ISLAMABAD: Pakistan’s Petroleum Minister, Ali Pervaiz Malik has said that the government might change its long-term Liquefied Natural Gas (LNG) agreement with Qatar. This comes after concerns about how the deal has impacted the country’s gas supply and financial health.
Malik spoke to the media, explaining that the second LNG contract with Qatar has caused significant problems for Pakistan. He said the country is currently facing an oversupply of imported LNG, largely because of the agreement with Qatar.
“If we didn’t have this LNG contract, we wouldn’t be dealing with the current gas issues,” Malik said. He added that the government would decide whether to revise the LNG deal with Qatar before it expires in 2026, always prioritizing Pakistan’s best interests.
According to Malik, there is a problem with the supply and demand of LNG in the country. He mentioned that 300 million cubic feet per day (mmcfd) of gas has been cut because of LNG issues.
The minister explained that the high price of imported LNG has caused problems, forcing the government to reduce the cheaper local gas production.
Malik also called for a unified energy policy. “There should be one Ministry of Energy, and the Petroleum Division must be included in all major energy decisions,” he said.
The LNG agreement, which was meant to improve energy security, has instead led to an expensive surplus of LNG in Pakistan. The current government is working on finding a solution to balance energy demand and supply.
On the subject of recent gas price increases for protected consumers, Malik clarified that the government had to recover part of the Rs 150 billion subsidy given to domestic consumers. Additionally, the government diverted Rs250 billion worth of LNG from the power sector to the domestic sector. These steps forced the government to increase fixed gas charges by Rs 200.
Malik noted that the country is under an IMF program, which requires a zero-deficit budget, and this is why the gas charge increase was necessary.
International Investment and Exploration
On international investment, the minister stated that Pakistan offers equal opportunities to companies from China, Russia, and the United States in the mining sector. “We don’t discriminate. Any company from these countries can bid when we issue tenders,” he said.
Regarding the Iran-Pakistan (IP) gas pipeline project, Malik shared that both countries are currently in arbitration in Paris, and a ministerial committee is looking into the situation, especially with rising tensions between Iran and the US.
Refinery Upgradation and Oil Exploration
Malik also discussed refinery upgrades. He acknowledged the justified demands from refineries and added that tax exemptions on refinery outputs and margin regulations were necessary for development. However, he mentioned that undue burdens should not be placed on refineries if they are to invest billions in upgrades.
The government had exempted sales tax on refineries for the 2024-25 budget, leading to a loss of Rs 34 billion. The IMF had also warned that continuing zero-rating could create problems, especially since the government planned to impose a 5% sales tax in the 2025-26 budget.
Lastly, Malik criticized the 40% corporate tax on exploration companies, calling it too high and harmful to the government’s efforts to encourage local oil and gas exploration. “This tax goes against our goal of indigenization,” he said.
