Document: Pakistan wants to sell its excess LNG due to a glut of supply that is reducing local gas production.

According to a government official and a presentation, Pakistan is looking for ways to sell surplus liquefied gas (LNG). This could result in losses of $378 million per year to domestic producers.

A second official confirmed that the country imports LNG from Qatar, but has three cargoes left over. It has no immediate need for them, so it is selling them at steep discounts.

Data from the energy think tank Ember revealed that the use of solar power, which is cheaper, has been gaining ground at the expense gas-fired generators.

This has led to domestic fuel producers reducing production.

In a presentation made to the industry and government, state-owned OGDCL stated that Pakistan is exploring the possibility to transfer LNG cargoes onto rented tankers "for offshore storage and further sale".

OGDCL stated that the excess LNG in the network had a significant impact on local exploration and production over the last 18 months. It also added that this had forced a curtailment in domestic supply.

According to a presentation from May 29, the domestic industry could lose $378 million over the next year at the current rate.

Not immediately clear is whether the long-term contracts between QatarEnergy and Pakistan for LNG imports allow for the resale cargoes. One government official said that the country is still looking into ways to achieve this.

Qatar usually has a clause that limits the destination of cargoes in contracts for long-term supplies with buyers.

QatarEnergy didn't immediately respond to an inquiry for comment.

Pakistan has deferred the delivery of five LNG cargoes contracted from Qatar, without any financial penalty. The country is grappling with excess capacity.

The Pakistani petroleum minister Ali Pervaiz Malik refused to comment on the presentations, but said that renegotiating contracts would be a complex process, which could take up to a year. A final decision to initiate it has yet to made.

Malik said that while the contract with Qatar permits Pakistan to refuse vessels, there are penalties and other complications if it does so.

Malik explained that the glut is due to several gas-fired plants no longer operating on contracts that required them to be in operation.

OGDCL stated in its presentation that "it was expected that the summer season would create extraordinary demand, but the trend indicates to the contrary." Reporting by Ariba Shhid and Sudarshan Varadhan; Editing by David Evans

(source: Reuters)