Pakistan seeking deferment of Qatari LNG cargoes to extend $5.6bn liability timeline

• Pakistan will get the deferred LNG cargoes in 2031-32.
• Move to help defer the liability of $5.6 billion till 2031.
• Crisis of RLNG glut in Pakistan aggravated manifold: official.

ISLAMABAD: Amid massive drop in gas consumption in the country, Pakistan is seeking deferment of 177 LNG cargoes from Qatar in the next five years, The News reported on Monday.

Pakistan 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 also ask Qatar under the second proposal to divert at least its two LNG term cargoes per month in 2026 to international market with no impact on Pakistan," the top official of Petroleum Division told this scribe.

From October 2025 to 2030, he said, 177 LNG cargoes have become additional in number because of less consumption by power and export sector. The cost of one cargo stands at Rs9 billion. If the existing value of US dollar is applied, the cost of 177 LNG cargoes stands at $5.6 billion, he said.

This liability of $5.6 billion will be deferred till 2031-32 if Qatar agrees to it. Under long-term agreements, Pakistan imports 120 LNG cargoes (108 from Qatar and 12 from ENI) per year.

"Pakistan wants to initiate dialogue with Qatar on future gas supply outlook because of the price opening clause that is to be invoked by March 2026 under two LNG term agreements and diversion of LNG cargoes to international market. 

"The crisis of RLNG glut in Pakistan has aggravated manifold because of default of contracts by power sector by not utilising imported gas as per agreements,” the official said.

A delegation, headed by Federal Minister for Petroleum and Natural Resources Ali Pervaiz Malik and comprising Secretary Petroleum Division Momin Agha, Coordinator of SIFC Lt-Gen Sarfraz and Managing Director of Pakistan State Oil Syed Taha, will leave today (Monday) for Qatar. They will pitch the proposals before Qatar authorities to consider and decide in favour of Pakistan.

The top mandarins of Petroleum Division have to finalise by September 15 Annual Delivery Plan (ADP) of 2026 about LNG cargoes from Qatar by rescheduling their arrivals.

“If we go by the agreements with Qatar, 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. The new gas LNG supply outlook will be on the scene in 2027,” the official said.

He said, "Since we have no time, we decided to settle this issue before time. In 2026, the LNG glut will further aggravate, as five cargoes, due to arrive in 2025, had been deferred to 2026".

Pakistan imports nine LNG cargoes from Qatar per month (five cargoes on 13.37% of Brent and 4 on 10.2%) under 15 years and 10 years long agreements based on take-or-pay mode to cater to sustainable supply of RLNG to four RLNG power plants in Punjab. Unfortunately, power sector is not utilising imported gas as per their agreements.

Pakistan also imports one cargo from ENI, an Italian trading firm, every month. This cargo is being diverted every month to international market for selling purposes since February 2025. This diversion will continue till December 2025.

Being within the agreements inked with Qatar, the official said Pakistan can divert LNG cargo being imported from Qatar to international spot market under the 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, profit will not be shared with PSO. If cargo is sold less than the term price, 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 international market, the profit will be shared between ENI and PPL (Pakistan LNG Limited). In case it is sold less than the term price, the loss will also be shared.

During the talks with Qatar, the official said, Pakistan officials will assess the mood of Qatari authorities over future LNG supply agreements. Since March 2026 is fast approaching, a price opening clause will be invoked. At that time, Pakistan will have the right to lay off import of some cargoes from the agreement. The new gas prices for remaining cargoes will also be negotiated keeping in view prevalent LNG prices.

The top official painted a gloomy picture of LNG glut and its impact on local gas sector, saying less use of RLNG by power sector in breach of agreements has caused all-time hike in gas pressure in main RLNG pipeline.

The line pack pressure stayed most of the time at 5.170bcf, and when pressure exceeds 5bfc — a danger mark — the national gas network can burst any time. The data shows to save the system, authorities concerned have closed the gas wells of 270-400mmcfd.

As per the data, power sector is currently using 510mmcf RLNG against 800mmcf. Massive decrease in usage of imported gas by the export sector by 250mmcf to 100mmcf from 350mmcf, because of its highest price of Rs3500 per MMBtu and 5pc off-the-grid levy (Rs238) per MMBtu is causing hike in gas pressure in main RLNG pipeline.

SNGPL says power sector is not utilising the imported gas as per its contracts. It is using less gas as a fuel, which is why the local gas supply in the system has been curtailed in the range of 270-400mmcf to handle the line pack pressure.