RLNG consumption in power sector: Govt constitutes panel to craft operational plan
- Pakistan remains obligated to receive RLNG cargoes under long-term agreements with QatarEnergy
ISLAMABAD: The government has constituted a committee to review existing arrangements and develop an integrated operational plan for the consumption of Re-gasified Liquefied Natural Gas (RLNG) in the power sector, sources told Business Recorder.
In a letter to the Additional Secretary of the Power Division, Executive Director of the Independent System and Market Operator (ISMO) Muhammad Zakria noted that electricity demand from the national grid has shown a declining trend in recent years due to increasing penetration of rooftop solar generation and other factors.
At the same time, Pakistan remains obligated to receive RLNG cargoes under long-term agreements with QatarEnergy.
However, RLNG-based power generation is relatively expensive in the merit order. As a result, operating RLNG-fired plants often requires curtailment or shutdown of comparatively cheaper generation sources to ensure RLNG consumption.
READ MORE: PD in a quandary over less RLNG off-take by power plants
The ISMO stated that this situation also affects gas system operations managed by Sui Northern Gas Pipelines Limited (SNGPL) and power system dispatch carried out by the system operator.
In view of the emerging operational challenges and the need for coordinated planning between the gas and power sectors, a committee comprising the following officials has been constituted: (i) Dr Fiaz Ahmed Chaudhry, Chairman ROC ISMO Board (team leader); (ii) Jawad Naseem, General Manager SNGPL; (iii) Saeed Riaz, SSGCL; (iv) Sarfraz Shah; (v) Abdul Rashid Jokhio, DG (Gas); (vi) Umar Farooq, Planning Consultant ISMO; (vii) Abdul Kabir, Senior Director Operational Planning ISMO; (viii) Nabeel Ali, Deputy Director (Generation Operation Planning) ISMO; and (ix) Asim Riaz, subject matter expert.
The committee’s Terms of Reference (ToRs) include: (i) identifying key root causes of RLNG underutilisation through a comprehensive review of historical and current challenges, including contractual obligations, power system dispatch constraints and gas supply chain limitations; (ii) assessing the unconstrained RLNG consumption potential in the power sector assuming merit-order dispatch and relaxation of existing contractual or operational limitations; (iii) developing an actionable strategy to enhance absorption of surplus RLNG, including prioritised dispatch of RLNG-based power plants, contractual reallocation of gas and operational optimisation across the gas and power sectors; (iv) evaluating the financial and tariff implications associated with increased RLNG utilisation in the power sector; and (v) proposing a forward-looking framework to ensure efficient and coordinated RLNG utilisation in the future.
The development comes amid concerns within the Petroleum Division over ISMO’s request for further reduction in nearly 10 RLNG cargoes, in addition to volumes already reduced, allegedly in violation of the Integrated Generation Capacity Expansion Plan (IGCEP).
In December 2025, ISMO also wrote to the Petroleum Division regarding RLNG demand for the power sector for calendar year 2026, in which the demand was again revised downward.
According to the Special Secretary Petroleum Division, under the Qatar LNG Sale and Purchase Agreements (SPAs), the Annual Delivery Plan (ADP) for LNG cargo scheduling is finalised by October 15 for the subsequent calendar year.
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 used to determine the volume of Net Proceed Differential (NPD) cargoes. Consequently, the ADP for 2026 was finalised with QatarEnergy on November 30, 2025.
However, through its letter dated December 13, 2025, 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 divergence between IGCEP requirements and 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 finalisation of the ADP with Qatar Energy have already created serious operational challenges, including high line-pack pressures and curtailment of around 200 MMCFD of indigenous gas to maintain system integrity.
“To avoid curtailment and potential damage to gas fields — resulting in revenue losses for 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 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.
Copyright Business Recorder, 2026