Islamabad: The government has secured financial relief worth millions of dollars in LNG terminal capacity payments following negotiations with private terminal operators, after earlier disruptions in liquefied natural gas (LNG) supplies from Qatar impacted the energy supply chain.
Two major LNG terminal operators — Engro Elengy Terminal Pakistan Limited (EEPTL) and Pakistan GasPort Limited (PGPCL) — have agreed to provide one-time commercial relief by partially reducing fixed, dollar-denominated capacity charges payable under long-term contracts.
The development follows supply disruptions linked to regional tensions affecting Qatar’s Ras Laffan LNG facilities, which led to force majeure declarations and temporary interruptions in LNG shipments.
Under existing 15-year agreements, Pakistan is required to pay approximately $538,535 per day — nearly $15 million per month — in capacity and utilisation charges to the two terminals, even in the absence of LNG cargo arrivals.
Officials said PGPCL agreed to extend commercial support for 34 days during the disruption period, while EEPTL provided similar relief for 39 days. The exact financial impact of the concessions has not been disclosed, with authorities describing it as a “one-time arrangement in the larger national interest.”
The revised agreements were approved after clearance from the boards of Sui Southern Gas Company (SSGC) and Pakistan LNG Limited (PLL), the state-owned entities responsible for overseeing the terminal contracts.
Sources said the government initially explored whether force majeure provisions could suspend capacity payments, but concluded that under existing agreements, terminal operators were still legally entitled to receive payments despite supply interruptions.
Petroleum Minister Ali Pervaiz Malik had earlier raised concerns over the contract structure, questioning why capacity payments should continue during force majeure situations.
Subsequently, government negotiators engaged both terminal operators to explore possible relief mechanisms, urging them to consult stakeholders and develop an “out-of-the-box” solution to ease the financial burden.
In a statement, PGPCL said it had agreed to extend commercial support to Pakistan in response to recent LNG supply disruptions, describing the move as a contribution toward national energy security.
The company added that since starting operations in January 2018, its terminal has handled 367 LNG cargoes and maintained high operational efficiency with globally competitive tolling tariffs.
PGPCL further noted that the project represents around $500 million in investment by PGPC, BW Group, and Fauji Oil Terminal & Distribution Company Limited, and operates using the floating storage and regasification unit BW Integrity, owned by Norway’s BW Group and Japan’s Mitsui & Co, with a storage capacity of 170,000 cubic metres and regasification capacity of up to 750 MMcfd.
Energy sector experts say the episode highlights ongoing vulnerabilities in Pakistan’s long-term LNG contracts, where rigid dollar-linked payment obligations continue even during extraordinary supply disruptions.
While the recent relief provides temporary fiscal breathing space, analysts caution that structural challenges remain, as Pakistan remains locked into long-term contractual commitments that continue to strain public finances and foreign exchange reserves.
Story by Khalid Mustafa
