Pakistan Urges Qatar to Divert LNG Cargoes Amid Low Demand

Islamabad: Pakistan has requested Qatar to divert 24 liquefied natural gas (LNG) cargoes from its long-term contracts to the international market in 2026 due to a growing surplus and weak local demand.

Officials from the Petroleum Division said the proposal, discussed under the Net Proceed Differential (NPD) clause of Pakistan’s LNG contracts with Qatar, will be finalized by the end of October. The clause allows resale of surplus cargoes, but profits go to Qatar while Pakistan must bear any losses if spot prices are lower.

In contrast, Pakistan’s agreement with Italian energy company ENI is more flexible, allowing profit and loss sharing with Pakistan LNG Limited (PLL). The government is already diverting one ENI cargo each month in 2025 and plans to continue in 2026, except for January.

Currently, Pakistan imports nine LNG cargoes from Qatar each month — five under a 15-year deal at 13.37% of Brent crude and four under a 10-year deal at 10.2% of Brent. Both are based on “take-or-pay” terms, requiring payment even if the gas is unused.

These imports were meant for four RLNG-based power plants in Punjab, which now operate at low capacity. The decline in demand has created an annual surplus of 35 LNG cargoes, including 11 from ENI, causing operational problems such as excessive gas buildup in the pipeline system.

The line-pack pressure has risen above 5.17 billion cubic feet (bcf), exceeding the 5 bcf safety limit and risking system damage. To reduce pressure, authorities have shut down local gas fields producing 270–400 million cubic feet per day (mmcfd) — but experts warn that this could permanently harm wells and reduce crude oil and LPG output.

Attock Refinery Limited has already reported lower crude oil supplies, affecting refinery operations.

As of October 17, the power sector is consuming only 486 mmcfd of RLNG, compared to the usual 800 mmcfd, while export industries have reduced usage from 350 mmcfd to 100 mmcfd due to high prices — around Rs3,500 per MMBtu, plus an additional Rs570 levy.

The four major RLNG power plants — Haveli Bahadur Shah, Balloki, Bhikki, and Trimmu — now run under the Economic Merit Order, which prioritizes cheaper energy sources, making RLNG less competitive.

This has created major financial challenges for the Petroleum Division and Pakistan State Oil (PSO). During fiscal year 2024–25, the government diverted RLNG worth Rs242 billion to the domestic sector to handle excess supply.

Experts say unless industrial and power demand recovers, Pakistan will continue facing gas oversupply issues, storage limitations, and potential infrastructure risks.