ISLAMABAD: The government has decided it will no longer absorb losses arising from the diversion of Liquefied Natural Gas (LNG) cargoes under the Net Proceed Differential (NPD) clause and will instead transfer the cost to Regasified Liquefied Natural Gas (RLNG) consumers, The News reported.
According to the report, senior Petroleum Division officials said Pakistan is in negotiations with Qatari authorities to divert between 24 and 29 LNG cargoes in 2026 to the international market under the NPD provision. Qatar is expected to confirm the final number by November 30, with officials anticipating 24 diversions.
Under the NPD mechanism, if a diverted cargo sells at a higher price in the global market than Pakistan’s term contract rate, profits go to Qatar. But if the cargo sells below the contractual price, Pakistan State Oil (PSO) must bear the loss. The government has now decided that neither the state nor PSO will absorb these losses, passing them on instead to RLNG consumers.
This shift will directly affect RLNG-based power plants, export-oriented industries and new domestic consumers linked to RLNG networks. Officials cautioned that electricity generation on RLNG will become more expensive, fuel costs for export sectors will increase and households seeking RLNG connections will face higher bills.
The Oil and Gas Regulatory Authority (Ogra), in its latest price determination, projected a positive impact of Rs48 billion from potential cargo diversions. It noted that domestic customers would continue receiving local gas at Rs1,000 per MMBTU until June 30, 2025 — well below the RLNG-linked rate of around Rs3,500 per MMBTU. However, questions remain about whether the regulator accounted for scenarios where diverted cargoes are sold below Pakistan’s term prices.
Officials said Pakistan could save an estimated $339.6 million in foreign exchange if Qatar approves the diversion plan, based on a term cargo price of $28.3 million per shipment.
They also stated that Pakistan’s RLNG surplus could have been better managed earlier. In October 2024, multiple meetings held at PSO headquarters — with representatives from Sui Northern Gas Pipelines Limited (SNGPL), Sui Southern Gas Company Limited (SSGCL), PSO and Pakistan LNG Limited (PLL) — recommended diverting 37 LNG cargoes. Spot prices throughout 2025 remained above Pakistan’s long-term contract rates, making diversions commercially favourable, but PSO did not exercise available options, contributing to later operational and financial pressures.
