OPINION: While industry players pin their hopes on an oil price recovery to spur market activity following the Covid-19-induced slump, spare a thought for populations of countries at the mercy of such commodity price rises due to their reliance on energy imports.
South Asian liquefied natural gas importers India, Pakistan and Bangladesh are cases in point. All three nations this northern hemisphere winter have failed to award some tenders for LNG after bids were deemed too high.
Some industrial customers have found themselves without gas, while blackouts and power outages have hit towns and cities because of the gas crisis.
China has snapped up much of the available spot LNG volumes, while a Japanese utility has paid just shy of $40 per million British thermal units for a cargo.
The past couple of months have seen LNG prices soar due to the almost perfect storm of production disruptions and unseasonably cold weather, effectively excluding some customers from being able to secure supplies.
But it is not just a short-term issue for some, according to the Institute for Energy Economics & Financial Analysis.
The institute claims that upwards of $50 billion-worth of LNG import facilities and gas-fired power projects are at high risk of cancellation in Bangladesh, Pakistan and Vietnam because of higher and more volatile LNG prices going forward.
It serves as a reminder that so-called “healthy” commodity prices are not a universal panacea.
(This is an Upstream opinion article.)