LNG

Islamabad, Pakistan – At the start of this year, Pakistan had more imported liquefied natural gas (LNG) than it could use. Demand had been falling for three straight years, from a peak of 8.2 million tonnes in 2021 to 6.1 million tonnes by late 2025, as cheap solar panels flooded the market and factories cut back.

The government quietly sold excess gas shipments to other countries and shut down domestic gas wells to prevent pipelines from bursting under the pressure of oversupply. Gas that could not be diverted would be pushed into household networks at a financial loss, adding billions to an already crippling debt pile in the energy sector.

Then the war came. On February 28, the United States and Israel launched hundreds of strikes against Iran in an operation named Epic Fury. The strikes targeted Iranian missiles, air defences, military infrastructure and leadership. Supreme Leader Ali Khamenei was killed in the opening assault.

Iran retaliated by firing hundreds of missiles and drones across the region, and as a result, traffic passing the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world’s oil and gas passes, almost came to a halt.

The energy consequences were immediate. As a part of its retaliation against US-Israeli attacks, on March 2, Iranian drones hit Qatar’s gas facilities at Ras Laffan Industrial City, the world’s largest LNG export complex.

Qatar, the world’s second-largest LNG exporter after the United States, halted all production and declared force majeure, a legal term meaning it was released from delivery obligations due to circumstances beyond its control.

The conflict escalated further on March 18, when Israel struck Iran’s South Pars gas field, the largest in the world, off Iran’s southern coast.

South Pars and Qatar’s North Field sit above the same underground reservoir, meaning the attack threatened both countries’ gas production simultaneously. Iran struck Ras Laffan again in retaliation.

QatarEnergy said that the hit had forced it to cut LNG production by 17 percent, with repairs expected to take up to five years.

Brent crude, the industry benchmark, was priced at more than $109 a barrel on Thursday,

Oil prices on Thursday climbed to $109 a barrel, while European gas prices jumped 6 percent in a single trading session.

For Pakistan, which secures nearly all its imported gas from Qatar and the United Arab Emirates, and holds no emergency reserves, the shift from surplus to shortage happened almost overnight.

A system built on imports

Pakistan meets its daily gas needs from three main sources. The bulk, about 2,700 million cubic feet per day, comes from domestic gas fields that have been in slow decline for years.

The rest comes from imported LNG, supplied by Qatar under long-term contracts, adding roughly 600 million cubic feet per day when shipments flow normally.

The third source is bottled LPG, used mainly by households in rural areas not connected to the pipeline network. Pakistan gets more than 60 percent of its LPG from Iran, a supply also disrupted by the conflict.

Pakistan began importing LNG in 2015 when domestic production could no longer meet demand. Today, imported LNG powers roughly a quarter of the country’s electricity, with the power sector its largest consumer.

Qatar and the UAE together account for 99 percent of Pakistan’s LNG imports, according to energy analytics firm Kpler.

Of that, Pakistan’s LNG supply is dominated by two long-term government-to-government agreements with Qatar, one spanning 15 years and the other 10. Together, they cover nine shipments a month.

From glut to scarcity

Monthly cargo data from Pakistan’s energy regulator, OGRA, reflects the impact of the war. The country received between eight and 12 LNG shipments a month through 2025 and into early 2026, with 12 arriving in January alone. In March, the month the war began, only two shipments arrived.

Prices have been affected too. According to data compiled by researcher Manzoor Ahmed of the Policy Research Institute for Equitable Development (PRIED), on February 13, state-owned entities Pakistan State Oil and Pakistan LNG Limited procured eight combined cargoes at an average cost of $10.47 per MMBtu, totalling $257.1m.

MMBtu is the standard international unit used to measure and price natural gas and LNG.

By March 12, the two cargoes that did arrive cost $12.49 per MMBtu, a 19 percent increase in a month, reflecting tightening global conditions even before the war’s full impact.

Pakistan had already been consuming less gas. Its share of Asian LNG markets fell from roughly 30 percent in 2020 to about 18 percent in 2025, driven largely by the rapid expansion of solar power. Millions of Pakistanis, frustrated by high electricity costs and frequent blackouts, have installed rooftop panels in recent years.

By 2025, the country had 34 gigawatts of solar capacity, with an estimated 25 gigawatts feeding into the national grid. Overall electricity demand from the grid fell nearly 11 percent between 2022 and 2025.

