Pakistan defers LNG agreement with Qatar until 2026

December 04, 2024 (MLN): Pakistan has deferred an agreement to buy liquefied natural gas from Qatar for a year, Petroleum Minister Musadik Malik said on Wednesday, and will now receive the contracted LNG cargoes in 2026 instead of 2025, Reuters reported.

"We currently have a surplus of LNG, so we are not importing any new cargo," said Malik. There were no financial penalties for deferring, rather than cancelling, the order, he added.

Annual power use in Pakistan, which gets over a third of its electricity from natural gas, has fallen 8-10% year-on-year over the past three quarters, its power minister told Reuters in November, primarily due to higher tariffs curbing household consumption.

The South Asian nation has deferred five LNG cargoes from Qatar and is negotiating to defer five more with other markets, Malik told journalists, without disclosing the names of the sellers.

The government said in November it was slashing its electricity tariffs over the winter to boost consumption and cut the use of natural gas for heating.

Many power utilities in Pakistan have had to curtail or even halt operations in winter months due to demand dropping by up to 60% from peak summer levels.

Malik told Reuters in June that Pakistan was unlikely to buy LNG cargoes on the spot market until at least the beginning of winter in November due to oversupply and high prices.

Pakistan, which last bought a spot LNG cargo in late 2023, cancelled its spot LNG tender for delivery in January owing to oversupply and a lack of buyers in Pakistan at spot prices.

Malik also denied local media reports that Pakistan was closing a deal to import one cargo of crude oil from Russia each month from January.

He said his government had restarted talks with Russia and was looking to solve obstacles such as "insurance, reinsurance, deal structure, shipping lines and ship cargo size", but had not concluded a deal.

The previous caretaker government had decided not to pursue a government-to-government agreement with Russia, allowing the private sector to step in, Malik said.

Pakistan signed a deal with Russia in 2023 to import crude oil for local refining, which included a 100,000 metric ton shipment to state-owned Pakistan Refinery Limited (PKRF.PSX), opens new tab.

Under that arrangement, Pakistan paid for the crude at a discounted rate using Chinese yuan.

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