In Karachi, Pakistan's liquefied natural gas (LNG) imports are set to hit an 18-month peak in December. The surge comes as the country schedules the arrival of 11 LNG shipments, marking a significant increase compared to the past year.

Notably, Pakistan has recently engaged in spot market purchases for two LNG cargoes, marking a shift from its year-long absence in such deals.

This uptick in imports is attributed to a notable decline in international LNG prices from their previous highs. Additionally, the onset of winter, when household demand for gas rises, has prompted Pakistan's return to the spot market.

The recent spot purchases involve two LNG cargoes bought at prices slightly below an average of $16 per million British thermal units (mmBtu). Concurrently, two gas marketing companies, Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL), have procured nine cargoes at an average price of $10.67 per mmBtu from QatarEnergy LNG and Gunvor under long-term agreements.

Tahir Abbas, Head of Research at Arif Habib Limited, highlighted that these spot market purchases have propelled LNG imports to an 18-month high, with Pakistan averaging 8 to 10 cargoes per month over the past 17 months.

This resurgence in imports follows a prolonged absence from the spot market since the peak LNG price of around $40 per mmBtu in winter 2022, during which local supplies were managed through load management strategies.

The imported LNG is primarily expected to meet the heightened demand from household consumers for heating purposes, particularly in colder regions like Balochistan. However, the steep cost of imported gas has led to reluctance among many businesses to utilize it, favoring locally produced natural gas, which is depleting rapidly.

Recognizing the depletion of local gas reserves, authorities stress the necessity of embracing LNG as a reality. Pakistan's gas reserves are diminishing at an annual rate of 9%. Abbas noted that while 3,200 million cubic feet of gas per day (mmcfd) is sourced domestically, the import of 11 cargoes in December is expected to contribute around 1,100 mmcfd to the month's supply.

Despite this increase, the projected 4,300 mmcfd supply in December falls short of the estimated demand of 6,500 mmcfd. To manage the deficit, gas utilities plan to implement outages in regions with milder temperatures and lower demand sectors, like power plants and certain industries.

Ogra has updated the re-gasified LNG prices for SNGPL and SSGC, which have risen by 9.8% and 10.11% respectively compared to the previous month. These adjustments reflect the current realities of the LNG market dynamics. Additionally, differences in unaccounted for gas (UFG) contribute to the varying LNG prices for SNGPL and SSGC, emphasizing the need for strategies to reduce reliance on imported gas by encouraging local exploration for new reserves.