ISLAMABAD Since electricity consumption has decreased as a result of weak economic activity and high energy costs, Pakistan is in negotiations with Qatar to delay the delivery of ten LNG cargoes next year.
Speaking to reporters here on Wednesday, Petroleum Minister Musadik Malik made this claim. In order to manage the excess LNG in the nation, he added, five LNG shipments planned for 2025 under long-term agreements with Qatar had already been canceled and that talks were on to postpone a further five cargoes.
He added that LNG had become surplus as a result of the economic merit order sidelining LNG-based power plants and the private sector’s reluctance to buy LNG due to its high cost. “Pakistan has already postponed five LNG cargoes and postponement of five additional cargoes is being considered further,” he said.
Between 120 and 140 LNG cargoes are typically imported by Pakistan each year, with the majority (about 85–100) coming from long-term contracts with Qatar in addition to other long-term agreements and spot purchases. Due to excess power capacity in the system and a drop in consumption, which varies from 2% to 18% in different months, the nation has not imported spot cargoes for almost a year.
In an attempt to lower capacity charges, the government has been pressuring independent power producers (IPPs) to finish contracts early. In order to promote increased consumption, it recently unveiled a winter incentive package for customers.
However, when commercial and industrial activity decreased and different consumer groups switched to renewable energy sources, power consumption fell to about 11,000MW even before the winter season, compared to the installed capacity of over 40,000MW.
In response to a query concerning recent delegation visits from Saudi Arabia, the petroleum minister stated that 34 memorandums of understanding (MoUs) totaling $2.7 billion had been inked with the Saudi private sector in a variety of areas, including human resources. He stated that seven of these agreements have already been signed.
Five Saudi firms attended a roadshow hosted by Pakistan Refinery Limited in Saudi Arabia, according to Musadik Malik, and one of them indicated interest in spending $1.7 billion in PRL modernization under the Brownfield Oil Refineries program.
The Saudi side advised Pakistan to hire an international consultant for the projected huge greenfield refinery, the minister added. By December 24, the consultant is supposed to deliver a feasibility study draft. He claimed that a roadshow to establish a new refinery in Pakistan, valued at $8–10 billion, would soon take place in Saudi Arabia based on the findings of this study.
The minister responded to inquiries concerning Russian oil imports by stating that talks between the two parties have been going on and that they have been discussing issues like insurance, deal structure, payment methods, cargo size, shipping lines, and—above all—the possibility of secondary US sanctions on such transactions.
According to Mr. Malik, it was agreed to purchase Russian oil through the creation of a special purpose vehicle (SPV) under a public sector organization during the Pakistan Democratic Movement (PDM) government. Payments were to be paid in Chinese money. The caretaker government, however, stopped talks to buy oil from Russia and changed the structure.
He clarified that although PRL had originally imported a shipment of oil from Russia, the interim administration chose to let the private sector handle the imports rather than using the public sector organization. Media reports that said Pakistan had struck a deal with Russia to import crude oil at a reduced price were flatly refuted by the minister.
