Pakistan Rejects LNG at Three Times Pre-War Prices, Extending Nightly Outages

Pakistan has slipped back into rolling power cuts after state-owned Pakistan LNG Limited turned down the only offer it received in an emergency tender for a September cargo. BP Singapore was the sole technically qualified bidder and asked 26.969 dollars per million British thermal units for a shipment of 140,000 cubic metres due at Port Qasim in Karachi between September 4 and September 8. Pakistan LNG judged the price far above the international benchmark of roughly 23.18 dollars and cancelled the award, leaving the grid short of the fuel its gas-fired plants need during evening peak hours.

The decision matters because regasified LNG sits at the heart of Pakistan's evening supply. Solar output collapses after sunset, and gas-fired units in Punjab are the machines that normally close the gap. Without a replacement cargo, the government has little choice but to keep managing demand at night. Officials said the missing contracted volumes had left plants with a combined capacity of around 5,000 megawatts unable to run, and the Power Division put the loss of available generation at about 4,000 megawatts at the end of August.

Fighting between the United States and Iran broke out at the end of February 2026 and traffic through the Strait of Hormuz has been throttled ever since. QatarEnergy halted LNG production on March 2 after strikes hit energy facilities in Qatar and formally declared force majeure to its buyers on March 4. Qatar supplies close to 90 percent of Pakistan's LNG, and together with the United Arab Emirates accounts for almost all of the country's imports, so the notice removed the backbone of Pakistani gas procurement overnight.

The damage then deepened. Missile attacks on the Ras Laffan complex on March 18 and 19 destroyed two production trains with a combined capacity of 12.8 million tonnes per year, equal to about 17 percent of Qatari export capacity. QatarEnergy has said repairs will take between three and five years and cost it roughly 20 billion dollars in annual revenue. Over the six months since the war began, Qatar has managed to ship only 18 cargoes against 509 in the same period a year earlier. Shipping through the strait remains thin, with vessel tracking data showing single-digit to low double-digit transits on recent days.

Pakistan entered the crisis with almost no cushion. The country imports the large majority of its petroleum needs, holds strategic fuel reserves covering only about 10 to 14 days of normal consumption, and relies on LNG for close to a quarter of its electricity. There is no pipeline alternative of any scale and no domestic gas field able to replace the lost volumes.

The first serious break came in April. Pakistan went more than a month without a single LNG delivery, with several cargoes stranded in the Persian Gulf. LNG-fired plants with about 6,000 megawatts of capacity were producing roughly 500 megawatts, while hydropower fell to around 1,600 megawatts, about half the level of April 2025. Consumers faced outages of up to five hours on April 13 and 14 and around seven hours on April 15 and 16 before the government trimmed load management to two or two and a half hours.

Supply was patched up on April 30, when the carrier Seapeak Magellan berthed at the Pakistan GasPort terminal with a cargo arranged by TotalEnergies. Load management ended the following day, helped by hydropower recovering to about 6,000 megawatts. The relief was expensive and temporary. Through the summer Pakistan bought repeatedly on the spot market, paying 20.70 dollars per million British thermal units for an emergency July cargo and then 21.88 dollars for another, the highest levels since 2022. Power generation costs rose 38 percent year on year in July. The petroleum ministry has put the fuel import bill at about 1.3 billion dollars for March to July 2026 and says a single LNG cargo that used to cost 30 to 35 million dollars now runs closer to 75 million dollars.

In August QatarEnergy told Pakistani buyers in the last week of the month that cargo cancellations would continue into October, extending force majeure that had already been rolled forward several times. Unannounced outages spread across the country, and on August 31 Power Minister Awais Leghari and Petroleum Minister Ali Pervaiz Malik apologised publicly at a joint press conference, blaming the war and the closure of the strait and asking the public to absorb a few more difficult days. The prime minister had instructed that tariffs must not rise to cover the cost.

The failed tender followed immediately. Pakistan LNG issued it on August 30 for delivery on a delivered ex-ship basis at the Pakistan GasPort Consortium terminal at Port Qasim. Bids were due at 14:00 on September 1, technical offers were opened at 14:30 and commercial offers from compliant bidders at 15:30, with offers valid until 22:00 the same evening. All times are Pakistan Standard Time. Only BP Singapore qualified, and the evaluation report published the same day recorded the price as unacceptable.

Pakistan LNG re-advertised on September 2 for a single cargo of the same size at Port Qasim, this time for a delivery window running from September 8 to September 12. Bids on that replacement tender are being opened on September 4. Whether the country avoids further evening load shedding now depends on that result and on whether any seller is willing to move below the level Islamabad has already refused.

The wider market gives little reason for comfort. QatarEnergy has extended cancellations for Italian buyer Edison into early November, and analysts expect the global balance to stay tight until new export capacity in the United States, Canada, Australia and Nigeria arrives, possibly not before 2028. For Pakistan the episode has hardened an argument that was already gaining ground, namely that battery storage paired with the country's fast-growing solar fleet is the cheapest way to cover the evening peak and the only route out of a dependence that has now produced two price shocks in four years.