Pakistan's Gas Production to Decline Sharply by 2034, Raising Energy Security Concerns
Pakistan's gas sector is facing significant challenges due to declining domestic production and weak LNG demand. According to a study by Pakistan's Credit Rating Agency (PACRA), indigenous gas production is projected to fall from 2,634 million cubic feet per day in fiscal year 2024 to around 1,266 million cubic feet per day by fiscal year 2034. This decline will reduce the share of domestic gas in Pakistan's total supply from about 73 percent to only 25 percent over the same period.
The study also notes that LNG imports have weakened sharply, with imports falling from approximately 6 million tonnes to around 3.7 million tonnes during the first nine months of fiscal year 2026 due to increasing adoption of solar energy and other alternatives by industrial and power sector consumers.
However, the proposed Turkmenistan Afghanistan Pakistan India and Iran Pakistan gas pipelines could provide a long-term solution for Pakistan's gas supply diversification. The financial health of major gas distribution companies Sui Northern Gas Pipelines Ltd. and Sui Southern Gas Company Ltd. remains a concern due to delays in tariff adjustments, weak recoveries, and rising working capital requirements.
The LPG market offers a more positive picture, with local production increasing by 15.5 percent in fiscal year 2026 and imports declining by 12 percent year-over-year. However, the government's fiscal year 2027 import target of about 1.6 million tonnes indicates that Pakistan will remain significantly dependent on imported LPG.
The proposed restructuring of SNGPL and SSGCL aims to separate their transmission and distribution operations, create a National Gas Transmission Company, and introduce a new multi-year tariff mechanism. This reform package could improve cost transparency, reduce unaccounted for gas losses, and strengthen collections, helping address the sector's Rs. 3.4 trillion circular debt.