Qatar agrees to cancel 24 LNG cargoes as Pakistan reopens local gas wells

Qatar has agreed to cancel excess Liquefied Natural Gas (LNG) cargoes, prompting the federal government to reopen previously closed local gas wells from January 2026. Local gas from the shut-in fields is expected to start flowing into the system from January.

The natural gas fields had earlier been shut down to handle excess LNG cargoes. Government sources said Qatar has now agreed to cancel 24 LNG shipments for 2026, while the federal cabinet had previously approved the diversion of 45 LNG cargoes on December 12, citing declining domestic demand.

Oil Ministry sources said excess loads had previously forced the shutdown of local wells producing 200 million cubic feet per day (MMCFD). The LNG surplus resulted from the power sector’s reduced use of imported natural gas, which would normally have been piped into the pipeline system.

To avoid potential damage to the pipeline from unused LNG, the local fields were kept offline. In 2026, Pakistan plans to import 85 LNG cargoes from Qatar, down from the 120 previously planned.

According to ministry sources, a total of 35 cargoes will be cancelled, including 24 from Pakistan LNG and 11 from Italy’s Eni, creating an estimated saving of Rs20.1 billion.

Oil Ministry officials said the cancellation of excess cargoes will help meet the financial obligations of Sui companies, which total 850 billion rupees.

The gas sector’s revolving debt currently stands at Rs 3.1 trillion, comprising Rs 1.7 trillion in principal and Rs 1.4 trillion in interest. The authorities have prepared a six-year plan to manage this debt.

Reading: The Cabinet approves the diversion of 45 LNG cargoes

The plan, which includes three options, will be submitted to the federal cabinet for approval. The proposed measures include an oil levy of Rs 5 and options for debt restructuring and interest relief for companies.

Reuters reported in November that Pakistan reached an agreement with Italy’s Eni to cancel 21 LNG cargoes under a long-term supply contract.

Talks with Qatar

Amid growing renewable energy production and lower demand for industrial natural gas, Pakistan has taken steps to reduce its LNG purchases, resulting in a surplus of imported natural gas.

Eni signed a long-term LNG supply agreement with Pakistan LNG Limited in 2017 to deliver one cargo per month until 2032, retaining the option to redirect shipments elsewhere.

Sources told Reuters in November that Pakistan was also negotiating with Qatar over gas supplies from the Gulf state, including options to defer some cargoes or resell them under existing contractual provisions.

Read more: How flawed LNG deals fueled Pakistan’s Rs 2.6 trillion gas sector collapse

Too much gas

Pakistan’s long-term LNG deals with Qatar and Eni cover about 120 cargoes per year, an average of nine per month from two Qatari contracts and one from Eni. LNG imports have fallen this year as power producers reduce natural gas consumption due to higher solar and hydropower generation.

Lower consumption of natural gas by power plants and self-generating industrial facilities has led to a surplus, leaving the system effectively supercharged for the first time in years.

The surplus has forced Pakistan to sell gas at discounts, cut domestic production and consider storing or reselling excess cargoes offshore, according to government presentations seen by Reuters.

Kpler data shows that Eni’s most recent cargo arrived at the GasPort terminal on January 3. Sources told Reuters that Pakistan and Eni also agreed to suspend further cargo deliveries in 2025.

Eni delivered 12 LNG cargoes to Pakistan in 2024.

With additional input from Reuters