International prices continue to play havoc on the local market
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By Asad Ullah Kamran
P
akistan’s latest bid to acquire four Liquified Natural Gas (LNG) cargoes for the month of July, one each in the first and second weeks, and two in the last week yielded an alarming response from the market. No bids were received for the first two weeks and a single bid from Qatar Energy Trading was received for the last week at the highest ever rate of $39.80/mmbtu. This grim response to the tender is the latest reminder of the hugely volatile global energy market at the moment and its potentially disastrous consequences for Pakistan which is already struggling with high inflation and energy shortfalls. The country needs to take drastic and painful decisions to keep the economy above water. Pakistan has increased its dependence on LNG drastically over the last few years for its power generation in particular. Natural gas combustion produces green-
house gases, but it also produces much less CO2 and air pollution than many of the hydrocarbons it is replacing, notably coal. Compared to other fossil fuels, natural gas consumption increased significantly during the previous 10 years, making for approximately one-third of the expansion in global energy demand. Studies also show that its usage will continue to expand substantially in the upcoming years, followed by severe divergences. Additionally gas is capable of responding both to seasonal and short-term demand fluctuations and to provide backup to the expanding use of variable renewables like wind and solar power. Because of its storage capacity, ability to be transported through pipelines or liquefied and sent by ship, and the ability of gas-fired power plants to turn on and off quickly, gas is key in helping the transition from fossil fuels to renewables.
The problem
H
owever, the price of LNG has increased by more than 1,000% over the past two years, first due to demand after the epidemic and then
