Islamabad is bracing for a possible shortage of liquefied natural gas (LNG) following April 14, as Qatar has ceased its LNG production amid escalating tensions in the Middle East. This development was highlighted during a recent session of the Senate Standing Committee on Petroleum, where officials expressed deep concern over the abrupt halt in LNG shipments from Qatar, a key supplier for Pakistan’s energy needs. The committee meeting, chaired by Senator Manzoor Ahmed, shed light on the gravity of the situation and its potential impact on Pakistan’s energy security in the weeks ahead.
Qatar, recognized as the world’s second-largest LNG producer after the United States, has traditionally been the primary source of Pakistan’s imported LNG. The suspension of gas production and exports from Qatar comes as a direct consequence of the ongoing conflict involving Israel and Iran, which has disrupted regional stability and logistics. This conflict has not only affected geopolitical dynamics but has also severely interrupted the supply chains that Pakistan depends on to fuel its power plants, especially during periods of peak electricity demand.
Prior to the outbreak of hostilities, Pakistan had scheduled the arrival of eight LNG cargoes in March to meet its growing energy requirements. However, only two shipments successfully reached Pakistani shores before the conflict escalated, while the remaining six were delayed indefinitely. The situation remains precarious for April as well, with only half of the six planned LNG shipments expected to arrive on time. This disruption has raised alarms about the country’s ability to maintain steady energy supplies if the current conditions persist beyond mid-April.
In response to this looming crisis, Pakistani authorities have taken several immediate steps to mitigate the impact. Efforts to boost domestic natural gas production have been intensified to partially compensate for the shortfall in imported LNG. Additionally, emergency supply management plans have been put into motion to optimize the distribution of available gas resources. Under these contingency measures, the supply of system gas is projected to decrease slightly from 655 million cubic feet per day (MMCFD) to 642 MMCFD, while regasified LNG (RLNG) supply is expected to increase marginally from 28 to 30 MMCFD. Overall, the total gas supply is anticipated to decline from 683 MMCFD to approximately 672 MMCFD.
The committee was also informed about adjustments in gas allocation across various sectors to balance demand and supply. Domestic consumption is forecasted to rise from 399 to 420 MMCFD, reflecting increased household usage. Conversely, gas supply to the commercial sector is likely to be curtailed from 10 to 8 MMCFD. Industrial users, particularly process industries, may face a reduction from 140 to 120 MMCFD, while captive power plants are expected to see a decrease from 82 to 70 MMCFD. Interestingly, the power generation sector might receive a slight boost in gas supply, increasing from 18 to 20 MMCFD, and fertilizer plants are also slated for a minor increase from 29 to 30 MMCFD, underscoring efforts to prioritize critical industries.
Looking ahead, Pakistan has secured an alternative LNG supply agreement with a company based in Azerbaijan, which could serve as a backup if demand surges or the Qatar supply disruption continues. However, this option comes with a significant cost implication, as LNG from Azerbaijan is estimated to be nearly three times more expensive than Qatari gas. This highlights the financial challenges Pakistan faces in diversifying its energy imports amid geopolitical uncertainties.
The root of this supply crisis lies in QatarEnergy’s decision to halt operations at its massive LNG production facility, which has a capacity of 77 million tons per annum. The company has invoked force majeure on its LNG shipments, citing the volatile regional conflict as the cause. Saad al-Kaabi, Qatar’s Energy Minister, recently conveyed that even if the conflict were to end immediately, it could take weeks or even months for LNG deliveries to normalize. This underscores Qatar’s critical role in the global LNG market and the far-reaching consequences of disruptions originating from geopolitical conflicts.
In summary, Pakistan finds itself in a challenging position as it navigates the fallout from the Middle East conflict that has directly impacted its LNG imports. The government’s proactive measures to increase domestic production and reallocate gas supplies reflect an urgent attempt to safeguard the country’s energy stability. However, the situation remains fluid, and the coming weeks will be crucial in determining how effectively Pakistan can manage this energy shortfall while exploring costlier alternatives to meet its growing demand.
