PAKISTAN SEEKS LNG DEAL REVISION WITH QATAR AMID SURPLUS IMPORTS

Pakistan Moves to Renegotiate LNG Contracts with Qatar

Pakistan is seeking to renegotiate its long-term liquefied natural gas (LNG) supply agreements with Qatar, as reduced industrial growth, falling electricity demand, and costly surplus gas imports weigh on the economy. The contracts, valid until 2031, have created a situation where policymakers are forced either to shut down local gas production facilities or supply expensive imported LNG to residential consumers at a loss.

ECC Authorizes Talks to Adjust Import Volumes

The Economic Coordination Committee (ECC) has approved the Petroleum Division to begin discussions with Qatar on revising import volumes. Petroleum Minister Ali Pervaiz Malik is expected to visit Doha to initiate talks, though it remains uncertain whether Qatar will agree to reopen the agreements.

Surplus LNG Imports Could Cost $1.5 Billion

According to government estimates, Pakistan faces surplus LNG cargoes worth $1.2–1.5 billion between July 2025 and December 2026. Officials warn that unless volumes are adjusted, the excess imports will significantly burden the national exchequer at a time when the country is already dependent on foreign loans.

Options on the Table for Pakistan

The government is considering multiple strategies to manage surplus LNG, including:

Reducing monthly cargoes from 9 to 6–7.
Extending the contract expiry while postponing excess deliveries.
Using the Non-Performance Damages (NPD) clause, which allows Qatar to sell LNG to other buyers and recover potential losses from Pakistan if resale prices are lower.

Background of Pakistan-Qatar LNG Contracts

Pakistan signed two major LNG supply contracts with Qatar in 2016 and 2021, allowing imports of up to 6.75 million tonnes per annum.

The 2016 deal was priced at 13.37% of Brent crude.
The 2021 deal reduced the rate to 10.2%, cutting import costs by nearly 31%.

Pakistan has already deferred five cargoes from the 2016 deal to 2026 without incurring penalties. Both agreements permit a review and potential termination in 2026 if price renegotiations fail.

Impact of Surplus LNG on Local Energy Sector

With imported LNG costing around Rs3,500 per mmbtu, the government struggles to divert it to households without heavy subsidies. At the same time, power plants—the primary consumers of LNG—have reduced demand due to cheaper fuel alternatives and declining electricity consumption.

This oversupply has forced the government to curtail local gas production, leading to losses in exploration revenues and reduced output of condensate, oil, and LPG. According to SNGPL, at least 11 LNG cargoes will remain unused from July–December 2025, and another 40 cargoes in 2026, adding to the financial strain.

Renegotiation Seen as Only Viable Solution

Officials emphasize that renegotiation with Qatar remains the only practical way forward to avoid mounting energy and financial losses. Without adjustments, Pakistan risks paying billions for unused LNG at a time when its economy can least afford it.

Key Points at a Glance

Pakistan seeks LNG deal renegotiation with Qatar amid surplus imports.
ECC approves talks to reduce LNG cargoes and adjust volumes.
Surplus imports may cost up to $1.5 billion by 2026.
Options include reducing cargoes, extending contracts, or triggering NPD clause.
2016 deal priced at 13.37% of Brent, 2021 deal reduced to 10.2%.
Surplus LNG is forcing curtailment of local gas production.
Petroleum Minister Ali Pervaiz Malik to lead talks in Qatar

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