ISLAMABAD: Energas, a consortium comprising Pakistan’s Lucky Group and QatarEnergy, has abandoned its plan to establish a liquefied natural gas (LNG) terminal at Port Qasim, citing changes in national energy policy, unresolved regulatory issues and concerns over the project’s commercial viability.
Thank you for reading this post, don't forget to subscribe!The development comes as the Port Qasim Authority (PQA) has warned the consortium that its final letter of intent (LOI) could be cancelled unless it provides unconditional acceptance by November 30, 2026, along with an updated project status. The authority has also warned that failure to meet the deadline could result in the forfeiture of the $2 million initial concession fee deposited by Energas.
In response, Energas Chairman Muhammad Ali Tabba has approached Prime Minister Shehbaz Sharif, seeking a refund of the amount and requesting that the consortium be absolved of contractual liability for delays and its inability to proceed with the project.
Tabba argued that the consortium had undertaken the self-financed project in good faith to meet Pakistan’s energy requirements at the time of its conception. However, he said subsequent changes in national energy needs and persistent unresolved policy and fiscal matters had undermined its viability.
According to Energas, the government had committed to resolving outstanding issues following discussions with Qatar, but key matters remained unresolved, discouraging further investment and preventing the consortium and QatarEnergy from reaching a final investment decision.
Among the outstanding concerns were pipeline capacity allocation, gas transportation agreements with relevant companies, access to the terminal’s tie-in area, exemptions from third-party access requirements and tax incentives.
QatarEnergy had reportedly booked terminal capacity and committed to supplying additional LNG at a price linked to approximately 10.2% of Brent crude prices to support utilisation of the proposed facility. However, the project failed to progress amid changing market conditions and continuing disagreements over the regulatory framework.
Energas also cited Pakistan’s Integrated Energy Study, whose final report was issued on March 28, 2025. According to the consortium, the study indicated that no additional LNG terminals would be required over the following five years, significantly weakening the economic rationale for the proposed investment.
The consortium further highlighted changes to the tax regime. Under Pakistan’s LNG Policy 2011, terminal operators had been eligible for a five-year tax holiday beginning from the commercial operations date. However, the exemption was withdrawn for new terminals in June 2021, while existing beneficiaries continued to enjoy the facility. Energas attributed the change to conditions imposed by the International Monetary Fund (IMF).
The project was initially conceived when Pakistan was seeking to expand its LNG import infrastructure. However, the country’s energy requirements subsequently changed, with authorities seeking to divert existing contracted LNG cargoes amid shifting demand and supply conditions. Disruptions associated with tensions involving Iran and the closure of the Strait of Hormuz further complicated the LNG supply outlook.
Pakistan had also amended its LNG policy ahead of Prime Minister Shehbaz Sharif’s visit to Qatar in August 2022, aiming to remove restrictions on new private-sector terminals supplying part of their capacity to the government and encourage further cooperation with Qatar.
Despite these efforts, the proposed terminal remained stalled for approximately three years.
The PQA, however, has rejected the consortium’s position that the outstanding matters justify its failure to proceed. In its correspondence, the authority maintained that the $2 million payment was an initial or partial concession fee under Clause 2.6(i) of the Project Guidelines 2019, rather than a refundable advance.
The authority said the applicable guidelines and the final LOI provided for termination and forfeiture of the amount if the developer failed to fulfil the prescribed conditions or provide unconditional acceptance within the stipulated timeframe, unless otherwise agreed by the parties.
PQA also maintained that arranging project financing, completing technical and environmental studies, obtaining regulatory approvals, securing pipeline access and ensuring compliance with applicable requirements were the developer’s responsibilities.
The dispute places the proposed LNG terminal’s future in doubt and highlights the challenges facing private-sector investment in Pakistan’s energy infrastructure amid changing demand forecasts, regulatory uncertainty and evolving government priorities.
Story by Khaleeq Kiani
