After bearing brunt of Europe energy crisis, Pakistan plans to open up gas access

Pakistan: A bill currently in the country's parliament seeks to expand access to foreign supplies to users representing about 70% of winter demand, according to Energy Minister Hammad Azhar

Pakistan plans to open up access to liquefied natural gas imports to offset dwindling local production and meet surging demand.

Hammad Azhar, Pakistan's energy minister, speaks during an interview in Islamabad, Pakistan, on Thursday, Jan. 27, 2022. (Azad Zaidi / Bloomberg)

A bill currently in parliament seeks to expand access to foreign supplies to users representing about 70% of winter demand, according to Energy Minister Hammad Azhar. The question remains whether price-sensitive buyers in the nation, one of the fastest-growing LNG importers, will be open to paying extra for the super-chilled fuel, especially after international prices rallied to records this winter. 

“The current supplies are such that we can barely even meet our current customers,” Hammad Azhar, energy minister, said in an interview. “Gas is running low in Pakistan and we have to supplement it.” 

Domestic gas production has fallen by about a fifth over the past two years and the bill that will allow LNG to be supplied to local customers is set to go to the upper house for approval. As LNG is more expensive than local gas, a detailed discussion on pricing will be needed, but increases won’t be “drastic,” according to Azhar. 

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Pakistan has borne some of the brunt of Europe’s energy crisis as the region outbid rivals in China, Japan, and South Korea and traders including Eni SpA and Gunvor Group Ltd. skipped cargo deliveries to the South Asian nation in recent months. One of the traders is expected to default on a cargo this month, Azhar said, without giving details. 

The nation imports LNG through two terminals and the minister expects a third site to be operational next year after it was hit by delays. Top supplier Qatar is also looking to invest in an import facility. 

The government is looking into setting up its own import facility by converting a portion of a state-owned liquefied petroleum gas terminal, Azhar said. 

Pakistan is also using its surplus electricity as an alternative to reduce the demand for gas. The government, which has already offered incentives to use electricity rather than gas for heating, is exploring ways to encourage industries to move permanently away from gas-fired generators, Azhar said.