Pakistan Defers Gas Import Plans Amid Lower Demand and LNG Oversupply
The Government of Pakistan is reconsidering its major gas import projects following new projections that show a decline in national gas demand and Pakistan Defers Gas Import Plans Amid Lower Demand and LNG Oversupply and According to a detailed report by UK based consultancy Wood Mackenzie Pakistan gas demand is expected to decline by around 3% between 2025 and 2040, even as total supply which include LNG contracts that continues to rise until 2031.
This marks a significant shift in the country’s long term energy strategy which prompts authorities to slow down gas pipeline imports from Turkmenistan and Iran and revise LNG supply schedules.
Decline in Gas Demand Despite Population Growth
Pakistan’s population is projected to reach 325 million by 2040 and yet gas demand is falling instead of rising.
- Total gas demand is expected to drop by 3.8% by the year 2031 and by another 2.5% through 2040.
- The power sector will see a 12% decline in gas use.
- The industrial sector will grow slightly by 2.8%, and the domestic sector by 4%.
Pakistan Defers Gas Import Plans Amid Lower Demand and LNG Oversupply and The decline is largely due to improved efficiency, solarisation and reduced power-sector dependence on gas-fired plants.
LNG Glut and Oversupply in Global Markets
- The report also highlights an ongoing global LNG surplus expected to extend well beyond 2031.
- The countries US and Qatar are expected to account for over 50% of global LNG supply in the next decade.
- This oversupply could lead to lower LNG prices from 2026 onwards.
- However Pakistan may not benefit much due to existing long-term import contracts at higher rates.
As a result officials are exploring an LNG import strategy to renegotiate or defer these costly contracts.
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Pakistan Gas Supply Outlook
Despite falling demand Pakistan total gas supply which includes LNG is expected to peak at 5 billion cubic feet per day by 2031 as compared to 3.8 currently a 31% increase. But this rise in supply without matching demand is creating serious imbalances in the energy market and contributing to circular debt in the gas and power sectors.
Circular Debt and Market Distortions
The study warns that price distortions, inefficient allocation and forced curtailment of local gas fields have worsened Pakistan energy debt. Imported LNG costs twice as much as locally produced gas, placing immense financial strain on the economy.
Key reform areas identified include:
- Revising the weighted average cost of gas sources
- Encouraging fresh exploration and domestic production
- Reducing line losses and leakages
- Improving gas storage capacity
- Ensuring transparent market liberalisation
Shifting Energy Mix and Prices
Currently the fossil fuels account for 88% of Pakistan’s total energy consumption for Oil and Gas is:
- Gas: 42%
- Oil: 29%
By 2040 the fossil share will drop to 84% with gas decreasing to 30% and oil increasing to 34% which is mainly due to rising transportation needs.
Expected Energy Price Trends:
| Year | Gas demand trend | LNG Market outlook | Domestic Gas Supply | Energy prices |
| 2025 | Moderate decline | High oversupply | Stable | Stable to slight Rise |
| 2030 | Further demand | Price correction | Rising | Moderate increase |
| 2035 | Low demand | Balanced supply | Slight decline | Moderate increase |
Impact on Energy Sector and Economy
The report projects Pakistan’s GDP growth at 3.7% annually between 2025-2040, driven by industrial recovery and improved imports. However unless structural issues are fixed, the energy circular debt could offset growth benefits and Reduced gas demand from power plants also means lower LNG terminal usage and potentially raising costs for consumers.
Government’s Next Steps is considering:
- Deferring new pipeline imports from Iran and Turkmenistan.
- Revising long-term LNG contracts to match actual consumption.
- Accelerating domestic exploration and reform initiatives.
- Align power sector gas usage plans with realistic demand forecasts.
Conclusion
Pakistan Defers Gas Import Plans Amid Lower Demand and LNG Oversupply and decision to defer gas import plans reflects a strategic shift toward long term sustainability and while population and economic growth continue, actual gas demand is falling due to efficiency gains and changing energy patterns.
To ensure stability the government must balance imports with real consumption, support local production, and reform the pricing structure to prevent further circular debt. If managed well, this adjustment could protect consumers from rising prices and strengthen Pakistan’s energy independence in the years ahead.
FAQ’s
Why is Pakistan delaying gas imports?
Pakistan Defers Gas Import Plans Amid Lower Demand and LNG Oversupply Because national gas demand is projected to decline by around 3% by 2040 and while LNG oversupply in global markets makes existing import contracts less viable.
How much gas is currently consumed in Pakistan?
Pakistan’s total gas consumption is about 3.8 billion cubic feet per day and is expected to peak at around 5 cubic feet per day by 2031.
What is the main cause in the drop of gas demand?
The main reason is lower demand from the power sector, increased solar and renewable energy, and improved industrial efficiency.
What are the risks of continuing large gas imports?
The Continuing with current import volumes may increase circular debt, raise consumer price and hurt domestic gas exploration.