Pakistan faces tough decisions in the LNG crisis

Karachi: The continuous disruption in the Strait of Hormuz has put Pakistan’s LNG supply under severe pressure. According to the head of Pakistan Gas Port, in the current situation, the country is having to limit the use of available LNG and gas.

Regional tensions have affected one of the world’s most important energy routes. As a result, LNG shipments from the Gulf have decreased. This situation is more important for Pakistan because the country depends on imported LNG to meet its energy needs.

Iqbal Z. Ahmed, chief executive of Pakistan Gas Port, said that the disruption in the Strait of Hormuz has limited the availability of LNG. According to him, in the current situation, it has become necessary to strike a balance between gas demand and available supply.

The number of commercial ships passing through the Strait of Hormuz has been much lower than usual in recent days. According to Reuters, only four commodity ships passed through the route on September 15. Before the war, about 125 commercial ships passed through it daily.

The situation is particularly sensitive for LNG shipments. Only seven ships passed through the Strait of Hormuz on September 10. These included three LNG ships bound for Qatar. One of these ships delivered LNG cargo to Pakistan.

Along with the supply crunch, global prices have also compounded the problem for Pakistan. The spot price of LNG in Asia has recently risen from around $10 per MMBtu to around $30. This increase has significantly increased the cost of buying imported gas.

For Pakistan, the impact of this crisis cannot be limited to the gas sector. The reduction in LNG availability could also increase pressure on power plants, industries and other large consumers.

The biggest challenge for the government will be to distribute the available gas on a priority basis. It is also important to meet the needs of domestic consumers while maintaining gas supply for power generation and essential industrial activities.

The current situation also exposes a fundamental weakness in Pakistan’s energy system. During a global crisis, both the price and availability of imported LNG can be uncertain. Therefore, simply buying additional cargoes is not a long-term solution.

The regional crisis has also increased the importance of alternative sources of LNG. Pakistan will have to find supply routes from different countries in the future, as well as increase investment in local gas, renewable energy and other sources.

In the global market, buyers in Asia and Europe are currently competing for limited LNG cargoes. Major buyers, including China and India, have also reduced their demand for gas due to high prices.

The immediate priority for Pakistan is to secure existing supplies and better manage gas use. However, if the disruption in the Strait of Hormuz is prolonged, the government may have to make more difficult decisions between energy demand, import costs and power generation.

The current crisis is also a reminder that Pakistan’s energy security cannot be ensured by importing more gas alone. A lasting solution will require diversifying energy sources and increasing domestic production.