By Muhammad Mudassar ISLAMABAD, June 02 (INP-WealthPK): Due to fluctuating LNG prices in the international market, Pakistan is experiencing difficulties in the spot purchase of the commodity. The conflict between Russia and Ukraine is a major factor affecting LNG prices in the international market. In May, Pakistan purchased four additional LNG cargos to meet its domestic demand. The additional LNG cargos were considerably more expensive than long-term contracts. Pakistan has two long-term contracts with Qatar, one involving six cargoes at 13.37% of brent, and two cargoes at 10.2% of brent. The average cost of six long-term contract cargos of PSO-Qatar stood at $5.78 per metric million British thermal units (mmbtu) in December 2020. As per the Oil and Gas Regulatory Authority (OGRA) notification, a total of 12 cargoes were due in May, with eight cargoes coming from two long-term PSO contracts with Qatar and four coming to Pakistan LNG Limited (PLL) under long-term contracts. The price of LNG under long-term contracts between Pakistan State Oil (PSO) and Qatar for eight cargos in May averaged $13.15 per mmbtu, while the average delivered ex-ship (DES) price for four-spot cargos by PLL came in at $25.95 per mmbtu, showing a difference of more than 97%. Because of the sharp decline in natural gas reserves, Pakistan is becoming increasingly dependent on imported LNG. However, if RLNG is bought at a higher price, inflation will rise, putting a strain on the nation's budget. In just six years, Pakistan has become the 9th largest LNG importer in the world. Global gas prices have risen due to shortages in Europe, pushing Asian LNG prices to a record high. That’s forced Pakistan to pay the most ever for spot shipments to top up supply under long-term contracts, or even forgo them altogether. Volatile LNG prices lead to an increase in electricity prices, and also a surge in the input price of other industries. In a recent statement, the CNG Association expressed hope for resumption of deliveries to keep the economy afloat. “The government has taken a bold step and bought LNG from the international market at this difficult time to reduce gas shortages and ensure supply to power plants and other consumers,” All Pakistan CNG Association Chairman Ghiyas Paracha stated. Winter is the peak season for gas demand as people in northern areas and Balochistan province uses gas geysers and heaters to stay warm. Pakistan should secure more long-term contracts in order to meet the entire demand for LNG. LNG is one of the major contributors to electricity generation. The core contributors to electricity generation during March 2022 were coal (25%), RLNG (19%), hydel (16%), nuclear (15%), furnace oil (11%), gas (10%), wind (3%), bagasse (1%), and solar (1%).