The current financial stress in the gas sector is partially obscured by elevated LNG spot prices, which are currently above Pakistan’s LNG contract price.

However, with over 174 MTPA of new liquefaction capacity coming online starting 2026 and global supply projected to outpace demand, global spot LNG prices are expected to decline substantially.

In such a scenario, the viability of diverting surplus cargoes under the Net Proceeds mechanism will diminish significantly. In addition, the allocation of 25 surplus cargoes to SNGPL for FY26 has increased its prescribed price from Rs 1,330 to Rs 1,890.25 per MMBtu.

RLNG: Supply glut or policy failure?—I

RLNG diversion to residential consumers yields an average recovery of ~ USD 4 per MMBtu, significantly below the delivered cost of ~ USD 12 per MMBtu. This results in a subsidy of ~ USD 8 per MMBtu, a major contributor to the gas sector circular debt, now exceeding Rs 3 trillion.

The RLNG surplus has also triggered curtailment of ~270 MMCFD of indigenous gas production, resulting in losses of ~ USD 378 million to upstream E&P companies, according to OGDCL. This is particularly concerning given the country’s rapidly depleting indigenous gas reserves and the urgent need to incentivize new........

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