Pakistan set to initiate dialogue with Qatar on LNG supplies

ISLAMABAD: In an important move, the government has decided to initiate dialogue with Qatar on future gas supply outlook mainly because of the price opening clause that is to be invoked by March 2026 under two LNG term agreements and diversion of LNG cargos to international market. The existing crisis of RLNG glut in Pakistan has aggravated manifold because of default of contracts by power sector which is not utilising the imported gas as per agreements.

To this effect, a high-level delegation headed by Federal Minister for Petroleum and Natural Resources Ali Pervaiz Malik will make an important visit to Qatar by the end of August, a senior official of the Petroleum Division told The News.

“The top mandarins of the Petroleum Division have to finalise by September 15 to October the Annual Delivery Plan (ADP) of 2026 about LNG cargoes from Qatar by rescheduling their arrivals.

“If we go by the agreements with Qatar, we have to initiate dialogue in March 2026 when the price opening clause will be invoked and the process to complete the talks will take 6-8 months and the new gas LNG supply outlook will be on the scene in 2027. Since we have no time, we decided to settle this issue before time, as in 2026 the LNG glut will further aggravate as five cargoes which were due to arrive in 2025 had been deferred in 2026.”

Pakistan imports 9 LNG cargoes from Qatar a month (5 cargoes on 13.37 percent of the Brent and 4 cargoes on 10.02 percent of the Brent) under 15 years and 10 years long agreements respectively based on take or pay mode to cater to the sustainable supply of RLNG to four RLNG power plants in Punjab, but unfortunately the power sector is not utilising the imported gas as per their agreements. Pakistan also imports one cargo from ENI -- an Italian trading firm every month and this cargo is being diverted every month to the international market for selling purposes since February 2025 and this diversion will continue till December 2025.

Being within the agreements inked with Qatar, the official said that Pakistan can divert LNG cargo being imported from Qatar to international spot market under clause of NPD (net proceed differential), but as per the agreements, if Qatar is asked to divert Pakistan’s term cargo to international market and sell it, then profit will not be shared with PSO. If cargo is sold less than the term price, then the loss will be borne by Pakistan.

The agreements inked with Qatar are far different from the contract with ENI. Under the term-agreement with ENI, when LNG cargo is sold out to the international market, the profit will be shared between ENI and PPL (Pakistan LNG Limited) and in case it is sold less than the term price, the loss will also be shared.

During the talks with Qatar, the official said, Pakistan authorities will assess the mood of Qatari authorities over future LNG supply agreements. Since the date of March 2026 is fast approaching, a price opening clause will be invoked and at that time Pakistan will have the right to lay off the import of some cargoes from the agreement and the new gas prices for remaining cargoes will also be negotiated keeping in view the prevalent LNG prices.

The top official also painted a gloomy picture of LNG glut and its impact on local gas sector saying the less use of RLNG by the power sector in breach of agreements has caused all time hike in gas pressure in the main RLNG pipeline. As of Sunday (August 3, 2025), the line pack pressure reached 5.170 bcf and when pressure exceeds 5bcf — a danger mark, the national gas network can burst any time. The data also shows that to save the system, authorities concerned have closed gas wells of 350-400mmcfd.