Imagine a country drowning in natural gas, forced to sell it at rock-bottom prices and even cancel shipments. That's the reality Pakistan faces right now. In a surprising move, Pakistan has canceled 21 liquefied natural gas (LNG) shipments from Italian energy giant Eni, citing a glut in its gas network. This bold decision, revealed in an official document and confirmed by sources, highlights a growing dilemma: what happens when a country's energy needs shift dramatically? And this is the part most people miss: Pakistan's energy landscape is rapidly changing, with renewable sources like solar and hydropower gaining ground, leaving traditional gas imports in oversupply.
According to a document from Pakistan LNG (PLL) to the Ministry of Energy, dated October 22nd, 11 shipments scheduled for 2026 and 10 for 2027 will be scrapped at the request of gas distributor SNGPL. Only the January shipments in both years and the December 2027 delivery will be kept to meet winter demand peaks.
Eni, bound by the contract's flexibility clauses, has reportedly agreed to this cancellation. This is a strategic move for Eni, as LNG is in high demand globally, and selling on the spot market often yields higher profits than long-term contracts.
But here's where it gets controversial: Pakistan is also in talks with Qatar, another major LNG supplier, to renegotiate its supply agreements. Options on the table include delaying shipments or reselling them under existing contract terms. This raises questions about the reliability of long-term energy contracts in a rapidly evolving energy market. Are such agreements becoming obsolete in the face of increasing renewable energy adoption?
Pakistan's LNG imports have plummeted this year due to reduced demand from power plants, which are increasingly relying on solar and hydropower. This, coupled with lower gas consumption by industries generating their own electricity, has created a significant surplus. For the first time in years, Pakistan is grappling with an oversupply of gas, forcing it to sell at discounted rates, curb domestic production, and explore options like offshore storage or reselling excess cargoes.
Is this a temporary blip or a sign of a permanent shift in Pakistan's energy landscape?
Pakistan's long-term LNG deals with Qatar and Eni total around 120 shipments annually, averaging nine per month from Qatar and one from Eni. However, the current oversupply situation has rendered these agreements burdensome.
Eni's last shipment to Pakistan arrived at the GasPort terminal on January 3rd, according to Kpler data. Sources indicate that Pakistan has also agreed with Eni to halt all further shipments in 2025. In 2024, Eni delivered 12 cargoes to Pakistan.
This situation prompts a crucial question: How can countries effectively manage the transition to renewable energy while honoring existing fossil fuel commitments? Pakistan's predicament serves as a case study for the complexities involved in this global energy transformation. What do you think? Is Pakistan making the right move by canceling LNG shipments and renegotiating contracts? Share your thoughts in the comments below.
