Pakistan is tightening its energy belt as the state-run Pakistan LNG Limited (PLL) rejected the two lowest evaluated bids for urgent liquefied natural gas (LNG) imports, leaving the country to grapple with a deepening power shortfall as summer temperatures climb.
The decision to turn down offers from BP Singapore and TotalEnergies comes at a critical juncture for the national grid. With the Power Division urgently seeking 400 million mmcfd of LNG to stabilize electricity generation, the rejection of the most competitive pricing suggests a procurement process fraught with volatility and stringent internal criteria.
The tenders, floated on a mere 36-hour notice, were intended to secure two cargoes for delivery in mid-to-late May. While the bids from the global energy giants were the lowest on paper, PLL’s refusal to accept them underscores the precarious nature of Pakistan’s current energy security strategy, which has been hampered by geopolitical disruptions and administrative inertia.
The Bidding Breakdown: Costs and Rejections
PLL received seven total bids for the two urgent slots. For the first delivery window (May 12-14), BP Singapore submitted the lowest bid at $17.28 per million British thermal units (mmBtu), undercutting PetroChina ($17.69) and Vitol Bahrain ($17.84). Despite being the most cost-effective option, the BP bid was rejected.
A similar pattern emerged for the second delivery window (May 24-26). TotalEnergies offered the lowest price at $16.98 per mmBtu, followed by SOCAR Trading at $17.21 and PetroChina International at $17.49. OQ Trading submitted the highest bid at $18.58. Once again, the lowest evaluator—TotalEnergies—was turned away.
| Delivery Window | Lowest Bidder | Price (per mmBtu) | Status |
|---|---|---|---|
| May 12-14 | BP Singapore | $17.28 | Rejected |
| May 24-26 | TotalEnergies | $16.98 | Rejected |
| Previous Cycle | Unspecified | $18.40 | Accepted |
Geopolitical Friction in the Gulf
The current supply crisis is rooted in significant instability within the Gulf region. Pakistan has long relied on Qatar as its primary long-term LNG supplier, but that pipeline has effectively frozen. Reports indicate that Qatar has been reluctant to dispatch cargoes due to security risks and disruptions in the Strait of Hormuz.
The situation escalated in March, with reports of regional conflict and attacks on fuel installations in neighboring Gulf states leading Qatar to declare force majeure on its global contracts, including those with Pakistan. This legal declaration essentially suspended Qatar’s obligation to deliver shipments, forcing Pakistan to turn to the volatile spot market.
The urgency of the May tenders was driven by hopes that the “Gulf crisis” would ease and international supply routes would reopen. However, the continued instability has left the Petroleum Division scrambling to fill the gap left by the missing Qatari shipments, three of which were reportedly forced to return from the waterway due to security concerns.
Domestic Fallout: Price Hikes and Power Cuts
The shortage of cheap, long-term LNG has cascaded into higher costs for the Pakistani consumer. In April, the Oil and Gas Regulatory Authority (Ogra) notified a sharp 19-22% increase in the price of regasified liquefied natural gas (RLNG), pushing sales prices to between $12.50 and $14 per mmBtu for distribution by the two Sui gas companies.
Ogra attributed this spike to a combination of lower import volumes—which drove up terminal charges—and a slight rise in the cost of the few cargoes that did arrive. In March, the “basket price” for RLNG was based on only two cargoes, a stark drop from the eight cargoes imported monthly in February.
For the average citizen, this translates to “loadshedding”—scheduled power outages—occurring even before the peak of the summer heat. The Power Division’s request for 400 million mmcfd of LNG is a direct attempt to mitigate these outages, yet the failure to secure the lowest spot-market bids complicates that effort.
Administrative Scrutiny of Pakistan LNG Limited
Beyond the geopolitical hurdles, PLL is facing internal criticism over its operational efficacy. Despite being established nearly a decade ago to streamline LNG imports, the entity has struggled to execute its core mandate. Records show that PLL failed to import any cargo last month and had gone nearly a year without a shipment prior to a single import a few months ago at $7.65 per mmBtu.
This operational paralysis stands in contrast to the financial rewards enjoyed by the organization’s leadership. Critics have pointed to the “hefty remuneration” and perks provided to PLL executives and its board of directors, arguing that high compensation has not translated into energy security. A tender floated in December 2023 for January 2024 delivery was also cancelled, further illustrating a pattern of inconsistency in procurement.
Disclaimer: This report involves energy market pricing and regulatory data; it is provided for informational purposes and does not constitute financial or investment advice.
The next critical checkpoint for Pakistan’s energy stability will be the Petroleum Division’s response to the rejected bids and whether they can secure alternative shipments before the May 12-14 window closes. Officials are expected to provide an update on the procurement of the 400 million mmcfd requirement in the coming days.
Do you think the government should prioritize price over speed in the current energy crisis? Share your thoughts in the comments below.
