Key facts
- Pakistan rejected an LNG cargo offer from BP priced at $26.97 per MMBtu.
- The rejected price was significantly higher than the international LNG market rate of approximately $23.18 per MMBtu.
- Pakistan's power generation costs increased by 38% in July due to high LNG prices.
- Supply disruptions from Qatar, linked to the Strait of Hormuz blockade, have impacted Pakistan.
- The country is facing potential extended rolling blackouts.
Pakistan is at risk of extending rolling blackouts after rejecting a liquefied natural gas (LNG) cargo offered by BP at a price of $26.97 per million British thermal units (MMBtu). This price was deemed too high, especially compared to the international LNG price of around $23.18 per MMBtu and previous purchases made by Pakistan.
The country has issued a new tender seeking 140,000 cubic meters of natural gas. The rejected offer from BP was significantly higher than the $20.70 per MMBtu Pakistan paid for an emergency cargo in July, which was itself a record high for the country since 2022.
These high spot market prices and supply issues have contributed to a 38% surge in Pakistan's power generation costs in July. The situation has been exacerbated by the non-arrival of an expected cargo from Qatar, which has extended force majeure on its LNG exports due to the ongoing blockade of the Strait of Hormuz, a critical shipping route.
The disruption in the Strait of Hormuz has forced Pakistan to implement rolling blackouts, with some areas experiencing up to 24 hours without power.