Pakistan Faces Risk of Winter Gas Shortages

Pakistan has delayed a decision on importing liquefied natural gas (LNG) worth around $2 billion, raising concerns about gas shortages during the winter. The delay could affect gas supplies to industries, power plants and fertilizer manufacturers.

The Petroleum Division has urged the government to start importing LNG, warning that further delays could disrupt supplies and cause public unrest.

The Cabinet Committee on Energy (CCOE) has not yet approved a proposal to import 22 LNG cargoes, even though the Petroleum Division requested approval last month. The process for the first 12 cargoes was planned for October 7 to 10, but the deadlines have passed without a decision.

Petroleum Minister Ali Pervaiz said the proposal was still pending with the committee.

LNG Delays Raise Winter Supply Concerns

The government had expected to receive at least 11 LNG cargoes from Qatar under a long-term agreement. However, Qatar has extended its force majeure status until November due to regional uncertainty, making the delivery of these supplies uncertain.

Officials said the government had also considered importing 15 cargoes instead of 22, but a smaller quantity could worsen gas shortages during peak winter demand.

Each cargo is estimated to cost $87 million. Importing 22 cargoes from November to February would cost nearly $2 billion. The government had earlier estimated the cost at $1.5 billion, based on supplies from Qatar at around $12 per million British thermal units.

With deliveries from Qatar uncertain, Pakistan may need to buy more LNG from the spot market, which could increase costs.

The proposed plan includes four cargoes from Azerbaijan through Pakistan LNG Limited, four arranged by Pakistan State Oil with other market participants, and three from a US government-nominated supplier. The remaining cargoes would help meet demand from power plants and households.

Homes May Get Priority Over Industry

Gas demand is expected to nearly double during winter, rising from 850 million cubic feet per day to 1,600 million cubic feet per day.

On the Sui Northern Gas Pipelines Limited (SNGPL) network, demand is expected to increase from 550 million cubic feet per day to 1,100 million cubic feet per day, putting additional pressure on supplies in northern Pakistan.

Under the Petroleum Division’s proposal, households would receive priority. Gas would be supplied from 5 a.m. to 10 p.m., with adequate pressure maintained during cooking hours.

Industries, power plants and fertilizer manufacturers would receive gas according to availability. Supplies to compressed natural gas (CNG) stations could also be reduced, especially in December 2026 and January 2027.

If shortages become severe, gas supplies to cement plants and other industries could also be cut to protect household consumers.

Fertilizer Production Could Also Be Affected

The LNG shortage could affect fertilizer production. Government officials said at least two fertilizer plants connected to the SNGPL network could face gas supply suspensions.

According to the Ministry of National Food Security and Research, the closure of Fauji Fertilizer Bin Qasim, Fatima Fertilizer and Agritech could result in a urea shortage of 109,000 metric tonnes per month.

The Petroleum Division has also compared the foreign exchange costs of importing LNG with those of importing urea and providing subsidies. Its estimates suggest that importing LNG and supplying it to consumers would have a greater financial impact over one month than importing urea.

Meanwhile, Pakistan’s official foreign exchange reserves stood at slightly more than $21 billion after the country raised $3 billion through Eurobonds ahead of a major debt repayment of the same amount.

Final Decision Still Pending

The government has yet to decide how much LNG to import and how to arrange the purchases. It now faces a choice between the cost of additional imports and the risk of gas shortages during the peak winter season.

Any further delay could put additional pressure on households, industries, power generation and fertilizer production.