Qatar to divert 24 LNG cargoes next year

Islamabad will bear loss if Doha sells gas in open market below contract price

ISLAMABAD:

Qatar has agreed to divert 24 liquefied natural gas (LNG) cargoes in 2026 under a net proceeds differential formula as consumer demand falls sharply in Pakistan.

Under the agreed mechanism, Pakistan will bear the loss if Qatar sells LNG cargoes in the open market below contract price, revealed a report submitted to the Economic Coordination Committee (ECC).

This differential will be passed on to LNG consumers. In this regard, the federal government will issue policy guidelines to the Oil and Gas Regulatory Authority (Ogra).

Sources told The Express Tribune that Pakistan State Oil (PSO) informed the government that Qatar Energy had shown its willingness on the net proceeds differential for 24 LNG cargoes in the year 2026.

The government of Pakistan had signed two LNG supply agreements with Qatar and one monthly cargo deal with Eni. Under the Qatar deal, Pakistan is getting nine cargoes per month and as part of the Eni agreement, the country is receiving one cargo each month.

Owing to various challenges, especially because of low offtake by power producers, there is serious "demand destruction" in the gas sector. As a result, Sui Northern Gas Pipelines Limited (SNGPL) has surplus LNG. In a mitigating measure, the Petroleum Division and Pakistan LNG Limited (PLL) worked with Eni and 11 cargoes were sold in the market in 2025 on a net proceeds differential basis. In parallel, the Petroleum Division and PSO worked with Qatar Energy and deferred five LNG cargoes slated for delivery in 2025. Because of continued disruption in demand, both SNGPL and PSO initially estimated a surplus of around 177 cargoes from July 2025 to December 2031, translating into 24 surplus cargoes per year. They requested the Petroleum Division to take up the matter with Qatar Energy for slowing down LNG supplies.

To address the challenge, the Petroleum Division presented a summary to ECC on August 19, 2025, seeking authorisation to discuss the matter with the Qatari government as per the following options.

One – Reducing surplus cargoes on a mutual basis without any commitment/ compensation. Two – Curtailing surplus cargoes now and buying the same quantity after 2031 by extending the contract period. Three – Exercising the net proceeds option in the remaining contract period for which a separate summary will be placed before the ECC for issuing policy guidelines to Ogra in order to pass on the impact of net proceeds differential to power and other RLNG consumers. Four – Amending the contract where LNG procurement from Qatar Energy is designated for onward sales to Sui companies.

Following ECC's approval, a delegation comprising the minister for petroleum, secretary petroleum, minister for privitisation, PSO MD, SNGPL MD and a representative of the Attorney General of Pakistan visited Doha from August 25-27, 2025.

A series of meetings were also held at the Petroleum Division with representatives of the Ministry of Foreign Affairs, Attorney General of Pakistan, SNGPL, PSO, the task force on power and other stakeholders. It was agreed that the net sales proceeds option shall be exercised initially for 2026 and based on the outcome, further steps shall be decided.

Accordingly, as per provisions of PSO's quarterly sale-purchase agreements and the annual commitment, quantities and estimates were conveyed to Qatar Energy on September 30, 2025.

Later, during the contractual time window of October 15 to November 15, 2025, dedicated to discussions on the net proceeds differential, PSO asked Qatar to adopt the net proceeds option for 29 cargoes in the year 2026. Now, PSO has revealed that Qatar Energy has shown its willingness on the net proceeds differential for 24 cargoes next year.

Furthermore, Qatar Energy will remain engaged to find out more workable solutions for managing the net proceeds differential clause for a win-win situation. PSO will close discussions before the November 15 deadline. In parallel, as per projected demand and supply, the net proceeds differential will also apply to 21 cargoes from Eni – 11 for 2026 and 10 for 2027.