ISLAMABAD: The government has authorised Pakistan State Oil (PSO) to finalise a key agreement with Qatar by *November 15, allowing the diversion of up to *24 LNG cargoes in 2026 under a net proceeds differential formula.
In a recent meeting, the Petroleum Division informed the Economic Coordination Committee (ECC) that PSO needed approval to conclude discussions with Qatar Energy before the deadline. It proposed authorising PSO and the Petroleum Division to finalise the Annual Delivery Programme (ADP) for 2026 with a cargo range of 24 to 29.
The ECC approved the request, noting that Pakistan currently faces surplus LNG supplies due to declining consumption — particularly from power producers — which has triggered demand destruction in the gas system. As a result, Sui Northern Gas Pipelines Limited (SNGPL) is also carrying excess LNG.
To mitigate the surplus, the Petroleum Division and Pakistan LNG Limited earlier arranged the sale of 11 Eni cargoes in 2025 based on the net proceeds differential, while PSO also negotiated deletion of some 2025 cargoes with Qatar Energy. A cumulative surplus of 177 cargoes is projected from July 2025 to December 2031 — around 24 cargoes per year.
Multiple options were assessed, including mutual reduction of surplus cargoes, procurement deferral beyond 2031, and adopting the net proceeds differential formula for the remaining contract period. The ECC agreed that a separate summary will be submitted for guidelines to OGRA to pass on the financial impact to power producers and other LNG consumers.
Following earlier ECC directives, a high-level delegation — including the petroleum minister, secretary petroleum, PSO and SNGPL chiefs, PM’s adviser and legal representatives — visited Doha from August 25–27, 2025. Subsequent meetings confirmed that the net proceeds differential is the most viable solution.
PSO has since informed the Petroleum Division that Qatar Energy is willing to apply the net proceeds differential for 24 cargoes in 2026 and remains open to exploring long-term mechanisms to manage surplus LNG.
The ECC approved the proposal under its agenda item “Update on Negotiation with State of Qatar for Mitigation of Surplus LNG.”
Story by Zafar Bhutta
