Pakistan's LNG Paradox: A $5.6 Billion Liability in the Making

Pakistan's energy economy is plagued by an unusual paradox. On one hand, it has had more liquefied natural gas (LNG) than it can use, forcing it to divert contracted cargoes to other markets.

However, when the 2026 Middle East conflict disrupted LNG supplies, Pakistan was left worrying about shortages and buying from the expensive global spot market. This highlights a fundamental mismatch: energy demand changes much faster than long-term contractual commitments.

The country's gas sector circular debt has ballooned to around Rs3.3 trillion, with costs eventually spreading across the wider economy through higher energy prices, pressure on public finances, and losses within state-owned companies.