Pakistan's LNG Deal with Qatar Open to Renegotiation Next Year

Pakistan's liquefied natural gas (LNG) pact with Qatar allows for either party to initiate renegotiation talks next year but no decision has been taken on whether to do this, Pakistan's petroleum minister told Reuters on Friday.

Musadik Malik was clarifying comments made to a parliamentary committee on energy, as reported in local newspaper The News, which had quoted him as saying: "The Qatar agreement is costly, and we will negotiate better terms next year."

Malik told Reuters he had been laying out details of the various contracts Pakistan has for LNG. "One provision was price renegotiation could take place at the 10th year of the Qatar LNG deal," he said, adding that Pakistan has a whole year to "figure out its options".

Pakistan's biggest LNG agreement was signed in 2016 between Pakistan State Oil and Qatar's Qatargas-2, the world's largest producer, for up to 3.75 million tons of LNG a year for 15 years, although a cancellation option can shorten the deal to 11 years if the parties fail to agree a new price.

An economic crisis has slashed power use in Pakistan, which gets more than a third of its electricity from natural gas, saddling it with excess capacity it still needs to pay for under decade-old contracts with independent power producers.

Citing a surplus of LNG, Malik said in December that Pakistan had deferred five contracted cargoes under the Qatar deal for a year and would now receive them in 2026 instead of 2025, with no financial penalty.

He added that Pakistan was also negotiating to defer five more cargoes from other unnamed sellers.