Gas-fired power plants built to run on imported LNG were left underutilised, especially during daylight hours.

“Of course, solarisation helps manage daytime demand, reducing the need for running thermal power plants,” said Haneea Isaad, an energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), who has tracked Pakistan’s gas sector for years.

But the contracts with overseas gas suppliers still needed to be adhered to — so Pakistan kept buying and paying, she told Al Jazeera.

Ahmed of PRIED pointed to two compounding challenges. First, the nature of Pakistan’s gas supply contracts were such that the government had to “buy LNG even when demand collapsed,” he told Al Jazeera.

Second, “rapid solar growth and suppressed grid demand were underestimated, and their effect on overall planning was not accounted for,” the Islamabad-based analyst added.

LNG consumption dropped by 1.21 million tonnes in 2025 alone. With no large storage capacity, surplus gas was pushed into domestic pipelines at a loss.

The resulting circular debt in the gas sector now stands at 3.3 trillion rupees, approximately $11bn. By January, Islamabad was negotiating to offload 177 unwanted gas shipments projected through 2031, a liability of $5.6bn.

Isaad of IEEFA said the surplus was predictable.

“Pakistan’s energy planning has mostly been bound by long-term contracts with very little flexibility,” she said. Once considered necessary for energy security, these rigid contracts, she added, have become a financial albatross in a market increasingly prioritising flexibility and low-cost generation.

She described the government’s pre-war response, diverting excess cargoes, as “reactive crisis management” that prioritised short-term fixes over better forecasting and procurement flexibility.

Supply shock

Qatar’s LNG shipments to Pakistan have stopped almost completely since March 2. Of the eight shipments scheduled that month, only two arrived. The six expected in April are unlikely to reach the country.

At a public hearing of the National Electric Power Regulatory Authority, Central Power Purchasing Agency chief executive Rehan Akhtar said LNG supplies were under force majeure, though coal imports from South Africa and Indonesia remained unaffected.

Officials have warned of near-zero LNG availability in the coming months, even if the war ends quickly. LNG accounts for more than 21 percent of Pakistan’s power generation.

“With Pakistan’s LNG supply completely halted after Qatar’s declaration of force majeure, LNG plants are effectively out of the running order,” Isaad said.

The government has responded by restoring domestic gas production that had been deliberately curtailed during the surplus period.

Isaad said Pakistan had been holding back roughly 350 to 400 million cubic feet per day of domestic gas to accommodate LNG imports.

“There will also be the option to rely on other power generation sources such as imported coal and hydropower,” she added. But, she warned, “even with hydropower, imported coal and restored domestic gas production covering some of the gaps left by LNG, there might still be an energy shortage.”

For now, mild weather and increased solar output have provided temporary relief.

“So far, Pakistan has somehow miraculously survived any prolonged energy shortages in the power sector through a combination of mild weather and a pre-existing reduced reliance on imported LNG,” Isaad said. “But peak summer months may be a different story.”

Summer pressure

With an energy crisis looming, Pakistan is bracing for a few hours of daily planned power cuts this summer, alongside other energy conservation measures and higher electricity costs.

According to the National Electric Power Regulatory Authority’s State of Industry Report 2025, peak electricity demand last summer exceeded 33,000 megawatts.

Winter demand currently stands at about 15,000 megawatts, partly because solar panels now generate between 9,000 and 10,000 megawatts daily, reducing reliance on the grid.

Furnace oil, the main backup fuel, now costs 35 rupees per unit, about $0.12, and its price has more than doubled since the Strait of Hormuz disruption.

Analysts say the burden will fall unevenly. Consumers reliant on grid electricity will face both higher bills and outages, while industries dependent on gas will see production disruptions. Those with rooftop solar and battery storage will be best insulated.

Isaad is blunt about the options before Pakistan. “Returning to the spot market might not be feasible, given the dire financial consequences,” she said. “Even if it does, competition with wealthier nations may once again price Pakistan out. Furnace oil could be another option, but that will be prohibitively expensive to run.

“The only option the government may be left with is load-shedding [planned power blackouts], probably around two to three hours daily.”

The United States-Israeli war on Iran has hit critical liquified natural gas (LNG) supplies in the Gulf, triggering the most severe disruptions in recent years to the global energy market.

