ISLAMABAD: The Petroleum Division is reportedly in a quandary over the Independent System and Market Operator’s (ISMO) request for further reduction in nearly 10 RLNG cargoes, in addition to already reduced volumes, allegedly in violation of the Integrated Generation Capacity Expansion Plan (IGCEP), well-informed sources in the Petroleum Division told Business Recorder.
In a recent communication with the Power Division, Special Secretary Petroleum Mirza Nasiruddin Mashhood Ahmad, referred to ISMO’s letter of December 13, 2025, regarding RLNG demand for the power sector for calendar year 2026, wherein the demand was again revised downward.
According to the Petroleum Division, under the Qatar LNG Sale and Purchase Agreements (SPAs), the Annual Delivery Plan (ADP) for LNG cargo scheduling is finalized by October 15 for the subsequent calendar year.
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Accordingly, RLNG demand for 2026 was confirmed in line with IGCEP requirements during meetings co-chaired by Minister for Power Sardar Awais Ahmad Khan Leghari and Minister for Petroleum Ali Pervaiz Malik. These figures were also incorporated into the Wood Mackenzie study to determine the volume of Net Proceed Differential (NPD) cargoes. Consequently, the ADP for 2026 was finalized with QatarEnergy on November 30, 2025.
However, through its December 13, 2025 letter, ISMO again revised RLNG demand for the power sector. The Petroleum Division maintains that there is no further room to change or reschedule additional cargoes, as this would create a divergence between IGCEP requirements and the revised demand projections.
The proposed ISMO plan reflects significant changes in monthly RLNG demand, potentially resulting in a surplus of around 10 LNG cargoes.
The Petroleum Division believes that changes in demand after finalization of the ADP with QatarEnergy have already caused serious operational challenges, including high line pack pressures and curtailment of approximately 200 MMCFD of indigenous gas to maintain system integrity.
“In order to avoid curtailment and potential damage to gas fields—resulting in revenue losses to oil and gas companies as well as reduced non-tax revenues for the government—the Power Division should adhere to the volumes agreed under IGCEP,” the Special Secretary Petroleum stated. He also advised the Power Division to manage intra-day and inter-day demand fluctuations within a tolerance range of 5–10 percent.
Meanwhile, the Federal Cabinet has already approved a plan to divert between 24 and 29 surplus LNG cargoes from Qatar under the Net Proceed Differential (NPD) arrangement for 2026, due to declining gas demand—primarily driven by reduced offtake from the power sector. The surplus has created operational and financial challenges for Sui Northern Gas Pipelines Limited (SNGPL).
To manage the imbalance, Pakistan LNG Limited (PLL) and Eni had earlier sold 11 surplus cargoes during 2025 on an NPD basis, while the Petroleum Division and Pakistan State Oil (PSO) negotiated deferral of five Qatar-sourced cargoes.
With demand continuing to decline, SNGPL and PSO projected that approximately 177 additional cargoes could become surplus between July 2025 and December 2031—equivalent to about 24 cargoes annually. Both entities recommended engaging QatarEnergy to reduce or reschedule committed volumes or increase offtake by the power sector.
On August 19, 2025, the Petroleum Division submitted a summary to the Economic Coordination Committee (ECC), seeking authorization to initiate discussions with QatarEnergy on multiple options, including: (i) mutual reduction of cargoes without compensation; (ii) reduction with deferred recovery after 2031 through contract extension; (iii) full exercise of the NPD mechanism for the remaining contract period, subject to OGRA policy guidelines; and (iv) amendment of the agreement to allow re-export or business-to-business sale of LNG cargoes.
Subsequently, a high-level delegation—including the Minister for Petroleum, Secretary Petroleum, the Prime Minister’s Adviser on Privatisation Mohammed Ali, Managing Directors of PSO and SNGPL, and a representative of the Attorney General’s Office—visited Doha from August 25 to 27, 2025, for negotiations.
Further consultations were held in Islamabad involving the Petroleum Division, Ministry of Foreign Affairs, Attorney General’s Office, SNGPL, PSO, and the Task Force on Power. Stakeholders agreed to initially apply the NPD mechanism for 2026, with future decisions to be based on its effectiveness.
In accordance with contractual obligations, PSO communicated Annual Committed Quantities (ACQs) to QatarEnergy on September 30, 2025. During the negotiation window from October 15 to November 15, PSO proposed placing 29 cargoes under the NPD mechanism for 2026.
The ECC was subsequently informed that QatarEnergy had agreed to place 24 cargoes—two per month—under NPD, while expressing willingness to continue discussions on a longer-term solution to manage surplus LNG volumes.
The ECC later authorized PSO and the Petroleum Division to finalize the Annual Delivery Plan for 2026 within a range of 24–29 cargoes under the NPD arrangement. Additionally, Pakistan has placed 21 Eni cargoes—11 for 2026 and 10 for 2027—under NPD due to the projected supply-demand imbalance.
Petroleum Minister has taken a firm stand that he would not breach bilateral/ trilateral contracts and pricing arrangements due to incompetence at the planning level.
Copyright Business Recorder, 2026