Pakistan to renegotiate LNG supply agreement with Qatar

Pakistan's Minister for Petroleum Dr Musadiq Malik informed a parliamentary panel chaired by Mustafa Mehmood on Thursday that Pakistan will renegotiate LNG cargo prices with Qatar in 2026.

Qatar's price agreement is more expensive, while Azerbaijan's contract is on a take-and-pay basis, allowing flexibility in cargo purchases, he briefed the the National Assembly Petroleum committee.

The government has succeeded in deferring five cargos for the current year amid reduced demand and is planning to continue deferring the import of LNG cargos under long-term agreements with Qatar through negotiations.

He also said that under the law, the ratifying country can terminate the agreement after 10 years.

Currently, the country has a surplus of imported gas, largely due to power plants declining to use 600 million cubic feet per day of LNG as it does not align with the economic merit order, Malik said.

Gas diversion to Balochistan

The committee was informed the federal government will reassess its gas distribution strategy, particularly the policy of prioritizing Balochistan's gas supply to domestic consumers during winter months at the expense of Sindh province.

The committee members belonging from Sindh also expressed concerns regarding diversion of gas from industry in Sindh to domestic sector in Balochistan, curtailments to Captive Power Plants (CPPs) and the allocation of 35% to the private sector in the province.

Panel member Naveed Qamar argued that the Article 158 of the Constitution gave first right of gas use to producing province and can divert in case of surplus. He said the Constitution was more important than government's priority policy on gas.

Sui Southern Gas Company (SSGC) Deputy Managing Director Operations Syed Muhammad Saeed Rizvi informed committee members that approximately 70 million cubic feet per day (mmcfd) of gas produced in Sindh province was redirected to Balochistan during the winter.

Conversely, during the summer months, excess gas from Balochistan was supplied to Sindh.

The official said that the Balochistan High Court had directed the SSGC to increase the protected consumer limit for Balochistan from 90 mmcfd to 360 mmcfd which significantly affected monthly bills, especially during winter. The court had fixed rates at PKR 2,551 per month for summer (April to October) and PKR 8,848 per month for winter (November to March).

Meanwhile, Malik said that the company had already appealed before the court, and government would look into this issue in the light of the committee's recommendations.

The SSGC official also informed the panel the company has been facing PKR 25 billion financial losses as a result of the court's verdict to supply indigenous gas to domestic sector on a fixed rate.