ISLAMABAD:
The government has authorised Pakistan State Oil (PSO) to clinch a deal with Qatar before November 15 for diverting up to 24 cargoes of liquefied natural gas (LNG) in 2026 based on difference in net proceeds.
“As PSO has to close discussions on net proceeds differential before the deadline of November 15, 2025, it is proposed that the Petroleum Division and PSO are authorised to finalise ADP for 2026 with a cargo range of 24 to 29,” the Petroleum Division told the Economic Coordination Committee (ECC) in a recent meeting.
Responding to the proposal, the ECC authorised PSO to strike the deal by November 15. During discussions, the Petroleum Division apprised ECC about the current demand for LNG and said that PSO had a surplus stock due to a constant decrease in consumption. Therefore, the proposed option was the optimal solution available.
Owing to scores of challenges, especially the low offtake by power producers, there is renewed demand destruction in the gas system. As a result, Sui Northern Gas Pipelines Limited (SNGPL) has surplus LNG.
As a mitigating measure, the Petroleum Division and Pakistan LNG Limited reached an understanding with Eni, as part of which 11 cargoes were sold in the market in 2025 under the net proceeds differential formula.
The Petroleum Division and PSO also worked with Qatar Energy to delete some cargoes for 2025. A cumulative surplus of around 177 cargoes has been estimated from July 2025 to December 2031, translating into 24 cargoes per year.
To address the issue, the Petroleum Division submitted a summary to ECC, seeking authorisation to take up the matter with the Qatari government. There were a few options. First was to reduce surplus cargoes on a mutual basis at any time. Second was to slash the surplus and the same quantity may be procured after 2031 by extending the contract period. Third option was to adopt the net proceeds differential formula for the remaining contract period.
It was decided that a separate summary would be placed before ECC for issuing necessary policy guidelines to the Oil and Gas Regulatory Authority to pass on the impact of net proceeds differential to power producers and other LNG consumers.
In pursuance of the approval, a delegation comprising the minister for petroleum, secretary petroleum, PSO MD, SNGPL MD, adviser to the prime minister and representatives of the Attorney General of Pakistan visited Doha from August 25 to 27, 2025.
Thereafter, a series of follow-up meetings were held at the Petroleum Division, where it was agreed that net proceeds differential was the preferred option. PSO conveyed it to Qatar Energy. The Ministry of Energy (Petroleum Division) stated that PSO had informed it that Qatar Energy showed its willingness for the net proceeds differential pertaining to 24 cargoes scheduled for delivery in 2026.
Furthermore, Qatar Energy is ready to remain engaged and find a more stable solution for managing the surplus. The ECC considered a summary titled “Update on Negotiation with State of Qatar for Mitigation of Surplus LNG” and approved the proposal.
