ISLAMABAD: The Petroleum Division has sought approval from the Prime Minister-led Cabinet Committee on Energy (CCoE) for the winter gas load management plan for four months (November 2026 to February 2027), under which domestic consumers will receive top priority while supplies to industry, captive power plants, fertiliser plants and compressed natural gas (CNG) stations may be curtailed in case of a severe shortage of gas or non-availability of required liquefied natural gas (LNG) cargoes.
According to sources close to Petroleum Minister, the Petroleum Division has estimated that 24 LNG cargoes would be required to meet winter demand on the Sui Northern Gas Pipelines Limited (SNGPL) network, including nine cargoes for the power sector and 15 for domestic demand, of which two would be contingency cargoes.
The proposed plan also envisages additional LNG procurement arrangements as uncertainty persists over supplies under existing contracts with Qatar Energy.
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The Petroleum Division has warned that continued force majeure declared by QatarEnergy since March 2026, coupled with tensions in the Middle East and Gulf region, has made the delivery of contracted LNG cargoes uncertain, the sources added.
According to the Petroleum Division, winter demand rises sharply because of increased requirements for space and water heating. On the SNGPL network, demand is projected to increase from around 550 million cubic feet per day (MMCFD) to 1,100 MMCFD, while demand on the Sui Southern Gas Company Limited (SSGCL) network is projected to rise from 300 MMCFD to 500 MMCFD.
The government introduced a policy in FY2018-19 to divert re-gasified LNG (RLNG) to domestic consumers at indigenous gas tariff rates during the winter months, initially covering November to February.
The difference between the cost of imported RLNG and the price charged to domestic consumers created a tariff differential. The Petroleum Division stated that the accumulated differential exceeded Rs350 billion during the period from FY2018-19 to FY2022-23 but subsequently declined to Rs220 billion as of June 30, 2026, owing to government subsidy releases.
However, the document states that Rs78 billion remains to be settled under the gas circular debt management plan.
The proposed winter arrangement will therefore have implications not only for gas availability but also for the finances of gas utilities, electricity consumers and the federal government.
The Petroleum Division has also highlighted a potential revenue shortfall for SNGPL during the winter period.
The revenue requirement of SNGPL for the current financial year, as determined by the Oil and Gas Regulatory Authority (OGRA), stands at Rs501 billion at a prescribed price of Rs1,719 per million British thermal units (MMBtu). This requirement does not include the cost associated with diverting RLNG to domestic consumers.
The Petroleum Division argued that the use of spot LNG cargoes for domestic supplies and contracted cargoes for the power sector could result in a revenue shortfall of Rs45 billion. The shortfall, it states, would necessitate an increase of more than Rs300 per MMBtu across the Sui gas companies.
The Petroleum Division has cautioned that using contracted cargoes for the domestic sector would instead increase the fuel cost adjustment (FCA) burden for the Power Division.
The government will consequently have to weigh the financial implications of different supply arrangements, including the allocation of LNG between domestic consumers and electricity generation.
The Petroleum Division has reported that, under the executed Annual Delivery Plan (ADP) between Pakistan State Oil (PSO) and QatarEnergy, LNG cargoes were scheduled for delivery from March to September 2026. However, only 10 cargoes had been received, while the non-delivery of 40 cargoes under force majeure was estimated to have generated foreign-exchange savings of USD1.23 billion at LNG prices ranging from USD8 to USD13 per MMBtu.
To meet government-sector demand from April to July 2026, seven LNG cargoes were reportedly procured from the spot market at prices ranging from USD16 to USD22 per MMBtu. Their financial impact was estimated at USD144 million.
After accounting for the additional cost of spot purchases against the estimated savings from non-delivered contracted cargoes, the net foreign-exchange saving for the period up to September 2026 was estimated at around USD786 million.
The Petroleum Division further stated that there were three attempts in September 2026 to procure one LNG cargo from the spot market. Bids opened on September 11 and 17 were priced at USD26.712 and USD26.969 per MMBtu, respectively, while no bid was received in the third bidding round.
The document attributes the difficulty in securing LNG at affordable rates to the prevailing conflict in the Middle East and Gulf region. It warns that contracted cargo deliveries in the remaining months of 2026 are uncertain and that last-minute spot purchases could become increasingly difficult in a tight international market.
Pakistan’s LNG import bill, according to the summary, stood at USD3.870 billion in calendar year 2024 and USD2.897 billion in 2025. Imports during 2026 up to the period covered by the document were estimated at USD1.256 billion, including an estimated USD444 million for the year-to-date period specified in the summary. LNG imports for November and December 2026 were projected at USD1.036 billion at estimated spot-market prices.
To address the expected winter shortage, the Petroleum Division has proposed efforts to secure at least four LNG cargoes per month from QatarEnergy through special arrangements.
The summary states that a meeting attended by the Minister for Power and the National Coordinator of the National Crisis Management Cell (NCMC) agreed that efforts should be made to obtain the cargoes. However, a fallback option for sectoral gas load management would be kept ready in case the required cargoes were not delivered under existing contracts or could not be procured from the spot market.
