By SKM
August 24, 2025
ISLAMABAD: Pakistan will seek from Qatar the deferment of 177 LNG cargoes that have become additional on account of the massive reduction in gas consumption in the country in the next 5 years till 2030 and will get the deferred cargoes in 2031-32. This will help defer the liability of $5.6 billion till 2031 – the expiry year of one LNG supply agreement. The second GtG agreement will expire in 2032.
“The authorities will, under the second proposal, also ask Qatar to divert at least its two LNG term cargoes per month in 2026 to the international market with no impact on Pakistan,” top officials of the Petroleum Division told this scribe.
From October 2025 to 2030, they said, as many as 177 LNG cargoes have become additional in number because of less consumption by the power sector and export sector. The cost of one cargo stands at RS9 billion in Pak Rupees and if the existing value of US dollar of Rs282 gets applied, then the cost of 177 LNG cargos in dollar terms stands at $5.6 billion. This liability of $5.6 billion will be deferred till 2031-32 if Qatar agrees to defer the additional 177 LNG cargoes due in 5 years till 2030. Under long-term agreements, Pakistan imports 120 LNG cargos (108 from Qatar and 12 from ENI) per year.
“Pakistan wants to initiate dialogue with Qatar on future gas supply outlook mainly because of the price opening clause that is to be invoked by March 2026 under two LNG term agreements and diversion of LNG cargos to international market as well, as the existing crisis of RLNG glut in Pakistan has aggravated manifold mainly because of default of contracts by power sector by not utilizing the imported gas as per agreements.”
The delegation headed by Federal Minister for Petroleum and Natural Resources Ai Pervaiz Malik comprising Secretary Petroleum Division Momin Agha, Coordinator of SIFC Lt General Sarfraz and Managing Director of Pakistan State Oil Syed Muhammad Taha will leave today (Monday) for Qatar where they will pitch the above two proposals before the authorities of Qatar to consider and decide in favour of Pakistan.
“The top mandarins of the Petroleum Division have to finalize by September 15 to October the Annual Delivery Plan (ADP) of 2026 about LNG cargoes from Qatar by rescheduling their arrivals.”
“If we go by the agreements with Qatar, then we have to initiate dialogue in March 2026 when the price opening clause will be invoked and the process to complete the talks will take 6-8 months and the new gas LNG supply outlook will be on the scene in 2027. Since we have no time and decided to settle this issue before time, as in 2026 the LNG glut will further aggravate as five cargoes which were due to arrive in 2025 had been deferred to 2026.”
Pakistan imports 9 LNG cargoes from Qatar per month (5 cargoes on 13.37 percent of the Brent and 4 cargoes on 10.2 percent of the Brent) under 15 years and 10 years long agreements respectively based on take or Pay mode to cater to the sustainable supply of RLNG to four RLNG power plants in Punjab, but unfortunately power sector is not utilizing the imported gas as per their agreements. Pakistan also imports one cargo from ENI – an Italian trading firm every month and this cargo is being diverted every month to the international market for selling purposes since February 2025 and this diversion will continue till December 2025.
Being within the agreements inked with Qatar, the official said that Pakistan can divert LNG cargo being imported from Qatar to international spot market under clause of NPD (net proceed differential), but as per the agreements, if Qatar is asked to divert Pakistan’s term cargo to international market and sell it, then profit will not be shared with PSO and if cargo is sold less than the term price, then the loss will be borne by Pakistan.
The agreements inked with Qatar are far different from the contract with ENI. Under the term-agreement with ENI, when LNG cargo is sold out to the international market, the profit will be shared between ENI and PPL (Pakistan LNG Limited) and incase it is sold less than the term price, the loss will also be shared.
During the talks with Qatar, the official said, Pakistan authorities will assess the mood of Qatari authorities over future LNG supply agreements. Since the date of March 2026 is fast approaching, a price opening clause will be invoked and at that time Pakistan will have the right to lay off the import of some cargoes from the agreement and the new gas prices for remaining cargoes will also be negotiated keeping in view the prevalent LNG prices.
The top official also painted a gloomy picture of LNG glut and its impact on local gas sector saying the less use of RLNG by the power sector in breach of agreements has caused all time hike in gas pressure in the main RLNG pipeline. The line pack pressure stayed most of the time at 5.170 bcf and when pressure exceeds 5bfc—a danger mark, the national gas network can burst any time. The data also shows that to save the system, authorities concerned have closed the gas wells of 270-400mmcfd.
When the local gas fields are closed down to manage the line pack pressure, sometimes gas wells are not recovered with natural pressure and in the past, some gas wells sank on a permanent basis. More importantly, with the closure of gas fields, the LPG and crude oil production are also affected. The Attock Refinery Limited which uses the crude oil of country cannot run itself on the optimum level to produce the finished products and to this effect, ARL has many times agitated through its correspondence with petroleum Division that the closure of local gas fields harms the crude oil production owing to which the refinery is not being operated at its full capacity.
As per the data the power sector is currently using 510mmcf RLNG against 800 mmcf and massive decrease in usage of the imported gas by export sector by 250 mmcf to 100 mmcf from 350 mmcf, mainly because of its highest price of 3500 per MMBtu and 5 percent off-the-grid levy (Rs238) per MMBtu is causing hike in gas pressure in the main RLNG pipeline.
SNGPL says that the power sector is not utilizing the imported gas as per its contracts, but is using less gas as a fuel for power generation which is why the local gas supply in the system has been curtailed to in the range of 270-400mmcf to handle the line pack pressure. “The gas consumption has decreased manifold. Under the latest scenario, 24 LNG cargoes have become additional per year despite the fact one LNG cargo from ENI – an Italian-based trading company is being diverted to the international market every month from February 2025 to December 2025. The government has diverted in FY25 the costly RLNG valuing Rs242 billion to the domestic sector,” the officials said.
The four RLNG power plants at the time of LNG supply agreements were declared must-run projects and they were supposed to use the 800 mmcf gas per day all the time, but now the Power Division runs the said power plants based on Economic Merit Order (EMO). The mantra the then government leadership used to market was that RLNG based power plants had 62 percent efficiency and when they would be run at the optimum level their cost of electricity generation would be affordable.
Initially, the four RLNG power plants were bound to run under a 66% take‑or‑pay obligation, meaning they were contracted to take 66% of RLNG supply even if not used. This requirement was later eased in 2020, cutting it to 50% by the Power Division through ECC. This step has put the top mandarins of Petroleum Division on tight rope as the Pakistan State Oil, the state owned entity which is bound to import the 9 LNG cargoes from Qatar per month (5 cargoes on 13.37 percent of the Brent and 4 cargoes on 10.02 percent of the Brent) under 15 years and 10 years long agreements respectively based on take or Pay mode to cater to the sustainable supply of RLNG to four RLNG power plants in Punjab.
Now the Power Division is not running 4 RLNG power plants as per its contracts arguing that the electricity generation cost is higher based on imported gas and when the electricity is generated through the RLNG-based power plants, the basket price of electricity increases which the political regime cannot afford and it runs them only when EMO allows it based on the demand of the electricity. Ends
