Key facts
- Pakistan LNG has issued a tender for an emergency LNG cargo.
- A Qatar LNG cargo was canceled due to escalating tensions in the Strait of Hormuz.
- Traffic through the Strait of Hormuz has halted.
- Pakistan has increasingly relied on spot LNG purchases due to supply disruptions.
Pakistan is once again turning to the spot liquefied natural gas (LNG) market after a cargo from Qatar was canceled due to escalating tensions and traffic disruptions in the Strait of Hormuz. The state-controlled Pakistan LNG issued a tender on Wednesday to secure a cargo for delivery between July 15-16.
Anonymous traders familiar with the matter told Bloomberg on Thursday that the cancellation stemmed from renewed hostilities that have halted traffic through the critical waterway. Pakistan, which historically relies heavily on long-term fixed deals with Qatar for its LNG supply, has encountered procurement difficulties since late February when conflict began impacting transit through the Strait of Hormuz.
This emergency tender is not the first time Pakistan has sought spot cargoes in recent months. Continued disruptions and the latest flare-up have forced the South Asian nation to repeatedly seek LNG on the spot market. Last week, Pakistan purchased its second spot LNG cargo in as many weeks, indicating a slow recovery in liquefied gas flows from the Persian Gulf.
As of Thursday, traffic through the Strait of Hormuz had ground to a halt again following two consecutive days of exchanges between the U.S. and Iran. Pakistan's significant dependence on Middle Eastern LNG previously led to a major gas supply and power crisis in March and April when no LNG vessels could transit the Strait of Hormuz. The shutdown of Qatari LNG production and exports due to the Middle East conflict has exacerbated Pakistan's energy crisis, resulting in power outages and fuel rationing.