Govt to respond to Qatar on LNG cargo deferment beyond 2030

• Pakistan had sought to defer 177 LNG cargoes beyond 2030.
• Govt decides to consume 80 LNG cargoes per year from Qatar.
• Pakistan still faces oversupply of 24 LNG cargoes per year.

Qatar has asked Pakistan to submit a firm proposal on whether to defer LNG cargoes beyond 2030 or allow Doha to sell part of its contracted supply on the international market under the Net Proceeds Differential (NPD) clause, The News reported.

The request comes as Pakistan faces a worsening gas crisis caused by a sharp decline in domestic consumption. Pakistan LNG Limited (PLL) is already diverting one term cargo per month — imported from Italian energy firm ENI — to the international spot market since February 2025 due to reduced demand. These monthly diversions will continue until December 2025.

A senior official familiar with the matter said, “Once Pakistan submits a formal written proposal, Qatar will respond with a counter-proposal. A final decision will be made if both parties reach mutual agreement.”

Earlier, Pakistan had sought to defer 177 LNG cargoes worth $5.6 billion beyond 2030. However, that proposal included ENI cargoes, which do not fall under Qatar’s supply agreements. Under a revised plan, Pakistan has now decided to consume 80 LNG cargoes per year from Qatar, out of the 108 contracted. This leaves 28 LNG cargoes per year as surplus, which amounts to 140 cargoes over the next five years. Each LNG cargo is currently valued at around Rs9 billion.

Based on an exchange rate of Rs284 per US dollar, the total value of the 140 surplus cargoes stands at approximately $4.437 billion.

A high-level Pakistani delegation led by Federal Minister for Petroleum and Natural Resources, Ali Parvaiz Malik, visited Doha on August 25 to explain Pakistan’s worsening gas demand situation and explore possible relief options under existing agreements.

Sources close to the minister emphasised that Pakistan values its two long-term LNG supply agreements with Qatar. However, they acknowledged that the proposed deferment of 140 cargoes valuing $4.437 billion in the years 2031 and 2032 is not covered under the current contract terms.

Pakistan currently imports nine LNG cargoes from Qatar each month —five cargoes under a 15-year agreement priced at 13.37% of Brent, and four cargoes under a 10-year agreement priced at 10.2% of Brent. Both agreements are based on a strict “Take-or-Pay” model, mainly to fuel four RLNG-based power plants in Punjab. Unfortunately, the power sector is not consuming gas as per its contractual commitments.

In contrast to the agreement with Qatar, Pakistan’s deal with ENI allows for the sharing of profit or loss if diverted LNG cargoes are sold in the international market. Under Qatar’s NPD clause, however, if Pakistan requests Qatar to sell diverted cargoes internationally, any profit stays with Qatar, while Pakistan must bear the loss if the sale price is lower than the contract price.

The impact of reduced gas usage is being felt across the gas infrastructure. According to officials, excessive line pack pressure in the main RLNG pipeline has crossed 5.170 bcf — well above the 5 bcf danger mark—creating the risk of a system failure. To reduce pressure, authorities have shut down local gas fields producing between 270 and 400 mmcfd.

However, these shutdowns come with serious risks. Some wells fail to regain pressure once closed, leading to permanent damage. Moreover, gas well closures also affect the production of LPG and crude oil. For instance, Attock Refinery Limited (ARL) has repeatedly warned the Petroleum Division that reduced crude oil supply from domestic fields is preventing the refinery from operating at full capacity.

In terms of usage, the power sector is currently consuming just 510 mmcfd of RLNG, compared to the contracted 800 mmcfd. Similarly, RLNG usage by the export sector has dropped from 350 mmcfd to 100 mmcfd. Officials attribute this to high RLNG prices — Rs3,500 per MMBtu—and a 5 per cent off-grid levy of Rs570 per MMBtu.

Despite the diversion of ENI cargoes, Pakistan still faces an oversupply of 24 LNG cargoes per year. In fiscal year 2024–25 alone, the government has diverted RLNG worth Rs242 billion to the domestic sector to manage the excess.

The original design of the four RLNG-based power plants—Haveli Bahadur Shah, Balloki, Bhikki, and Trimmu—required them to run continuously as “must-run” units under a 66% Take-or-Pay commitment. These plants were touted to have 62% efficiency, making them among the most cost-effective for electricity generation. However, in 2020, the Power Division obtained ECC approval to reduce the take-or-pay requirement to 50%.

Now, these plants are operated based on the Economic Merit Order (EMO), meaning they only run when deemed cost-effective. The Power Division argues that RLNG-based power generation is expensive and raises the overall electricity basket price — an unaffordable political burden under current circumstances.

This shift has left the Petroleum Division and Pakistan State Oil (PSO) —the state-owned entity responsible for LNG imports — in a tight spot. Despite falling demand, PSO is still obligated to import nine LNG cargoes from Qatar each month under long-term contracts.

As Pakistan struggles to balance contractual obligations with real-time demand, the burden of excess LNG is straining the gas network and public finances. Officials say the onus is now on Islamabad to present a legally sound and commercially viable proposal to Doha. 

Qatar, for its part, awaits a formal request before offering any concession or alternative solution.