- Pakistan had sought to defer 177 LNG cargoes past 2030.
- Govt decides to eat 80 LNG cargoes per 12 months from Qatar.
- Pakistan nonetheless faces oversupply of 24 LNG cargoes per 12 months.
Qatar has requested Pakistan to submit a agency proposal on whether or not to defer LNG cargoes past 2030 or permit Doha to promote a part of its contracted provide on the worldwide market underneath the Web Proceeds Differential (NPD) clause, The Information reported.
The request comes as Pakistan faces a worsening fuel disaster attributable to a pointy decline in home consumption. Pakistan LNG Restricted (PLL) is already diverting one time period cargo per 30 days — imported from Italian power agency ENI — to the worldwide spot market since February 2025 as a result of decreased demand. These month-to-month diversions will proceed till December 2025.
A senior official acquainted with the matter mentioned, “As soon as Pakistan submits a proper written proposal, Qatar will reply with a counter-proposal. A last determination might be made if each events attain mutual settlement.”
Earlier, Pakistan had sought to defer 177 LNG cargoes price $5.6 billion past 2030. Nonetheless, that proposal included ENI cargoes, which don’t fall underneath Qatar’s provide agreements. Beneath a revised plan, Pakistan has now determined to eat 80 LNG cargoes per 12 months from Qatar, out of the 108 contracted. This leaves 28 LNG cargoes per 12 months as surplus, which quantities to 140 cargoes over the subsequent 5 years. Every LNG cargo is at present valued at round Rs9 billion.
Primarily based on an alternate price of Rs284 per US greenback, the overall worth of the 140 surplus cargoes stands at roughly $4.437 billion.
A high-level Pakistani delegation led by Federal Minister for Petroleum and Pure Sources, Ali Parvaiz Malik, visited Doha on August 25 to clarify Pakistan’s worsening fuel demand state of affairs and discover potential aid choices underneath present agreements.
Sources near the minister emphasised that Pakistan values its two long-term LNG provide agreements with Qatar. Nonetheless, they acknowledged that the proposed deferment of 140 cargoes valuing $4.437 billion within the years 2031 and 2032 will not be coated underneath the present contract phrases.
Pakistan at present imports 9 LNG cargoes from Qatar every month —5 cargoes underneath a 15-year settlement priced at 13.37% of Brent, and 4 cargoes underneath a 10-year settlement priced at 10.2% of Brent. Each agreements are primarily based on a strict “Take-or-Pay” mannequin, primarily to gasoline 4 RLNG-based energy vegetation in Punjab. Sadly, the ability sector will not be consuming fuel as per its contractual commitments.
In distinction to the settlement with Qatar, Pakistan’s take care of ENI permits for the sharing of revenue or loss if diverted LNG cargoes are offered within the worldwide market. Beneath Qatar’s NPD clause, nonetheless, if Pakistan requests Qatar to promote diverted cargoes internationally, any revenue stays with Qatar, whereas Pakistan should bear the loss if the sale value is decrease than the contract value.
The affect of decreased fuel utilization is being felt throughout the fuel infrastructure. In keeping with officers, extreme line pack stress in the principle RLNG pipeline has crossed 5.170 bcf — properly above the 5 bcf hazard mark—creating the chance of a system failure. To cut back stress, authorities have shut down native fuel fields producing between 270 and 400 mmcfd.
Nonetheless, these shutdowns include severe dangers. Some wells fail to regain stress as soon as closed, resulting in everlasting harm. Furthermore, fuel properly closures additionally have an effect on the manufacturing of LPG and crude oil. For example, Attock Refinery Restricted (ARL) has repeatedly warned the Petroleum Division that decreased crude oil provide from home fields is stopping the refinery from working at full capability.
When it comes to utilization, the ability sector is at present consuming simply 510 mmcfd of RLNG, in comparison with the contracted 800 mmcfd. Equally, RLNG utilization by the export sector has dropped from 350 mmcfd to 100 mmcfd. Officers attribute this to excessive RLNG costs — Rs3,500 per MMBtu—and a 5 per cent off-grid levy of Rs570 per MMBtu.
Regardless of the diversion of ENI cargoes, Pakistan nonetheless faces an oversupply of 24 LNG cargoes per 12 months. In fiscal 12 months 2024–25 alone, the federal government has diverted RLNG price Rs242 billion to the home sector to handle the surplus.
The unique design of the 4 RLNG-based energy vegetation—Haveli Bahadur Shah, Balloki, Bhikki, and Trimmu—required them to run repeatedly as “must-run” items underneath a 66% Take-or-Pay dedication. These vegetation had been touted to have 62% effectivity, making them among the many most cost-effective for electrical energy technology. Nonetheless, in 2020, the Energy Division obtained ECC approval to scale back the take-or-pay requirement to 50%.
Now, these vegetation are operated primarily based on the Financial Benefit Order (EMO), that means they solely run when deemed cost-effective. The Energy Division argues that RLNG-based energy technology is dear and raises the general electrical energy basket value — an unaffordable political burden underneath present circumstances.
This shift has left the Petroleum Division and Pakistan State Oil (PSO) —the state-owned entity answerable for LNG imports — in a good spot. Regardless of falling demand, PSO continues to be obligated to import 9 LNG cargoes from Qatar every month underneath long-term contracts.
As Pakistan struggles to steadiness contractual obligations with real-time demand, the burden of extra LNG is straining the fuel community and public funds. Officers say the onus is now on Islamabad to current a legally sound and commercially viable proposal to Doha.
Qatar, for its half, awaits a proper request earlier than providing any concession or different answer.
