Pakistan Risks Winter Gas Shortages

Pakistan is facing the risk of winter gas shortages due to a delay in deciding whether to import $2 billion worth of liquefied natural gas (LNG). The Petroleum Division has urged the government to proceed with imports, stating that further delays could disrupt supplies and lead to public unrest. The Cabinet Committee on Energy has yet to give the go-ahead for 22 LNG cargoes, despite the division seeking approval last month.

The plan called for the first 12 cargoes to begin importing between October 7 and 10, but those deadlines have passed without a formal decision. The government had initially expected to receive at least 11 cargoes from Qatar under a long-term agreement, but Qatar has extended its force majeure status until November, raising doubts about the delivery of contracted supplies.

The proposed plan included cargoes from Azerbaijan, Pakistan State Oil, and a US government-nominated supplier. However, importing 22 cargoes during the winter months could cost nearly $2 billion, despite initial estimates of $1.5 billion. Homes are likely to receive priority over industry, power, and fertilizer consumers, with gas supplies prioritized from 5 a.m. to 10 p.m. for residences.

The potential shortage could lead to supply suspensions for fertilizer plants, creating a potential urea shortfall of 109,000 metric tonnes per month. Pakistan's official foreign exchange reserves stand at $21 billion after borrowing $3 billion ahead of a major debt repayment, but the final import volume and procurement arrangements remain undecided, leaving the government with a difficult choice between additional imports and the risk of tighter gas supplies during winter peak demand.