Pakistan Revises Energy Strategy, Secures Emergency LNG Amid Uncertainty in Qatar Exports
While the ongoing crisis in the Middle East has unsettled global oil markets, Pakistan has shifted its strategy by entering the spot liquefied natural gas (LNG) market. The country is now paying above Asia’s spot LNG prices due to strained exports from Qatar and increasing supply uncertainties. On Monday, Pakistan LNG issued an urgent request for an LNG cargo from BP Plc, offering $16.74 per million British thermal units, while Asia’s spot prices were in the $15 range.
The urgency in Pakistan’s procurement comes as tensions in the Strait of Hormuz, a crucial route for about one-fifth of global LNG flows, have disrupted shipments. Recent attacks on vessels in the region have halted Qatari LNG exports, exacerbating supply issues for Pakistan, which relies heavily on Qatari imports. The situation has forced the country to depend more on spot market purchases, a shift from its previous strategy of waiting for cheaper shipments to resume.
Earlier disruptions and high-cost LNG
Pakistan’s latest LNG purchase follows a series of supply interruptions and rising import costs. A previously canceled shipment from Qatar, due to escalating tensions, compelled Pakistan LNG Ltd. to seek emergency spot tenders. In one instance, the country purchased LNG at $19.1337 per million British thermal units from BP Plc, marking the highest price paid since 2022. This purchase was only the second time in two years that Pakistan re-entered the spot LNG market, having first done so in April.
Despite its heavy reliance on Qatar for LNG, ongoing disruptions have significantly reduced inbound shipments. Shipping data indicates a sharp decline in LNG arrivals compared to previous years, putting additional strain on Pakistan’s energy system. The Strait of Hormuz remains vital for global energy flows, but instability in the region has repeatedly disrupted shipping routes, leading to uncertainty in energy availability.
Inflation rising alongside energy costs
The rising costs of energy imports have contributed to broader economic challenges in Pakistan. The consumer price index rose 11.7% year-on-year in May, up from 10.9% in April, reaching a two-year high. This increase has been partly driven by higher energy import costs. Public sector employee groups, including the All Government Employees Grand Alliance (AGEGA) Punjab, are calling for relief measures ahead of the Federal Budget 2026-27, citing declining purchasing power.
The ongoing tensions in the Middle East continue to impact global energy markets, leading to repeated disruptions in LNG and oil supplies. For Pakistan, this situation has resulted in irregular shipments, a greater reliance on costly spot cargoes, and sustained pressure on both energy availability and inflation.
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