KARACHI: Pakistan is moving away from liquefied natural gas (LNG) imports as a key component of its energy strategy, according to the country’s Petroleum Minister Ali Pervaiz Malik. This marks a significant shift for the South Asian nation, which had previously been a growing LNG buyer, according to a news report.
LNG shipments to Pakistan peaked in 2021, but have since declined due to the surge in global prices triggered by Russia’s invasion of Ukraine. Ship-tracking data shows a 5.0% decrease in LNG deliveries so far this year, with a further decline expected as Pakistan negotiates to reduce contracted deliveries with suppliers.
“This is not a temporary blip,” Malik stated in an interview in Islamabad. “We have to readjust our strategy.”
A decade ago, Pakistan planned to expand its LNG imports significantly to offset its decreasing domestic natural gas production. However, the sharp rise in LNG prices over recent years, coupled with decreased power demand due to government efforts to secure loans from the International Monetary Fund (IMF) by raising utility rates, has made LNG imports less viable.
While there are new power projects in development, Malik indicated that LNG would not play a role in these due to its high cost. Pakistan continues to be tied to long-term LNG purchase agreements, including with Qatar, the largest LNG supplier to the country. Malik revealed that he had recently met with Qatari officials to discuss delaying LNG deliveries over the next five years.
Malik is expected to recommend that Pakistan either adhere to the current contract with Qatar or come to a mutually agreeable arrangement with the supplier. He also mentioned that Pakistan’s contract with Eni SpA, another LNG supplier, offers more flexibility, allowing Pakistan to sell surplus LNG on the spot market and share profits.
In response to rising costs, Malik outlined plans to incentivize local gas exploration as a means to reduce energy costs and alleviate the country’s debt burden. “We are hopeful that any increase in gas demand will be compensated by local supplies, offsetting the decline in LNG imports,” he said.
As Pakistan rethinks its approach to energy, the government is increasingly focusing on domestic resources to meet its energy needs.
