Pakistan Launches Third Attempt to Secure September LNG Cargo Amid Rising Prices
Pakistan LNG Limited is issuing a new tender for a September spot LNG cargo after rejecting two earlier offers, reflecting the dilemma of higher fuel costs versus supply risk. The move is likely to increase electricity generation costs for the power sector.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Higher LNG prices raise electricity generation costs, negatively affecting the power sector; buy bias is not advised for related tickers.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- PowerNegatively affected
- Oil & GasNegatively affected
Companies
Mentions in This Briefing
Sectors: Power, Oil & Gas — Negative · Do not buy. PSX tickers: OGDC, PPL, MARI, PSO, SNGP, ATRL. Higher LNG prices raise electricity generation costs, negatively affecting the power sector; buy bias is not advised for related tickers.
Full Story
Open on ProPakistani## Background
Pakistan LNG Limited (PLL) has announced a third bid solicitation for a spot LNG cargo scheduled for delivery between 12–16 September. The tender seeks international suppliers and traders to provide approximately 140,000 cubic metres of LNG.
## Previous Rejections
On 4 September, PLL rejected a BP Singapore offer priced at $26.7128 per MMBtu for delivery 8–12 September. BP had also submitted a higher bid of $26.969 per MMBtu for the 4–8 September window, both of which were declined. PetroChina’s quote of $26.98 per MMBtu was also turned down.
## Market Context
Spot LNG prices have surged recently: a cargo delivered on 27 July cost $21.88 per MMBtu, while earlier July cargoes ranged from $18.23 to $20.70 per MMBtu. The September BP offer was about 22 % higher than the July 27 price and 46 % above the July 15‑16 price.
## Impact on Power Generation
Higher LNG prices translate directly into higher electricity costs. In July, power plants using RLNG generated 1,629 GWh (10.78 % of total generation) at an average cost of Rs47.38 per unit, up from Rs35.5 per unit in June. The total cost for RLNG‑powered generation reached roughly Rs77.2 billion.
## Geopolitical Factors
The Strait of Hormuz remains a critical shipping route for global energy supplies. Heightened tensions and shipping risks in the region add uncertainty to LNG procurement and could further drive up prices.
## Conclusion
Pakistan’s repeated rejections of spot LNG offers highlight the trade‑off between securing supply and controlling generation costs. The decision to issue a new tender suggests a continued search for a price‑competitive cargo, but the prevailing market conditions point to a likely increase in power sector expenses.