Pakistan said it is considering to sign a liquefied natural gas (LNG) purchase agreement with various countries including Russia as it seeks to secure supply and ease a crippling shortage.
The government “will go for the most favourable deal,” the Ministry of Energy said in a statement to Bloomberg News. Pakistan is mulling a government-to-government contract to import the power-plant and industrial fuel, according to the statement.
Only a handful of countries are willing to sign new LNG contracts with Russia, as most importers shun Moscow due to President Vladimir Putin’s invasion of Ukraine. India and China are buying additional spot shipments of Russian gas, with some at a hefty discount to prevailing rates.
The move comes as Pakistan is grappling with blackouts due to a fuel shortage after several other long-term suppliers were unable to deliver shipments. The government resorted to purchasing LNG from the expensive spot market to keep the lights on, racking up debt that threatens to further boost skyrocketing inflation.
Prime Minister Shehbaz Sharif — whose government came into power after leader Imran Khan was ousted last month — aims to sign a new long-term LNG contract to help reduce fuel costs. Long-term deals are much cheaper than current spot rates, and may provide some relief for the embattled government.
Asian and European liquefied natural gas spot prices are trading at a seasonal high as the war in Ukraine exacerbates an already tight market. A relatively poor nation that’s highly dependent on energy imports, Pakistan has been hit especially hard by rising fuel costs. Pakistan’s LNG import cost has increased 83% to $3.7 billion in the 10 months ended April, according to government data.