ISLAMABAD: Minister for energy Hammad Azhar said on Sunday Pakistan was “well stocked” on furnace oil (FO) in case of more cancelations of cargoes by Pakistan LNG’s term suppliers.
Pakistan imports more than half of its LNG through long-term contracts, which buffers it somewhat from spot price volatility. In recent months, there have been a spate of cancelations of cargoes.
The country with a population of over 200 million has struggled with energy shortages and rising power prices, with electricity still not available to 50 million people in the country who need it, according to a 2018 World Bank report.
The South Asian country has become an emerging buyer in the international LNG market over the last few years, with an increasing gap between demand and supply of gas.
“The country is well stocked on FO in case of further LNG defaults,” Azhar said on Twitter. “The surplus at some refineries is going to IPPs as FO consumption is already above 6000 tons/day. Meanwhile a new refinery policy is being finalized to shift refineries away from production of FO.”
Earlier, Azhar said Pakistan’s gas shortfall each winter was due to depleting natural gas reserves.
“Imported LNG is too expensive to plug this shortfall. In any case the suppliers that defaulted on their cargoes this year were all long term contracts inked in 2017.”
The power sector is Pakistan’s largest natural gas consumer, followed by residential consumption and the fertilizer industry.
Gas shortfall is expected to remain around 951 mmcfd in January 2022 and around 600 mmcfd in February, as per different estimates.
