MUSCAT: A leading energy firm in Pakistan, Pakistan GasPort, is considering Oman as a potential source for a spot liquefied natural gas (LNG) purchase. The company's Chairman, Iqbal Ahmed, revealed that they are in the process of acquiring a spot LNG cargo for delivery in November. This move marks Pakistan's first spot LNG deal since June 2022 and signals a growing interest in diversifying its LNG supplier base.
To secure the best deal, Pakistan Gasport is evaluating offers from LNG sellers in Oman, the US, and the UAE. Ahmed, in an interview with Reuters, expressed his satisfaction with the interest shown by these countries, stating, "We've got different countries which have offered us different options. We are extremely encouraged by what we've heard today."
This demonstrates the company's commitment to exploring multiple avenues to ensure a reliable and cost-effective supply of LNG.
This potential spot LNG purchase is significant for Pakistan as it would be the first cargo shipped in by a private sector company, highlighting the country's increasing involvement in the global LNG market. Moreover, Pakistan's decision to pursue spot purchases reflects a strategic shift, driven by the expectation of declining LNG prices in the coming years. Spot purchases enable flexibility and the ability to take advantage of market fluctuations, making them an attractive option for energy companies.
Ahmed emphasized that Pakistan Gasport is seeking a competitive price for the LNG cargo. He stated that a discount of 12% to the Brent slope, which equates to approximately $11 per million British thermal units (mmbtu), would be the "price to beat" for a cargo to Pakistan. This rate represents a one-sixth discount to the current average Asian LNG prices of $13 per mmbtu. Ahmed further explained, "If the government or anybody else can bring LNG at a price of 12% of Brent or lower, there is a market. The minute you cross that barrier, there is resentment," he added.
Pakistan Gasport is the owner of the largest LNG import and regasification terminal in Pakistan. It owns and operates the 750 million standard cubic feet per day (mmscfd) LNG import terminal at Mazhar Point, Port Qasim in Karachi. However, in the past, the responsibility of LNG imports has primarily rested with Pakistan LNG, a government-owned company. The last spot cargo purchase made by Pakistan LNG was in June 2022 from PetroChina.
In 2021, Pakistan imported goods worth $346 million from Oman. The primary items included petroleum gas ($94.5 million), non-retail pure cotton yarn ($41.9 million), and refined petroleum ($41.7 million). Over the past 26 years, Oman's exports to Pakistan have witnessed steady growth, with an average annual increase of 23%. This growth trajectory can be observed from the export value of $1.58 million in 1995, which has risen to $346 million in 2021.
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