Pakistan Negotiates LNG Shipments Delay with Qatar Over Lower Energy Demand
Pakistan is negotiating with Qatar to delay 10 liquefied natural gas cargoes scheduled for delivery next year as the country faces a decline in electricity consumption due to slow economic activity and high energy costs.
According to Petroleum Minister Musadik Malik, five LNG shipments scheduled for 2025 have already been canceled. The government is now in talks to postpone five more shipments to manage the country’s LNG surplus.
“Pakistan has already canceled five LNG cargoes, and we are considering delaying five more,” Malik said. He added that LNG is now surplus’ because LNG-powered power plants are not running in the country due to the country’s economic condition. Private companies also are reluctant to buy LNG at the current price.
Normally, Pakistan imports about 120 to 140 LNG cargoes in a year. Of these, 85-100 are under long-term supply arrangements with Qatar, while the rest are spot imports. However, Pakistan has not imported spot cargoes for nearly a year as electricity supply has crossed the demand. This is owing to lower electricity usage which has declined by 2% to 18% in different months.
In response to this, the government has been encouraging IPPs to end contracts early as a way of reducing costs. The government also introduced an incentive program encouraging higher energy consumption, especially during winter.
Despite these, electricity usage has remained low even before the winter season. This has resulted in consumption falling to around 11,000 MW, far below the country’s installed capacity of over 40,000 MW. This is largely because of lower industrial and commercial activity and a shift towards renewable energy sources.
Relatedly, Petroleum Minister Musadik Malik discussed recent talks with Saudi Arabia. Pakistan signed 34 memorandums of understanding (MoUs) worth $2.7 billion with Saudi companies across various sectors. The agreements include investments in oil refinery projects and human resources.
Malik also clarified the position of oil imports from Russia. He termed media reports that Pakistan had managed to purchase Russian oil at discounted rates as totally incorrect. There had been talk between the two countries, but the government has put plans to import Russian oil via a public sector entity on ice.
In summary, Pakistan is negotiating with Qatar to reschedule its LNG import schedule as the country’s energy consumption has significantly declined, due to economic issues and the shift to renewable energy sources.
