What is being commonly marketed as an RLNG supply glut in Pakistan is in fact the result of 1) mismanagement of generation planning by CPPA-G and Karachi Electric, and 2) deliberate demand destruction of industrial captive users by the government. It is all being done only to extend a short-term lifeline to a fundamentally unsustainable national grid, while imposing huge costs on the economy and doing long-term damage to the gas sector and overall energy landscape of Pakistan.

A supply glut is specifically a supply-side phenomenon. It occurs when the quantity of goods supplied in a market surpasses demand at the prevailing price level, and excess supply leads to a downwards pressure on prices. The anticipated global LNG supply glut, for instance, is a supply-side phenomenon driven by the American shale gas revolution and strong international demand, which spurred aggressive expansion of US LNG production capacity and export infrastructure.

Pakistan’s case is markedly different as the supply of LNG remains fixed.

In 2015, Pakistan started entering long-term LNG agreements to supplement gas supply from rapidly depleting domestic reserves. Pakistan State Oil (PSO) signed a 15-year-agreement with Qatar Energy in 2015 for 3.75 million tonnes per annum at 13.37 percent of Brent crude prices. In 2021, PSO secured an additional 10-year contract for 3 MPTA at 10.2 percent of Brent. Pakistan LNG Limited (PLL) also entered into a 15-year agreement with ENI in 2017, supplying 0.75 MTPA at 12.14 percent of Brent, which has been overtaken by Karachi Electric. In total, Pakistan signed long-term LNG supply agreements amounting to roughly 1,000 million cubic feet per day (MMCFD).

LNG was envisaged to........

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