Pakistan moves to cancel 21 LNG cargoes from Eni in major contract rethink

Pakistan has struck a definitive deal with Italy’s Eni to cancel 21 liquefied natural gas (LNG) cargoes under their long-term supply contract, according to an official document and sources familiar with the matter, marking one of the country’s most aggressive steps to curb costly excess imports.

The move, prompted by a domestic gas surplus for the first time in years, underscores a significant shift in Pakistan’s energy landscape, where rising renewable power generation and reduced industrial demand have upended earlier import forecasts.

According to a October 22 letter from state-owned Pakistan LNG Ltd (PLL) to the Ministry of Energy, reviewed by Reuters, 11 cargoes scheduled for 2026 and 10 for 2027 will be cancelled at the request of gas distributor Sui Northern Gas Pipelines Ltd (SNGPL). The agreement will see Pakistan retain only the peak winter shipments, the January deliveries in both years and the December 2027 cargo, to meet seasonal demand.

Eni’s agreement to the cancellations comes under the contract’s flexibility provisions. With global LNG demand strong, suppliers like Eni can often secure higher prices by selling cargoes on the spot market than through long-term contracts, making them amenable to such adjustments.

This realignment follows a period of drastically reduced imports. Data from Kpler shows Eni’s last delivered cargo to Pakistan arrived on January 3, 2024. Furthermore, sources confirmed that Pakistan and Eni have already agreed that no shipments will take place throughout the entirety of 2025.

The deal with Eni is part of a broader recalibration of Pakistan’s long-term LNG commitments. The country is also in active talks with Qatar, its largest LNG supplier, to adjust deliveries.

Officials familiar with the negotiations said options include deferring some cargoes or reselling them under existing contract clauses. A Qatari technical team was in Karachi last week to schedule cargoes, though the talks are ongoing and no final agreement has been reached. QatarEnergy did not immediately respond to a request for comment.

Collectively, Pakistan’s long-term contracts with Qatar and Eni account for approximately 120 cargoes annually. However, LNG imports have plummeted this year.

This drop is attributed to a surge in hydropower and solar output, which has reduced demand from power producers, coupled with lower consumption from industrial units that have turned to generating their own electricity.

The resulting gas surplus has created a significant challenge for authorities, who have been forced to sell domestic gas at steep discounts, curb local production, and explore costly options such as offshore storage or reselling excess cargoes on the international market.

The 2017 supply deal with Eni, which commits to delivering one cargo per month until 2032, was once a cornerstone of Pakistan’s strategy to address chronic energy shortages. The current restructuring signals a dramatic reversal, as the nation now grapples with the financial burden of over-importation in a rapidly evolving energy sector.