Islamabad (TDI): Qatar has agreed to divert 24 liquefied natural gas (LNG) cargoes to Pakistan in 2026 under a new “net proceeds differential” arrangement, as domestic gas demand continues to decline sharply.
According to a report submitted to the Economic Coordination Committee (ECC), Pakistan will be responsible for covering any losses if Qatar sells these diverted cargoes in the open market at a lower price than the contractual rate. The difference will later be passed on to domestic LNG consumers, for which the federal government plans to issue policy directions to the Oil and Gas Regulatory Authority (Ogra), The Express Tribune reported.
Pakistan State Oil (PSO) has reportedly informed the government about Qatar Energy’s consent to adopt the net proceeds mechanism for 24 LNG cargoes in 2026.
Pakistan currently imports nine LNG cargoes each month from Qatar under two long-term agreements, in addition to one monthly cargo from Italy’s Eni. However, the country has faced an oversupply of gas as power producers have cut back on LNG consumption, causing what officials describe as “demand destruction” in the sector.
Due to this slump, Sui Northern Gas Pipelines Limited (SNGPL) has been left with surplus LNG. In response, the Petroleum Division and Pakistan LNG Limited (PLL) arranged to sell 11 Eni cargoes in 2025 under the same proceeds differential formula. Five Qatari cargoes scheduled for 2025 were also deferred following negotiations.
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Officials initially estimated a potential surplus of around 177 LNG cargoes between mid-2025 and the end of 2031, roughly 24 excess shipments per year, and requested that the Petroleum Division discuss a slowdown in supply with Qatar Energy.
In August 2025, the Petroleum Division sought ECC approval to open talks with the Qatari side, presenting several options including mutually reducing surplus cargoes without financial compensation, deferring some supplies until after 2031 by extending the contract period, applying the net proceeds clause during the current contract, with Ogra later adjusting consumer prices accordingly, and amending the contract to reassign LNG procurement for direct sale to Sui companies.
Following ECC’s go-ahead, a high-level delegation, including the petroleum and privatization ministers, senior officials from PSO and SNGPL, and a representative from the Attorney General’s Office, visited Doha between August 25 and 27, 2025.
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Subsequent consultations among the Petroleum Division, the Foreign Office, and energy sector stakeholders concluded that the net proceeds option should be implemented initially for 2026, after which the policy’s effectiveness would be reviewed.
On September 30, 2025, PSO formally notified Qatar Energy of its LNG quantity estimates and contractual commitments for the upcoming year. During the negotiation window from October 15 to November 15, PSO requested Qatar to apply the net proceeds mechanism to 29 cargoes. Qatar later confirmed its readiness to apply the arrangement to 24 of them, the paper added.
Officials said Qatar Energy would continue engaging with Pakistan to refine the implementation process and ensure that both sides benefit from the arrangement.
In addition, Eni’s supplies will also follow the same pricing approach for 21 shipments, 11 in 2026 and 10 in 2027.
