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Pakistan Explores Long-Term LNG Agreement Amid Decline in Domestic Gas Supply

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Pakistan Considers Long-Term LNG Deal to Address Domestic Gas Shortfall

Pakistan is exploring the possibility of signing another long-term liquefied natural gas (LNG) purchase agreement to compensate for an anticipated decline in domestic fuel production. The country is seeking a contract for one cargo per month, contingent upon the prices offered by suppliers. Pakistan LNG Ltd., the state-owned firm responsible for importing LNG, is evaluating potential deals. Additionally, Pakistan's energy minister, Muhammad Ali, mentioned that the country is looking to secure two LNG cargoes for delivery in January through the spot market.

Gas Shortages and the Need for LNG

Pakistan has been grappling with gas shortages since the surge in global LNG prices following Russia's invasion of Ukraine. With declining domestic gas reserves, Pakistan has increasingly relied on LNG to meet its energy needs, particularly during peak demand in the winter months. To address the expected gas shortfall this winter, Pakistan recently purchased two LNG shipments on the spot market, marking the first such deals in over a year.

Gas Supply Outlook

Pakistan's total gas supply is 3.6 billion cubic feet per day, while demand is projected to reach 4.6 billion cubic feet per day this winter. Imported LNG accounts for approximately 29% of the total supply, with the remainder being sourced domestically. The energy minister expects the gas supply situation this winter to be on par with or slightly better than last year. In conclusion, Pakistan's consideration of a long-term LNG deal and its reliance on LNG imports highlight the country's efforts to address the decline in domestic gas production and mitigate gas shortages. The procurement of LNG through both long-term agreements and spot market purchases demonstrates Pakistan's commitment to ensuring a stable and sufficient energy supply for its industries and households.

Implications of Pakistan's Long-Term LNG Deal Consideration for New Businesses

Pakistan's potential long-term LNG deal could have significant implications for new businesses, particularly in the energy sector. As the country grapples with domestic gas shortages, the demand for LNG is likely to increase. This situation presents a unique opportunity for new businesses involved in LNG trading or related services to capitalize on this growing demand.

Opportunities Amid Gas Shortages

The ongoing gas shortages in Pakistan, exacerbated by the surge in global LNG prices, have led to a heightened reliance on LNG. New businesses that can provide innovative solutions or services to address these shortages could find a ripe market in Pakistan.

Impact of LNG Supply Dynamics

The dynamics of LNG supply, including long-term agreements and spot market purchases, could also influence the strategies of new businesses. Understanding these dynamics could help businesses better navigate the market and identify potential opportunities. In conclusion, Pakistan's consideration of a long-term LNG deal and its increased reliance on LNG imports underscore the potential opportunities for new businesses in the energy sector. However, these businesses must also be mindful of the challenges posed by fluctuating global LNG prices and the country's domestic gas production issues.
Story First Published at: https://financialpost.com/pmn/business-pmn/pakistan-considers-long-term-lng-deal-as-domestic-gas-drops
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