Pakistan is delaying a decision on importing an estimated $2 billion worth of liquefied natural gas (LNG), raising concerns about winter gas shortages and possible supply cuts to industry, power plants and fertilizer manufacturers. The Petroleum Division has urged the government to begin imports, warning that further delays could disrupt supplies and trigger public unrest.
The Cabinet Committee on Energy (CCOE) has yet to approve a proposal for 22 LNG cargoes, despite the Petroleum Division seeking authorization last month.
The plan called for the import process for the first 12 cargoes to begin between October 7 and 10, but those deadlines have passed without a formal decision. Petroleum Minister Ali Pervaiz said the matter remained pending with the committee.
LNG Delays Raise Winter Supply Concerns
The government had expected to receive at least 11 cargoes from Qatar under a long term agreement. However, Qatar has extended its force majeure status until November amid regional uncertainty, making the delivery of contracted supplies less certain. Officials said the government had considered importing 15 cargoes instead of the proposed 22, but warned that a smaller volume could worsen shortages during peak winter demand.
At an average estimated cost of $87 million per cargo, importing 22 shipments from November through February would require nearly $2 billion. The government had initially estimated the cost at $1.5 billion, assuming supplies from Qatar at around $12 per million British thermal units. With contracted deliveries uncertain, Pakistan may have to rely more heavily on spot market purchases, which could increase the financial burden.
The proposed plan included four cargoes from Azerbaijan through Pakistan LNG Limited, four arranged by Pakistan State Oil in collaboration with other market participants, and three from a US government nominated supplier. The remaining cargoes would help meet demand across the power and residential sectors. Several proposed deadlines for arranging these shipments have already passed.
Homes May Get Priority Over Industry
Winter gas demand is projected to nearly double from 850 million cubic feet per day to 1,600 million cubic feet per day. Demand on the Sui Northern Gas Pipelines Limited network is expected to rise from 550 million cubic feet per day to 1,100 million cubic feet per day, placing additional pressure on supplies in northern Pakistan.
Under the Petroleum Division’s proposal, residential consumers would receive priority, with gas supplied from 5 a.m. to 10 p.m. and adequate pressure maintained during cooking hours.
Industrial, power and fertilizer consumers would receive gas according to availability, while supplies to compressed natural gas stations could be curtailed, particularly in December 2026 and January 2027. In severe shortages, supplies to cement plants and other industries could also be reduced to protect household demand.
The potential impact extends to fertilizer production. Government officials said at least two fertilizer plants connected to the SNGPL network could face gas supply suspensions. According to the Ministry of National Food Security and Research, the closure of Fauji Fertilizer Bin Qasim, Fatima Fertilizer and Agritech could create a urea shortfall of 109,000 metric tonnes per month.
The Petroleum Division has also compared the foreign exchange implications of importing LNG with importing urea and providing subsidies. It estimates that importing LNG and supplying it to consumers would have greater financial implications for one month than importing urea. Meanwhile, Pakistan’s official foreign exchange reserves stood at slightly more than $21 billion after the country borrowed $3 billion through Eurobonds ahead of a major debt repayment of the same amount.
The final LNG import volume and procurement arrangements remain undecided, leaving the government facing a choice between the cost of additional imports and the risk of tighter gas supplies during the winter peak.
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