Pakistan is preparing a formal response to Qatar on the deferment of liquefied natural gas (LNG) cargoes beyond 2030. The decision comes amid a worsening gas crisis driven by a sharp decline in domestic demand, which has left the country struggling with oversupply.
Qatar has asked Islamabad to provide a firm proposal on whether it wants to defer part of its contracted LNG supply or allow Doha to sell the surplus cargoes in the global market under the Net Proceeds Differential (NPD) clause. Once Pakistan submits a written proposal, Qatar will issue a counter-offer, and a decision will be reached if both sides reach agreement.
Surplus LNG and Revised Consumption Plan
Earlier, Pakistan had requested deferment of 177 LNG cargoes worth $5.6 billion beyond 2030. However, that request mistakenly included cargoes from another supplier. Under the new plan, Pakistan has agreed to consume 80 LNG cargoes per year from Qatar, out of the 108 contracted. This leaves 28 surplus cargoes annually, translating into 140 surplus cargoes over five years. With each cargo valued at Rs9 billion, the total surplus equals $4.43 billion at the current exchange rate.
Long-Term Contracts with Qatar
Currently, Pakistan imports nine LNG cargoes from Qatar every month under two long-term agreements. Five are priced at 13.37% of Brent under a 15-year deal, while four are priced at 10.2% of Brent under a 10-year deal. Both are structured on a strict Take-or-Pay model, primarily to fuel four RLNG-based power plants in Punjab. However, these plants are not consuming LNG at committed levels.
In contrast, the agreement with another supplier allows profit or loss sharing if cargoes are diverted internationally. Under Qatar’s NPD clause, any profit from diverted cargo sales goes to Qatar, while Pakistan must bear losses if the international price falls below the contract rate.
Declining Gas Consumption and Infrastructure Strain
The impact of falling gas demand is evident across the energy system. RLNG consumption by the power sector has dropped to 510 mmcfd against a contracted 800 mmcfd, while usage in the export sector has reduced to just 100 mmcfd. Officials cite high RLNG prices of Rs3,500 per MMBtu, plus a 5% off-grid levy, as the main reasons behind this decline.
Due to reduced consumption, Pakistan LNG Limited has been diverting one cargo per month to the international market since February 2025. Despite these diversions, the country still faces an oversupply of 24 LNG cargoes annually. Excess pressure has built up in the RLNG pipeline network, raising risks of system failure. Authorities have shut down several local gas fields to ease pressure, but this carries risks of permanent well damage and reduced production of crude oil and LPG.
The Power Sector Challenge
Pakistan’s four RLNG-based power plants were initially designed as must-run units under a 66% Take-or-Pay commitment, offering efficiency levels of 62%. However, in 2020, the Power Division reduced the requirement to 50% and shifted operations under the Economic Merit Order. As a result, these plants now operate only when deemed cost-effective. Officials argue that high LNG prices make power generation expensive and politically burdensome.
Next Steps with Qatar
The Petroleum Division and Pakistan State Oil remain bound by contractual commitments to import nine cargoes monthly, despite low demand. This mismatch has created financial strain and increased pressure on gas infrastructure. A high-level delegation recently visited Doha to seek relief under existing agreements.
Officials stress that Pakistan values its strategic energy partnership with Qatar but must find a commercially viable solution to manage excess LNG volumes. Doha, however, is waiting for a formal and legally sound proposal before offering any concessions or alternative solutions.
