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AsianOil: Pakistan set for gas, power rationing amid LNG crunch

Pakistan is having to ration natural gas supply this winter for households, businesses and industry, amid the country’s worsening energy shortages and foreign currency exchange crisis, and may have to implement rolling blackouts to conserve electricity. With global economic volatility and high gas prices here to stay for some time, the outlook for the country certainly is not good.

The South Asian country embraced natural gas a decade ago as a means of ending its reliance on what was then considered costly fuel oil imports. The high cost of those imports, and the poor state of Pakistan’s energy infrastructure, has left the country suffering perennial energy shortages over the years. Until very recently, liquefied natural gas (LNG) was considered a cheaper fuel option for gas, which is why Pakistan invested in two regasification terminals to access the world’s LNG supply. For much of the last decade, LNG prices have been cheaper on the spot market than under long-term, oil-indexed contracts, and so Pakistan chose to rely on a large decree on those spot volumes to cover its needs.

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