ISLAMABAD: Pakistan and Qatar are close to revising their liquefied natural gas (LNG) supply agreements, with QatarEnergy offering lower prices under a proposed arrangement that would reduce Pakistan’s annual LNG imports.
Thank you for reading this post, don't forget to subscribe!Sources in Pakistan State Oil (PSO) said QatarEnergy had offered a revised price of 11.96% of Brent crude oil under the pricing formula for both contracts. Pakistan had sought a reduction to 10.20% of Brent, while Qatar initially proposed higher rates under the existing agreements.
The two long-term contracts, signed in 2016 and 2021, are due to expire in 2031. Together, they provide for 6.75 million tonnes of LNG annually, equivalent to 108 cargoes.
Under the proposed arrangement, annual supplies would be reduced to 66 cargoes, while 210 cargoes would be deferred over four years after 2031. PSO is seeking government approval to finalise the revised deal by November 3.
The price review follows a decline in demand from the power sector, which has created a surplus of LNG in Pakistan’s gas transmission system. In 2023, the government authorised PSO to negotiate a reduction of two cargoes per month with QatarEnergy. Consequently, 24 cargoes were reduced under a Net Proceeds Differential arrangement in the 2026 annual delivery plan.
Both existing agreements operate on a take-or-pay basis, requiring Pakistan to pay for contracted supplies regardless of whether the gas is fully consumed. Their limited flexibility for diverting cargoes has also created financial challenges for PSO when domestic demand falls.
The price revision process was formally initiated in March 2026. QatarEnergy issued a price review notice for the second supply agreement on March 7, while PSO issued a notice for the first agreement on March 19.
The agreements provide for negotiations to revise prices in line with contractual provisions and comparable LNG market benchmarks. If the parties fail to reach an agreement within the stipulated period, termination may be an option, although it could pose risks to Pakistan’s energy supply security.
The proposed revision aims to ease the financial burden of long-term LNG commitments while aligning imports more closely with domestic demand. The final outcome will depend on the government’s decision on QatarEnergy’s latest offer.
Story by Zafar Bhutta
