Pakistan is facing a difficult decision over additional liquefied natural gas (LNG) imports for the coming winter, with delays in approving a proposed 22-cargo procurement plan raising concerns about gas supplies to households, power plants, industries and fertilizer manufacturers.
The Petroleum Division has urged the government to begin the import process, warning that insufficient supplies could force authorities to restrict gas deliveries to several economic sectors to prioritise domestic consumers.
The Cabinet Committee on Energy (CCoE) has yet to formally approve the proposal, according to a report published by The Express Tribune.
The decision involves a trade-off between securing enough fuel to meet winter demand and limiting pressure on Pakistan’s foreign exchange reserves. With deliveries under existing contracts uncertain, officials are also weighing the cost of purchasing LNG from international spot markets.
Proposed LNG Imports Face Approval Delays
The Petroleum Division sought approval last month to arrange 22 LNG cargoes for the winter period. Under the original schedule, procurement arrangements for the first 12 shipments were to begin between October 7 and 10. Those deadlines have passed without the required formal approval.
Petroleum Minister Ali Pervaiz has confirmed that the matter remains pending before the committee.
The proposed procurement plan envisaged several supply channels. Pakistan LNG Limited (PLL) was expected to arrange four cargoes from Azerbaijan, while Pakistan State Oil (PSO), in collaboration with other market participants, was to arrange another four. Three additional cargoes were proposed through a supplier nominated by the US government.
The remaining shipments would help cover anticipated demand across the power and residential sectors.
At an estimated average cost of $87 million per cargo, 22 shipments could require close to $2 billion. However, the final cost would depend on the number of cargoes purchased, their contractual terms and prevailing international prices.
An earlier estimate placed the winter import bill at approximately $1.29 billion for 22 cargoes, based on a mix of long-term contracted supplies and more expensive spot-market purchases. The difference reflects the assumptions used in the respective estimates and the composition of the proposed supply arrangements.
Qatar LNG Uncertainty Increases Supply Risks
Pakistan had expected to receive at least 11 LNG cargoes from Qatar under a long-term supply agreement. However, Qatar’s extension of its force majeure status until November has raised uncertainty over the delivery of contracted shipments, according to officials cited in the report.
Force majeure refers to circumstances specified under a contract that may excuse or suspend certain obligations when extraordinary events prevent performance. Its effect on individual LNG deliveries depends on the applicable contract and circumstances.
Officials have considered reducing the proposed import volume from 22 cargoes to 15 to contain costs. But a smaller procurement programme could leave Pakistan with less flexibility if domestic demand rises sharply or contracted deliveries fail to materialise.
The government may also need to purchase LNG through the spot market, where prices can fluctuate with international supply conditions. Such purchases could increase the import bill, particularly if procurement is delayed until demand peaks.
A separate report by Business Recorder on the winter gas management plan outlines the Petroleum Division’s proposed arrangements and the risks associated with uncertain deliveries. The report also makes clear that proposed procurement measures should not be treated as completed purchases.
Winter Gas Demand Could Nearly Double
Pakistan’s daily gas demand is projected to rise from around 850 million cubic feet per day (mmcfd) to 1,600 mmcfd during winter, according to the figures cited in the report.
Demand on the Sui Northern Gas Pipelines Limited (SNGPL) network is expected to increase from approximately 550 mmcfd to 1,100 mmcfd, putting additional pressure on supplies in northern Pakistan.
Under the Petroleum Division’s proposed gas management plan, residential consumers would receive priority. The proposal envisages household gas availability from 5 a.m. to 10 p.m., with adequate pressure maintained during cooking hours.
Industrial, power and fertilizer consumers would receive gas according to availability. Supplies to compressed natural gas (CNG) stations could also be curtailed, particularly in December 2026 and January 2027.
If shortages become severe, authorities could reduce supplies to cement plants and other industrial consumers to protect household demand. These restrictions remain contingent on the final government decision and the availability of imported and domestic gas.
The government’s approach to winter supply management has also been discussed in Dawn’s report on the proposed gas load-management plan.
Fertilizer Plants Face Potential Gas Cuts
Fertilizer production is another concern because several plants depend on gas supplies through the SNGPL network.
According to figures attributed to the Ministry of National Food Security and Research, the closure of Fauji Fertilizer Bin Qasim, Fatima Fertilizer and Agritech could result in a urea shortfall of approximately 109,000 metric tonnes per month.
The actual impact would depend on whether supplies are interrupted, how long any shutdowns last, existing fertilizer stocks and production levels at other plants.
Officials have also compared the foreign exchange implications of importing LNG with those of importing urea and providing subsidies. The Petroleum Division’s assessment suggests that the cost of importing and supplying LNG for one month could exceed the cost of importing urea. That comparison, however, depends on the assumptions used for fuel prices, fertilizer requirements and subsidy costs.
Foreign Exchange Reserves Add to the Pressure
The cost of additional LNG imports comes as Pakistan manages its external financing requirements. The October 22 report put official foreign exchange reserves at slightly above $21 billion following the country’s $3 billion Eurobond borrowing ahead of a major debt repayment of a similar amount.
Purchasing additional LNG could help reduce the risk of winter fuel shortages, but expensive spot-market imports would increase foreign currency requirements. Conversely, insufficient supplies could disrupt electricity generation, industrial activity and fertilizer production.
The government has yet to settle the final import volume and procurement arrangements. Its decision will determine how much LNG Pakistan seeks for the winter and how it balances energy security against the financial cost of securing supplies.
Until formal approval and procurement arrangements are confirmed, the proposed cargoes should be regarded as planned imports rather than secured deliveries.
