For most of the past decade, the main complaint about Pakistan's LNG supply was that there was too much of it. As rooftop solar spread and industrial gas demand fell, the country found itself with surplus cargoes under long-term contracts with Qatar and Eni, and the government asked for some deliveries to be diverted or deferred. Before the crisis, Pakistan had cancelled 21 Eni cargoes scheduled for 2026 and 2027. The Hormuz crisis has turned that problem upside down in a matter of weeks.
Senior officials told the Senate Standing Committee on Petroleum on 16 March that Qatari LNG imports had been suspended since 2 March, after the war involving Iran disrupted shipping in the Gulf. Only two of the eight cargoes scheduled for March arrived, and officials said that the six cargoes expected in April were unlikely to be delivered. They warned that, without alternatives, the country would face an LNG shortfall after 14 April. Our view is that the government's choices so far, protecting households while cutting supply to power and some industry, are broadly correct for a short disruption. But if the disruption lasts months, Pakistan needs a clear, published gas allocation framework and a strategy that leans on its domestic generation, rather than an expensive scramble for spot cargoes.
The scale of the gap
Qatar has been Pakistan's anchor LNG supplier since 2016, delivering under long-term contracts at prices linked to oil, which officials told the committee worked out at around USD 9 per unit. Spot cargoes in the crisis were quoted at about USD 24. Replacing the missing Qatari volumes on the spot market would therefore cost well over twice as much per unit, at a time when the oil import bill is also soaring. The petroleum secretary said Azerbaijan was among the alternative suppliers being explored.
The Sui Southern Gas Company has already acted. Officials said supply to the power sector had been cut from 300 to 130 million cubic feet a day, and gas to a fertiliser plant had been reduced by half, while domestic consumers were being protected. Those are significant cuts, and they show where the system's flexibility lies.
Why power can absorb the cut, for now
LNG supplies nearly a quarter of Pakistan's electricity in a normal year, but the power system has more room to adjust than in previous crises. Energy Minister Awais Leghari told the committee that growing reliance on domestic sources, including solar, wind, nuclear, coal and hydropower, has reduced exposure to LNG disruption. March and April are also shoulder months, when electricity demand is lower than in the summer peak, and hydropower output begins to rise with snowmelt.
The real test will come in May and June, when air conditioning drives demand to its annual peak. If LNG is still scarce, the power sector will need to run Thar coal plants, nuclear units and hydropower at maximum output, and manage demand carefully in the evening, when solar output falls. Load management should be planned now, with clear schedules published in advance, rather than imposed through unannounced outages.
Fertiliser and food
The fertiliser sector is a more difficult case. Urea plants use gas as both fuel and feedstock, and cuts to their supply reduce domestic fertiliser output. The kharif sowing season, when farmers plant cotton, rice and sugarcane, begins in the coming months. A shortage of urea at that point would raise food prices and could force expensive fertiliser imports. Fertiliser plants that run on domestic gas fields should be kept supplied, and the government should consider whether some LNG volumes, if obtained, should be prioritised for fertiliser rather than power, where alternatives exist.
Oil products: a parallel squeeze
The gas shortfall sits alongside an oil shock. Petrol and diesel prices were raised by Rs55 per litre in March, and the petroleum secretary told the committee that international diesel prices had risen from USD 88 to USD 187 a barrel and petrol from USD 74 to USD 130. Stocks were limited: crude oil for 11 days, diesel for 21, petrol for 27, LPG for 9 and aviation fuel for 14. Around 70 per cent of Pakistan's petroleum imports come from the Middle East. To widen supply options, the government temporarily allowed imports of fuel below the Euro-5 standard.
LPG is a particular concern. It is used by millions of households without piped gas, mostly in rural areas and smaller towns, and nine days of stock is very thin. If LPG supply tightens, the burden will fall on households that are already among the poorest energy users.
What a gas allocation framework should look like
Pakistan has a gas allocation policy that sets priorities among sectors, but in practice decisions in a crisis are often made week by week, with little public explanation. A clearer approach would publish the order of priority for the duration of the disruption: households and essential services first, then fertiliser plants supplying the kharif season, then export-oriented industry, with power generation absorbing the remaining flexibility through domestic fuels. It should also set out the conditions under which spot LNG will be bought and at what price, so that decisions are not made under pressure from individual consumer groups.
The government has a related decision on cost recovery. If spot cargoes at USD 24 are bought, someone must pay. Spreading the cost across all gas consumers through a weighted average price would add to the circular debt if tariffs are not adjusted. Charging the full cost to sectors that choose to receive spot gas is more transparent and limits the fiscal damage.
Longer-term lessons
The crisis reinforces three lessons. First, long-term LNG contracts provide price stability but not security of supply when the supplier itself is cut off. Diversifying suppliers and routes, including LNG loaded outside the Gulf, has value that the cheapest contract does not capture. Second, domestic generation, including renewables, hydropower, nuclear and local coal, is now Pakistan's main buffer against import shocks, and the policy debate about rooftop solar should take that into account. Third, strategic storage for oil products and LPG is inadequate and should be expanded.
Our assessment
Pakistan has handled the first weeks of the LNG disruption reasonably well, protecting households and leaning on its domestic generation. But the shortfall after mid-April, the summer peak and the kharif season will test the system much more severely. A published, time-bound gas allocation framework, a disciplined approach to spot purchases and clear load management plans would reduce the economic damage. The longer-term lesson is that the domestic generation Pakistan has built in recent years, including the rooftop solar many in the power sector have resisted, is now one of its most valuable security assets.