Pakistan plans to introduce blended gas pricing mechanism

ISLAMABAD: Pakistan’s Minister of Petroleum, Dr. Musadik Malik, announced that the government plans to introduce a blended gas pricing mechanism by removing the ring-fenced Liquefied Natural Gas (LNG) pricing and integrating it with wellhead and pipeline quality natural gases.

The government is also close to finalizing an investment deal for the Reko Diq project and will soon decide on establishing a $10 billion greenfield refinery to produce petroleum products and petrochemicals on a 50:50 basis.

However, Dr. Malik admitted to being unaware of the high-speed diesel crisis that has nearly shut down the country’s refineries and led Pakistan State Oil (PSO) to cancel import orders under long-term contracts.

In addition, he assured that he would investigate the matter and provide updates to the media soon.

The minister highlighted that gaps in regulations governing LNG imports have caused numerous issues, including the idling of four efficient LNG-based power projects due to ring-fenced LNG pricing.

He noted that the average price for a blend of wellhead gas, pipeline quality gas, and LNG would be around Rs 1,700-1,800 per unit, which could be made available to all economic sectors, with the government also able to subsidize poorer residential sectors.

Dr. Malik also mentioned that the government is importing around 1,000 million cubic feet of LNG per day and assured that there would be no shortage of supply issues during the winter.

Moreover, he ruled out any increase in gas prices and declined to comment on the progress of the Iran-Pakistan gas pipeline project.

The minister also discussed plans to attract billions of dollars in investments from Saudi Arabia, China, and other countries to establish a greenfield refinery in Pakistan, and mentioned that studies are being conducted on transitioning from petroleum products to electrification and electric vehicles.