Petroleum Division concerned over reduced RLNG off-take by power plants, warns of system risks

The Petroleum Division is facing challenges due to reduced off-take of Regasified Liquefied Natural Gas (RLNG) by the power sector, which has resulted in the saturation of Sui Northern Gas Company Limited’s (SNGPL) system, BR reported. 

SNGPL reported that power plants were using only 327 MMFCD of RLNG on July 16, 2025, compared to the committed 600 MMCFD. The monthly average consumption for July stands at 501 MMCFD, which is below the required levels.

This reduced off-take has led to surplus gas accumulation in the system, pushing pressures to critical levels, as highlighted in a letter from SNGPL dated July 15, 2025. If RLNG consumption is not increased promptly, it may cause disruptions in re-gasification at terminals, resulting in potential delays in cargo discharge and financial losses due to demurrages and take-or-pay provisions.

The Directorate General (Gas) at the Petroleum Division has urged the Power Division to ensure that RLNG off-take aligns with the committed demand for July 2025. Failure to increase consumption could force SNGPL to further curtail supplies from local gas fields, exacerbating the situation.

In a related development, Power Minister Awais Leghari defended the Economic Merit Order (EMO) system, which prioritises cheaper electricity generation sources. He stressed that RLNG plants cannot be operated if they do not meet the criteria under the EMO. Leghari’s comments came after Minister for Petroleum Ali Pervaiz Malik raised concerns over RLNG underutilization by Independent Power Producers (IPPs).

The National Electric Power Regulatory Authority (Nepra) has been involved in reviewing the violations of the EMO, particularly in the public hearings related to fuel cost adjustments (FCAs). Despite this, Nepra has yet to provide further updates on the status of system constraints and financial impacts on the National Grid Company (NGC), which was previously withheld billions in funds due to such violations.

Discussions at a recent gas sector meeting have highlighted the need to address LNG oversupply issues and ensure synchronization of LNG demand with the power sector. Secretary of Petroleum emphasized the need to address gas tariff rationalization and resolve the circular debt issue within the gas sector.