Shipping through the critical Strait of Hormuz, which accounts for 27 percent of the world’s maritime oil trade and 20 percent of LNG, has been brought to a near standstill, with oil-producing nations such as Saudi Arabia rerouting oil through alternative pipelines and Qatar halting LNG production.

Natural gas makes up about a quarter of global energy consumption, raising concerns about how much the disruption to LNG will affect those most reliant on gas.

What is LNG?

Natural gas is formed over millions of years from decomposed organic matter subjected to intense heat and pressure beneath the Earth’s surface.

LNG is natural gas cooled to -162 degrees Celsius, known as cryogenic processing, shrinking it to a 600th of its gaseous volume.

In its liquid state, LNG is colourless, odourless and non-flammable, making it safe and efficient to transport across vast distances.

Composition and purification

Before liquefaction, the gas is purified through water-based solvents and molecular sieve beds to remove impurities including carbon dioxide, hydrogen sulphide, water and mercury.

Heavier hydrocarbons are then separated from methane and ethane through fractionation, and stored, used or sold as byproducts. The result is a fuel typically composed of 85 to 95 percent methane, with small amounts of ethane, propane, butane and nitrogen.

Storage and transport

LNG is stored in large insulated tanks without the need for high-pressure infrastructure. It is then pumped onto double-hulled carriers and shipped to terminals around the world.

Regasification

At its destination, LNG is heated using seawater or a warm water bath until it vaporises, a process known as regasification, before being moved through pipelines for consumption. It is sometimes blended with nitrogen or propane to ensure compatibility with local gas networks.

What is it used for?

Once LNG is returned to a gaseous state at import terminals, it is dispersed through pipelines for use in homes, businesses and industries around the world.

Residential uses include cooking, heating and generating electricity. In many parts of the world, LNG also supports hot water systems in homes and heating for commercial buildings.

It is used for power generation broadly, offering a comparatively low-carbon alternative to coal and oil.

In industry, it is used for fertilisers, plastics, paints and medicines. It is also used in transport to fuel heavy-duty vehicles and ships.

Gulf nations export close to half the world’s traded urea – commonly used in fertilisers globally, leaving international agriculture deeply vulnerable to any interruption in the LNG shipping lane through the Strait of Hormuz.

The disruption has already forced fertiliser producers across the region to suspend or reduce operations, since natural gas is both the primary feedstock and the fuel that powers the manufacturing process.

QatarEnergy’s decision to halt gas production following attacks on its LNG infrastructure brought the world’s single largest urea plant to a standstill. In addition, the Omani port of Salalah on the Arabian Sea has been closed, which holds an ammonia storage terminal. The port was hit in a drone attack on March 11.

What are the by-products?

While LNG is primarily valued as an energy source, the processing and liquefaction of natural gas yield a range of by-products with industrial and medical applications.

The most notable by-product is helium, which is extracted during cryogenic processing at LNG facilities using distillation to separate the concentrations of helium from the gas.

Global helium production is estimated to be about 180 million cubic metres annually. The disruption to LNG facilities in Qatar means some 5.2 million cubic metres of helium is taken out of the market each month, accounting for about a third of global monthly production.

Helium is used primarily as a cooling agent for superconducting magnets in MRI and CT scanners, with the average MRI machine needing about 1,700 litres of liquid helium, and some older MRIs needing replenishment every two to three years.

Helium is also critical to the data centre industry, where it is used to conduct heat away from silicon, preventing parts of semiconductors from being damaged.

The natural gas value chain generates petrochemical derivatives that also form feedstock for manufactured goods.

For example, ethane and propane are cracked to produce ethylene and propylene, which are materials used in plastics such as IV bags, syringes and other medical-grade plastics.

Which countries supply LNG?

According to the International Gas Union (IGU) 2025 World LNG Report, some 411.24 million tonnes (mt) of LNG were traded in 2024.

The largest exporter of LNG is the United States, which in 2024 exported a total of 88.4mt, followed by Australia (81mt), Qatar (77.2mt), Russia (33.5mt) and Malaysia (27.7mt).

Together, the top five countries account for more than three-quarters of global supply.

Which countries import it?

China was the largest importer of LNG with 78.6mt imported in 2024, followed by Japan (67.7mt), South Korea (47.1mt), India (26.1mt) and Taiwan (21.8mt). The top five importers accounted for nearly 59 percent of all global LNG imports in 2024.

