KARACHI: Pakistan’s energy crisis has entered a more perilous phase, with the country now grappling not just with securing liquefied natural gas but with affording it, according to a new report titled “LNG Supply Shock: From Contract Disruption to Energy-Cost Pressure.”
The report says geopolitical disruptions in 2026 upended Pakistan’s LNG outlook almost overnight. Earlier projections of a $5.6 billion surplus vanished as global markets tightened, forcing Pakistan back into an expensive spot market. Between March and September 2026, the country secured only 17 LNG cargoes — 10 under long-term contracts and seven from the spot market — a fraction of its typical import needs.
The financial toll has been sharp. Spot LNG procurement costs rose from about $18.40 per million British thermal units in April to $21.88 per MMBtu in July 2026, the highest since the 2022 global energy crisis. Bids exceeding $26 per MMBtu were rejected as unaffordable, even though they approached prevailing Asian benchmark prices.
The fallout has spread across the power sector. LNG-based electricity generation costs jumped from 21.73 rupees per unit in August 2025 to 45.93 rupees per unit in August 2026 — a surge of more than 111% in a year. Overall power-generation costs rose nearly 38% year-on-year, intensifying pressure on tariffs, public finances and the energy sector’s circular debt.
The report attributes the crisis to structural weaknesses, including heavy reliance on a limited pool of suppliers and inflexible long-term contracts that left Pakistan unable to respond when markets tightened. By contrast, Bangladesh, India, Thailand, Taiwan and Vietnam secured alternative supplies through more diversified procurement and broader supplier networks.
While acknowledging government efforts to secure Qatari cargoes, expand government-to-government supply deals and pursue new agreements such as the Oman OQ Trading partnership, the report warns that temporary measures cannot shield Pakistan from future shocks.
It calls for a more resilient strategy built on supplier diversification, greater contractual flexibility, stronger demand forecasting, strategic fuel reserves and accelerated investment in domestic resources, including hydropower, renewables, nuclear power and indigenous fuels.
“Energy security is no longer just about having fuel available,” the report concludes. “It is about ensuring that fuel remains reliable, affordable and financially sustainable in an increasingly volatile global energy market.”
