AHMEDABAD: Pakistan and Bangladesh are rationing gas and buyers across South Asia are seeking alternative fuels after spot liquefied natural gas (LNG) prices surged to record highs, government and industry officials told Reuters.

Spot LNG prices LNG-AS have nearly tripled since early November as freezing temperatures across North Asia boosted demand and depleted inventories. Since July, prices are up a dizzying 1,000 per cent.

Gas-fired power plants and industries across the region are scrimping on gas, with the scramble for other fuels driving up demand for liquefied petroleum gas (LPG) and residue oil.

In Pakistan, which is more reliant on spot LNG imports for its winter needs, gas use for industry is being limited to certain hours and industry executives have warned the situation has become critical.

A recent power blackout was partly caused by a gas shortage after buyers who snapped up record-cheap LNG earlier in the year baulked at paying up during the recent price surge.

“The current gas crisis being faced by the industry includes disconnection of gas supply to industries as well as low gas pressure,” said Saleem Uz Zaman, president of the Trade and Industry Association of Karachi.

Sui Southern Gas Company Ltd, the gas distributor for Sindh and Balochistan, said in a letter to industry associations that it faces an “emergency situation” and pegged the daily supply gap at about 200 million cubic feet.

Soaring prices have led to cancelled orders from state-owned buyers Indian Oil Corp, Pakistan LNG and Bangladesh’s Rupantarita Prakritik Gas Co.Tile makers from Morbi, the hub of the ceramic industry in India, have sought permission from local authorities to switch to alternative fuels such as LPG, Morbi Ceramics Associations wrote in a letter to officials on Jan 9.

In Bangladesh, the government has cut gas supplies to power plants due to lower electricity demand during winter, while maintaining steady gas flows to industries, a senior official at the state-run Petrobangla said.

Import tenders cancelled

“LNG prices have gone crazy... For the last few tenders, we didn’t get any response from suppliers,” said Rafiqul Islam, general manager at Rupantarita Prakritik.

“We are continuing our efforts to buy from the spot market ... But it is very unlikely to get competitive prices in this highly volatile market,” he said.

Reliance Industries, operator of the biggest refining complex in western India, has almost halted LNG imports and switched to cheaper alternatives, industry sources said. Reliance did not respond to a Reuters request for comment.

South Asia has been a critical growth market for LNG, with imports by India, Pakistan and Bangladesh climbing 8pc in 2020 to a record 50.48 billion cubic metres (BCM) despite the coronavirus pandemic’s hammering of the region’s economies, according to Refinitiv ship-tracking data.

That growth rate was second only to China’s 11.5pc expansion in LNG imports in 2020.

Alternatives sought

“Fuel is a significant input cost for us, accounting for 30pc of the total production cost,” it said.

India’s fuel oil consumption has also increased after gas prices spiked.

“Whatever fuel oil we are producing is getting consumed here. We have not been able to build inventory of furnace oil,” said an official at refiner Bharat Petroleum Corp who declined to be named.

“Situation is completely different from what it was after Covid-19 outbreak... No one can afford LNG at this rate.”

India could see 2 or 3 cargoes less in February and March than it normally would, said E.S. Rangana­than, head of marketing at India’s largest gas transmitter GAIL (India) Ltd.

He however expects the impact on supplies to customers to be minimal. GAIL is due to receive 32 cargoes this year under its long term deal with Gazprom compared to 24 last year, he added.

Published in Dawn, January 16th, 2021

Opinion

Educating merged districts
12 Apr 2021

Educating merged districts

Students should not have to go through month-long sit-ins and hunger strikes to ask for scholarships from the government.
Greater visibility
12 Apr 2021

Greater visibility

It is not surprising that the custodians of patriarchy are fearful.
Rethinking executions
11 Apr 2021

Rethinking executions

One convict’s fight to escape the gallows exposes the deep flaws in our criminal justice system.

Editorial

12 Apr 2021

Pakistan-India peace

AS the Pakistan-India peace process — or at least the shaky beginnings of the latest round — moves forward,...
12 Apr 2021

Child abuse

IN its annual report, the NGO Sahil found that there has been a 4pc increase in documented cases of major crimes...
12 Apr 2021

New tax chief’s task

THE FBR got a new chairman on Friday. Asim Ahmed, a senior IRS officer who was serving as the Board’s IT member...
11 Apr 2021

Dissension within PTI

WITH the dust from the PDM’s implosion still not fully settled, the PTI is now faced with growing dissension from...
11 Apr 2021

Power to arrest

A SUPREME Court verdict announced on Thursday spelled out what might be considered a self-evident truth in any...
11 Apr 2021

Unequal vaccine distribution

IT is in times of crisis that we often see the best — or worst — of humanity. In this regard, the pandemic has...