Pakistan’s LNG demand stays flat as economic optimism meets energy headwinds

Pakistan’s liquefied natural gas (LNG) demand is projected to remain largely unchanged in the new fiscal year despite a hopeful forecast of 4.2% GDP growth and an expected rebound in industrial activity.

Analysts cite stabilizing macroeconomic conditions, including lower interest rates and a stronger rupee, but caution that high energy costs and deferred cargo deliveries will limit any substantial rise in LNG consumption.

According to government data, Pakistan consumed 914 million cubic feet per day (mmcfd) of LNG in FY2024-25, the lowest in five years. Imports have dropped consecutively over five years, and expectations for FY2025-26 remain conservative, with inflows anticipated at around 900-950 mmcfd.

Ali Nawaz, CEO of Chase Securities, commented, “Economic stability and the continuation of the IMF program may help resume spot purchases, but the LNG demand is unlikely to surge.”

Industrial activity vs. energy economics

The government projects industrial growth of 3.5% for FY2025-26 following last year’s contraction. But costly gas tariffs, reduced subsidies, and a shift toward renewables are tempering LNG requirements, especially in key sectors like cement and textiles.

“Despite the growth forecast, industrial LNG demand will likely stay soft,” said Syed Fawad Bashir, head of research at KTrade Securities.

Deferred cargoes and contractual adjustments

Pakistan deferred five LNG cargoes from Qatar for delivery in 2025, with plans to re-negotiate terms in 2026. Long-term contracts with ENI and Qatar remain in place, though pricing slopes tied to Brent crude vary significantly across durations.

Abdul Azeem of Al-Habib Capital noted, “Storage constraints and affordability issues have prompted monthly import reductions by PSO — from nine cargoes to six — marking a clear downsizing in volumes.”

Electricity generation from RLNG-fired plants dipped by 6% in the first 11 months of FY2025, aligning with the broader trend of declining demand. Officials say unutilized RLNG is being rerouted to domestic consumers while prioritizing power generation over furnace oil use during peak summer months.

Total gas demand is forecasted between 3,500-4,000 mmcfd, but indigenous gas shortfalls could deepen reliance on LNG. Still, with industrial units shuttering or scaling down, the likelihood of an LNG surge appears slim.