Imagine a country drowning in natural gas, forced to sell it at rock-bottom prices and even consider storing it offshore. That's the reality Pakistan faces right now, thanks to a perfect storm of surging renewable energy production, plummeting industrial demand, and long-term gas contracts that are suddenly looking like expensive anchors.
In a bold move, Pakistan has just canceled 21 liquefied natural gas (LNG) shipments from Italian energy giant Eni, according to official documents and insider sources. This isn't just a minor adjustment – it's a dramatic shift aimed at stemming the tide of excess gas flooding the country's network.
Here’s the breakdown: Pakistan LNG (PLL), the state-owned company, notified the Ministry of Energy on October 22nd that 11 cargoes scheduled for 2026 and 10 for 2027 would be axed at the request of gas distributor SNGPL. Only the January shipments in both years, plus the December 2027 delivery, will be kept to meet winter demand peaks.
But here's where it gets controversial: Eni, bound by a long-term contract signed in 2017, reportedly agreed to this cancellation under the contract's flexibility clauses. With global LNG demand soaring, suppliers like Eni typically stand to profit more by selling on the spot market than honoring long-term deals.
Eni remained tight-lipped, while PLL, SNGPL, and Pakistan's petroleum ministry didn't respond to requests for comment.
And this is the part most people miss: Pakistan isn't just cutting ties with Eni. It's also renegotiating deals with Qatar, its other major LNG supplier. Talks are underway to defer or resell Qatari cargoes, leveraging existing contract clauses. A technical team from Qatar recently visited Karachi to discuss scheduling, though no decisions have been finalized.
This strategic pivot comes as Pakistan grapples with a gas glut. Long-term deals with Qatar and Eni guarantee around 120 cargoes annually – roughly nine per month from Qatar and one from Eni. But with power producers increasingly relying on solar and hydropower, and industries generating their own electricity, demand has plummeted.
The result? Pakistan is stuck with surplus gas, forcing it to sell at steep discounts, curb domestic production, and explore unconventional solutions like offshore storage.
Here's the million-dollar question: Is Pakistan's gamble on renegotiating LNG contracts a smart move, or will it backfire if global gas prices surge again?
Eni's last shipment to Pakistan arrived in January, and sources confirm a deal to halt further deliveries in 2025. In 2024, Eni sent 12 cargoes.
As Pakistan navigates this energy tightrope, one thing is clear: the country's gas strategy is undergoing a seismic shift, with far-reaching implications for its energy security and economic stability.
What do you think? Is Pakistan making the right call, or is it playing with fire? Let us know in the comments below.
