Punjab’s requirement in winter may reach 1 billion cubic feet per day.
If demand is not met by local production, domestic consumers may also face gas shortages. In this situation, the timely availability and price of imported LNG will affect the gas supply arrangements.
Gas demand usually increases in winter, especially when additional gas is required for domestic consumption. If imported cargoes are not available on time or their purchase is expensive, the government may have to make decisions regarding the distribution of gas in different sectors and the use of available resources.
The gas situation in the coming months will depend on the supply from Qatar, cargoes available in the spot market and import costs.
