Pakistan Rejects a $27 LNG Cargo and Faces Longer Rolling Blackouts
The only bid its emergency tender drew was priced at nearly three times the pre-war level
Pakistan may have to extend rolling blackouts after refusing to pay close to three times the pre-war price for a cargo of liquefied natural gas, the only offer its latest emergency tender attracted.
The single cargo was offered at $27 per million British thermal units. A senior executive at Pakistan LNG Limited said the international price was around $23.18 per mmBtu against a bid received of $26.969, and that the price was considered too high, so a fresh tender was issued. The new tender seeks the equivalent of 140,000 cubic metres of natural gas.
The rejected bid sits well above what the country has recently been forced to pay. Pakistan bought an emergency cargo in July at $20.70 per mmBtu, the highest it had paid since 2022, and was soon topped by another at $21.88. The direction of travel since then has been unfavourable. Power generation costs rose 38% in July year on year, driven by the LNG price jump and by the country's forced move onto the spot market after losing supply under long-term deals with its principal seller.
That seller is QatarEnergy, which has extended force majeure on its LNG exports through the blockade of the Strait of Hormuz, Qatar's only outlet for its gas. A cargo Pakistan expected from Qatar last month never arrived, sending it back to the spot market. The wider cancellation programme is set out in the extended force majeure.
The consequence on the ground is measured in hours without power. Blackouts of up to 24 hours have been reported in parts of Karachi, and 12 hours in other parts of the city. For a country that built a large share of its generating fleet around imported gas, a spot market priced at wartime levels leaves few options: buy at a price the grid cannot recover from consumers, or ration.
For shipping, the case is a reminder that the Hormuz disruption does not stop at the tanker. A cancelled cargo removes a voyage, and it also removes the terminal slot, the regasification throughput and the freight that would have moved behind it. The LNG carrier fleet serving the Gulf is specialised and thinly substitutable, which is why buyers at the end of long chains, rather than the exporters, are absorbing most of the shock.
