Pakistan plans to cancel 50+ LNG cargoes over 2 years, save nearly $600M

Pakistan has planned to cancel as many as 57 cargoes of liquified natural gas (LNG) during 2026 and 2027, resulting in savings of nearly $600 million, analysts have shared with Nukta.

The cancellationplans come amid dwindling LNG demand in Pakistan as prices increase and industries switch to solar power for electricity generation.

An official from Pakistan's Ministry of Energy told Nukta the government had finalized talks with Italian energy company ENI to cancel 21 cargoes — 10 in 2026 and 11 in 2027.

Under its contract with ENI, Pakistan imports one cargo per month at 12.14% slope of Brent price.

Nukta reached out to the company but got no response.

The official said negotiations are underway to cancel at least 36 cargoes from Qatar, from which Pakistan imports nine per month under two separate agreements.

Five cargoes per month have been locked at 13.37% slope of Brent price for 15 years and four cargoes per month have been locked at 10.2% slope of Brent price for 10 years.

Under the agreement, if Pakistan cancels LNG cargoes, the Qatar government would sell them in the global market. If they are sold for a price higher than the one agreed with Pakistan, the Qatar government would keep the profit. However, if they are sold for a lower price, then Pakistan would pay the difference, according to the official.

'Meaningful' savings

Saad Hanif, head of research at Karachi-based brokerage Ismail Iqbal Securities, said that Pakistan's decision to cancel LNG cargoes from Qatar will generate meaningful near-term foreign exchange savings, especially given the wide gap between long-term contract prices and current spot LNG.

Each cancelled Qatar cargo would have cost Pakistan roughly $24-28 million (at 13.37% slope) versus the current spot level of $7-9/MMBtu. This results in an estimated net savings of $8-12 million per cargo, he shared.

Hanif said if the country saved $10 million on each LNG cargo, the net savings in two years would be around $570 million.

Falling demand

While the government had forecast gas demand for 2026 at around 6 bcf earlier this year, current patterns show that it could actually be a little under 4 bcf, according to Shankar Talreja, director research at Topline Securities.

He said that at present, Pakistan's domestic gas supply stands at 2.770 bcf — based on the last six-months average — while RLNG imports average 0.936 bcf, taking the total supply to an average of 3.706 bcf. Meanwhile, the demand is around 3.6 bcf.

"The fall in demand has been due to slower economic growth reducing demand from industries, continuous increase in gas and RLNG prices, the government's move to reduce subsidies, and reduction in electricity generation from LNG-fired plants," Talreja said.

Electricity generation from RLNG-fired plants in the four months ended Oct.31 dropped by 8.1% to 8,318 Gwh compared with 9,118 Gwh during the same period last year, according to the data from the National Electric Power Regulatory Authority received last week.

Industries are using more gas to generate electricity as cost of production is cheaper. The per unit cost of electricity generated using RLNG is around PKR 21 and that using domestic gas is PKR 13.

As RLNG demand falls, the number of cargoes being imported has also dropped. According to government data revealed on Thursday, 42 LNG cargoes were imported from July to November compared to 49 during the same period last year.

"I think the impact should be positive because it will reduce our import bill and also lead to reducing gas prices in the country because imported LNG is relatively expensive," Mustafa Mustansir, director research at Taurus Securities, said.

Mustansir said that Pakistan was cancelling the cargoes because of a drop in domestic gas demand and excess gas in the transmission system because of which local E&P companies have been forced to curtail their gas production (which is also affecting their oil production) and therefore, local E&P companies' business is suffering.

In 2025, Pakistan has deferred nine cargoes from ENI and five from Qatar.

Pakistan's LNG consumption dropped to 914 mmcfd in the fiscal year ending June 30 — the lowest level in five years.

According to Ministry of Energy data, annual imports have been declining for five consecutive years, falling from from 1,106 mmcfd in FY2021 to 923 mmcfd in FY2024.

During the previous fiscal year, Pakistan imported 116 LNG cargoes, down from 121 the previous year.