Pakistan Seeking to Defer LNG Cargoes for Years — Are We Rapidly Heading to a Global LNG Glut?
- Timothy Beggans
- Aug 28, 2025
- 2 min read
Pakistan is navigating turbulent energy waters. In a decisive move, Islamabad’s Economic Coordination Committee (ECC) has authorized the Petroleum Division to renegotiate terms with Qatar, aiming to defer 177 LNG cargoes between 2025 and 2031—a step that could defer approximately $5.6 billion in liabilities until 2031–32.
This arises from dramatically lower gas demand in power and export sectors, leading to a surplus of contracted LNG that Pakistan didn’t plan for. In addition to pushing back deliveries, Islamabad proposes diverting at least two term cargoes per month in 2026 to the international market, to relieve domestic pressure without compromising its supply.
These contracts—with pricing linked to a percentage of Brent crude (13.37% for the 2016 agreement and 10.2% for the 2021 contract)—were long seen as lifelines for energy security. Today, rigid “take-or-pay” terms have become fiscal anchors, contributing to institutional losses—estimated at around Rs 100 billion—and placing the burden squarely on taxpayers.
This scenario underscores the heightened credit risks of supplying LNG to low-income countries. Suppliers face increasing exposure when buyers lack flexibility or reserves to manage demand shocks. As Pakistan seeks deferments and renegotiation, similar economies may face comparable strains—raising concerns of soft demand across Asia and signaling a potential global LNG glut.
Could this be the canary in the coal mine? As energy transitions accelerate and demand patterns shift, the LNG market may be adjusting to a new normal—one where long-term contracts are no longer guaranteed lifelines but pose escalating fiscal and credit risks.
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