KARACHI: Pakistan’s LNG challenge has entered a more difficult phase, shifting from concerns over securing adequate supplies to the growing problem of obtaining imported gas at prices affordable for consumers, businesses and the wider economy.
According to a report titled “LNG Supply Shock — From Contract Disruption to Energy-Cost Pressure” released by the Institute of Cost and Management Accountants of Pakistan (ICMAP), geopolitical disruptions in 2026 dramatically altered the country’s LNG outlook.
Earlier expectations of an LNG surplus estimated at around $5.6 billion have given way to a sharp supply squeeze, forcing Pakistan to rely increasingly on the costly international spot market.
Between March and September 2026, Pakistan secured only 17 LNG cargoes — 10 under long-term contracts and seven through the spot market — significantly below its typical import requirements.
The financial impact has been substantial. Pakistan’s spot LNG procurement cost rose from around $18.4 per mmBtu in April to $21.88 per mmBtu in July 2026, the highest spot price paid since the global energy crisis of 2022.
Subsequent bids exceeding $26 per mmBtu were rejected as unaffordable, despite being broadly in line with prevailing Asian LNG benchmark prices.
The higher LNG costs have also sharply increased power-generation expenses. According to the report, the cost of LNG-based electricity generation jumped from Rs21.73 per unit in August 2025 to Rs45.93 per unit in August 2026, representing an increase of more than 111 per cent.
Overall power-generation costs increased by nearly 38pc year-on-year, putting additional pressure on electricity tariffs, government finances and the energy sector’s circular debt.
The report said the crisis had exposed structural weaknesses in Pakistan’s energy framework, particularly its reliance on a limited number of LNG suppliers and relatively inflexible long-term contracts.
These constraints reduced the country’s ability to respond quickly when global LNG markets tightened, according to the study.
By comparison, several Asian economies, including Bangladesh, India, Thailand, Taiwan and Vietnam, were able to source alternative supplies through more diversified procurement strategies and broader supplier networks, the report noted.
While acknowledging government efforts to secure additional Qatari cargoes, expand government-to-government supply arrangements and pursue new agreements, including the partnership with Oman’s OQ Trading, ICMAP said such measures alone would not shield Pakistan from future international energy shocks.
The study called for a more resilient energy strategy centred on supplier diversification, greater contractual flexibility, improved demand forecasting and the development of strategic fuel reserves.
It also recommended accelerating investment in domestic energy resources, including hydropower, renewable energy, nuclear power and indigenous fuels, to reduce Pakistan’s exposure to volatile international LNG markets.
The report concluded that Pakistan’s LNG challenge is no longer simply about securing sufficient cargoes. The growing concern is whether the country can secure energy at prices that its economy and consumers can sustain.