South Asian nations such as Pakistan and Bangladesh are also at high risk from the current conflict.

Pakistan’s primary energy source is natural gas, which accounts for 28 percent of electricity generation for the country of more than 250 million people.

In Bangladesh, with a population of about 176 million, gas accounts for half of all electricity generation.

Qatar and the United Arab Emirates supply about 99 percent of Pakistan’s LNG imports and 72 percent of Bangladesh’s, according to trade intelligence firm Kpler.

Earlier in the month, Pakistan introduced emergency measures to tackle the energy shock, including moving to a four-day workweek for government employees and announcing spring holidays for schools from March 16 to the end of the month.

As a precautionary measure, the Bangladeshi government has also reduced gas supplies. Bangladesh is seeking nearly $2bn in loans from international lenders in a bid to fund energy inputs and keep prices stable.

Some petroleum gas tankers heading to India have managed to pass through the Strait of Hormuz despite the conflict — at least one Pakistani tanker has crossed the strait, too. In India, where 5 percent of electricity generation comes from gas, they are now relying more on coal as LNG disruptions continue. India gets about half of its LNG from the Gulf.

On March 9, an Indian government order redirected natural gas and regasified LNG to priority sectors, with curtailments affecting consumers and the petrochemical industry, according to S&P Global.

CEO Saad al-Kaabi says QatarEnergy may have to declare force majeure on long-term contracts for up to five years.

Iranian ⁠attacks on Qatar have wiped out ⁠17 percent of its liquefied natural gas (LNG) export capacity, causing an estimated $20bn in lost annual revenue and threatening supplies to Europe and ⁠Asia, QatarEnergy’s CEO says.

Saad al-Kaabi told the Reuters news agency on Thursday that two of Qatar’s 14 LNG trains, the equipment used to liquefy natural gas, and one of its two gas-to-liquids facilities were damaged in Iranian strikes this week.

The repairs will sideline 12.8 million tonnes of LNG production per year for three to five years, he said.

“I never in my wildest dreams would have thought that Qatar would be – Qatar and the region – in such an attack, especially from a ‌brotherly Muslim country in the month of Ramadan, attacking us in this way,” al-Kaabi said in an interview.

His comments came hours after Iran on Wednesday launched a series of attacks on oil and gas facilities across the Gulf region after the Israeli military bombed its South Pars offshore gasfield.

Tehran has been firing missiles and drones across the Middle East in response to the United States-Israeli war on Iran, which began on February 28.

It also has essentially blocked the Strait of Hormuz, a critical Gulf waterway through which about one-fifth of the world’s oil and LNG supplies transit, fuelling soaring petrol prices and global concerns about rising inflation.

Iran’s attacks on energy infrastructure have heightened tensions with its Arab Gulf neighbours, who have condemned the strikes as a violation of international law.

Iranian Foreign Minister Abbas Araghchi said on Thursday that his country would show “ZERO restraint” if its infrastructure is struck again as the Israeli attack on the South Pars gasfield continued to spur condemnation.

“Our response to Israel’s attack on our infrastructure employed FRACTION of our power. The ONLY reason for restraint was respect for requested de-escalation,” Araghchi wrote on X.

“Any end to this war must address damage to our civilian sites.”

‘Stay away from oil and gas facilities’

During Thursday’s interview with Reuters, al-Kaabi said QatarEnergy may have to declare force majeure on long-term contracts for up to five years for LNG supplies bound for Italy, Belgium, South ⁠Korea and China due to the two damaged trains.

“I mean, these are long-term contracts that we have to declare force majeure. We already declared, but that was a shorter term. Now it’s whatever the period is,” he said.

QatarEnergy had declared force majeure on its entire output of LNG after earlier attacks on its Ras Laffan production hub, which came under fire again on Wednesday. “For production to restart, first we need hostilities to cease,” al-Kaabi said.

The damaged units cost about $26bn to build, al-Kaabi said. He also told Reuters that the scale of the damage from the attacks has set the region back 10 to 20 years.

“If Israel attacked Iran, it’s between Iran and Israel. It has nothing to do with us and the region,” he said.

“And so now, in addition to that, I’m saying that everybody in the world, whether it’s Israel, whether it’s the US, whether it’s any other country, everybody should stay away from oil and gas facilities.”