Pakistan is preparing to renegotiate its liquefied natural gas (LNG) supply agreement with Qatar, utilizing a provision that allows either party to review or terminate the 10-year contract after a decade. The move comes as the government seeks more favorable terms to address rising energy costs and meet the country’s growing demands.
Federal Minister for Petroleum Musadik Malik revealed this development during a briefing to the National Assembly’s Standing Committee on Energy (Petroleum Division), emphasizing the government’s strategy to optimize energy agreements and reduce financial burdens.
Qatar and Azerbaijan LNG Agreements
Malik noted that Pakistan’s existing LNG deal with Qatar, which has a 13.37% slope (price linked to Brent crude oil), is more expensive than similar international contracts. He stated, “The Qatar agreement is costly, and we will negotiate better terms next year.”
In contrast, he highlighted the LNG supply arrangement with Azerbaijan, which operates on a take-and-pay basis. This deal offers greater flexibility, allowing Pakistan to purchase cargoes as needed without long-term commitments. “Azerbaijan provides one LNG cargo per month with the option to decline purchases if necessary,” Malik explained, calling it a more cost-effective option.
Energy Sector Challenges and Sindh’s Gas Shortage
Beyond LNG agreements, Malik stressed the need for major refinery upgrades to meet Euro-V fuel standards. Additionally, he announced that a biofuel policy will be presented to the cabinet within a month.
The committee meeting, chaired by Syed Mustafa Mehmood, also addressed Sindh’s ongoing gas shortages. Lawmakers from Sindh raised concerns over the diversion of surplus gas to other provinces, arguing that it violates constitutional provisions.
Sindh’s Syed Naveed Qamar insisted that gas should be prioritized for producing provinces, yet Sindh continues to face shortages. The Petroleum Secretary disclosed that while 80% of Sindh’s industry relies on local gas, Punjab receives 80% imported LNG. However, a significant portion of Sindh’s gas is supplied to Balochistan, where losses exceed 50%.
Committee Chairman Mehmood questioned why gas is being diverted to areas with high losses and poor recovery rates. Officials from SSGC (Sui Southern Gas Company) responded that the Sindh High Court has placed limits on consumer billing, a decision that is currently under legal review. Malik added that the responsibility for Balochistan’s gas losses should be addressed at the provincial level.
The meeting also discussed Balochistan’s high gas theft rates, with committee member Moin Amir Pirzada suggesting the establishment of a separate gas management company for the province to tackle the issue more effectively.
Conclusion
Pakistan’s efforts to renegotiate the Qatar LNG deal and expand flexible energy contracts with countries like Azerbaijan reflect a broader strategy to manage rising energy costs. Meanwhile, challenges in domestic gas distribution and losses continue to be a major issue, particularly for Sindh and Balochistan, requiring policy reforms and better resource management.
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