Pakistan cuts LNG imports from Qatar amid declining electricity demand

ISLAMABAD: Pakistan’s government is taking steps to reduce its reliance on liquefied natural gas (LNG) imports from Qatar, aiming to alleviate pressure on gas utilities and address circular debt issues.

Pakistan imports 10 LNG cargoes monthly, with nine from Qatar and one from ENI. However, Sui Northern Gas Pipeline Limited (SNGPL) has requested Pakistan State Oil (PSO) to defer three LNG cargoes monthly, reducing imports to six.

The power sector’s reluctance to take its full LNG allocation stems from a decline in electricity demand, driven by rising electricity tariffs and a growing shift towards solar energy.

Approximately 7,000 MW of electricity has been added to the national grid through net metering, with solar energy production expected to be even higher. Industrial closures have also been attributed to unaffordable electricity costs.

In addition, experts suggest restructuring state-owned gas utilities to reduce operational expenses and lower gas prices. Currently, consumers pay $10-13 per million BTU (mmbtu) for local and imported LNG, significantly higher than the actual cost of $2-6 per mmbtu.

In response, a committee led by Foreign Minister Ishaq Dar is exploring selling contracted LNG to private parties to alleviate the state’s burden.

The diversion of LNG to domestic consumers has contributed to circular debt, straining the economy and pressuring local oil and gas exploration companies.

The reduction in local gas supplies, exceeding 200 million cubic feet per day, offers relief to local oil and gas companies, which have committed $5 billion in investments.

Moreover, these companies had warned the government that prioritizing LNG imports over indigenous gas supplies put their investments at risk.

Pakistan’s energy crisis highlights the need for diversified energy sources and efficient management.