Developing Asian nations are increasingly struggling with the high cost of liquefied natural gas (LNG), with Bangladesh and Pakistan particularly hard hit. Bangladesh recently paid $28.03 per million British thermal units for a cargo from BP Plc, its most expensive purchase since 2022, totaling nearly $100 million for that single shipment. This comes as the country grapples with rolling blackouts, highlighting its urgent need for fuel despite the exorbitant prices.
The global LNG market has seen prices surge due to intensified hostilities between the US and Iran, which have disrupted flows through the Strait of Hormuz. Asian spot LNG prices climbed to $25.908 per million British thermal units, the highest since December 2022, more than doubling from pre-war levels. This price jump is forcing countries like Pakistan to reconsider purchases, with the nation having retendered after deeming bids of almost $27 per million British thermal units too costly earlier in September.
The Middle East conflict has crippled approximately a fifth of global LNG supplies, with Qatar's major liquefaction plants at Ras Laffan significantly damaged and operating at reduced capacity. QatarEnergy has extended its force majeure on LNG shipments to countries including Pakistan and Bangladesh into early November, exacerbating supply shortages. This situation has led to fierce competition, with European buyers increasingly vying with Asian nations for limited LNG cargoes, especially as winter approaches and Europe's gas storage levels remain below average.
The financial impact on these developing nations is substantial. Bangladesh has paid $2.1 billion for spot LNG since April, a significant increase from the $1.2 billion it would have paid for its contracted Qatari supplies. India’s LNG imports, despite rising prices, increased by 34% year-on-year to nearly 2.5 million tonnes in August as city gas utilities sought to prevent shortages. While new LNG supplies from the US, Nigeria, and Canada are expected to come online in the coming years, the immediate future presents a challenging outlook for price-sensitive Asian importers.