The Petroleum Division has sought authorisation for the National Logistics Cell (NLC) and NCMC to arrange 11 or more QatarEnergy cargoes for power-sector demand under special arrangements. If force majeure is lifted, the procured quantities would be adjusted against committed quantities under the Annual Delivery Plan.
It was also proposed that Pakistan LNG Limited (PLL) operationalise its agreement with SOCAR to book one cargo per month for November 2026, December 2026, January 2027 and February 2027, subject to a maximum price of USD20.969 per MMBtu under the relevant tender. The summary set October 12, 2026, as the deadline for submission of compliance information to the Petroleum Division.
In addition, PSO has been asked to develop a strategy with Shell LNG and/or Oman Trading International to source one cargo per month for December 2026, January 2027 and February 2027, for consideration by the Cabinet.
The proposals are intended to provide alternative supply arrangements before the onset of peak winter demand. The document, however, does not establish that all proposed cargoes have been procured or that deliveries have been secured.
The winter plan also considers the impact of gas allocation decisions on fertiliser production.
The Ministry of National Food Security and Research presented options concerning the gas requirements of Fauji Fertilizer Bin Qasim, Fatima Fertilizer and Agritech, which receive supplies through the Sui networks.
According to the summary, the closure of the three plants could create a fertiliser supply shortfall of around 109,000 tonnes of urea per month. Their closure in December 2026 and January 2027 would affect inventories during both months.
The Petroleum Division has therefore proposed a cost-benefit analysis comparing the import of LNG and its supply to fertiliser plants at subsidised rates with the import of urea and its sale at subsidised prices.
The preliminary assessment, based on a cost and freight price of USD415 per tonne of imported urea and the contracted and spot LNG prices used in the analysis, indicates that importing LNG for domestic supply would have higher financial implications than importing urea.
The comparison is intended to help the government determine whether maintaining gas supplies to fertiliser plants or importing finished fertiliser would be the less costly option.
The summary does not indicate that a final decision has been taken to shut down the plants or import additional urea.
Under the proposed load management plan, domestic consumers will remain the highest-priority category for sustained gas supplies during winter.
The Petroleum Division has recommended maintaining supplies to households from 5pm to 10pm, with optimum pressure during cooking hours to avoid inconvenience and social distress.
Industrial, power and fertiliser consumers would receive supplies according to actual demand and availability. Supplies to CNG stations would be curtailed, particularly during December 2026 and January 2027.
In an extreme winter situation, or if required, LNG cargoes are unavailable and indigenous gas supplies from northern sources are disrupted, supplies to CNG stations, cement plants, process industries and captive power plants could be curtailed to divert gas to domestic consumers.
The Sui gas companies have historically been responsible for managing demand and supply within their respective licensed areas under an Economic Coordination Committee decision dated January 29, 2013, which required gas utilities to manage loads according to approved priority orders.
The proposed plan continues this approach while seeking to address the additional uncertainty arising from LNG supply disruptions.
The documents contain comparative cost analyses of importing LNG and supplying it at subsidised rates against importing urea and selling it domestically at subsidised prices.
One analysis uses a potential urea import price of USD445 per tonne, a freight component of USD75 per tonne and a cost-and-freight price of USD445 per tonne, with the landed cost and the document’s figures indicate a government subsidy requirement of approximately Rs5.32 billion under the scenario presented.
A separate comparison of RLNG prices shows the potential cost implications of using contracted and spot LNG.
For the contracted LNG scenario, the LNG volume of approximately 2.326 million MMBtu, a price of USD17.49 per MMBtu and an OGRA-notified RLNG price for August 2026 of Rs4,679 per MMBtu indicates an estimated subsidy requirement of Rs7.63 billion.
Under the spot-market scenario, price of USD27 per MMBtu, with the September 2026 spot price listed at approximately Rs7,533 per MMBtu gives an estimated subsidy requirement of around Rs13.41 billion.
These comparisons underline the fiscal implications of replacing contracted supplies with more expensive spot cargoes. The figures are scenario-based estimates in the Petroleum Division’s summary and should not be treated as confirmed expenditure or final subsidy approvals.
The Petroleum Division has placed the proposed Winter Gas Load Management Plan 2026-27 before the Cabinet Committee on Energy for consideration and approval.
The recommendations seek to maintain household gas supplies during peak winter hours, provide for flexible allocation of available gas to industrial and power-sector consumers, secure additional LNG cargoes through alternative procurement arrangements and prepare contingency measures for possible supply disruptions.
The government will also have to consider the comparative financial implications for gas tariffs, electricity fuel costs, fertiliser availability and public subsidies.
The proposed arrangements reflect the risks posed by uncertain LNG deliveries, high spot-market prices and rising seasonal demand. Their implementation will depend on the availability and cost of LNG cargoes, the outcome of the government’s procurement efforts and the decisions taken by the competent authorities on the winter gas allocation plan.
Copyright Business Recorder, 2026