Pakistan buys costliest July spot LNG cargo amid tightening global supply

Pakistan has purchased a fourth spot liquefied natural gas (LNG) cargo for July delivery at USD 20.6999/MMBtu, the highest price it has paid for a spot cargo this month, underscoring rising import costs as global supply tightens.

State-owned Pakistan LNG Ltd. (PLL) accepted the lowest bid from PetroChina International for delivery on July 21-22, according to the company's bid evaluation report released Wednesday. The PLL board approved the award after PetroChina emerged as the lowest evaluated bidder, sources said.

PLL received only two bids for the tender. PetroChina International offered USD 20.6999/MMBtu, while BP Singapore submitted a higher bid of USD 21.3737/MMBtu.

The purchase marks Pakistan's fourth spot LNG cargo for July delivery and reflects a steady increase in prices throughout the month.

Earlier, Pakistan secured three July spot cargoes at USD 16.7372/MMBtu, USD 17.37/MMBtu and USD 18.2345/MMBtu. The latest cargo is about 24% more expensive than the first spot purchase made for July.

The rise in spot prices comes as global LNG markets remain under pressure from supply disruptions and heightened geopolitical uncertainty, forcing import-dependent buyers such as Pakistan to pay significantly more to secure cargoes.

The latest purchase also highlights the widening cost gap between spot procurement and long-term supply contracts, said Farhan Mehmood, head of research at Sherman Securities.

Under Pakistan's long-term LNG supply contract with Qatar, pricing is linked to a 13.7% Brent slope. Based on an average Brent crude price of about USD 100 per barrel over three months, the indicative LNG price works out to about USD 13.7/MMBtu.

At USD 20.6999/MMBtu, the latest spot cargo is nearly USD 7/MMBtu more expensive than the indicative Qatari contract price, representing a premium of about 51%, Mehmood said.

The higher spot procurement costs are expected to increase Pakistan's LNG import bill and add pressure to the country's energy import payments as it continues to rely on the spot market to bridge supply shortfalls.