Qatar agrees to lower LNG prices for revised multi-billion dollar Pakistan deal

Qatar has agreed to reduce liquefied natural gas (LNG) prices for a revised multi-billion dollar agreement with Pakistan. Pakistan State Oil (PSO) and QatarEnergy currently manage two separate LNG supply contracts that are set to expire in 2031.

The first sale purchase agreement, signed by PSO and QatarEnergy, covers a 15-year period from 2016 to 2031. A second contract spans 10 years, running from 2021 to 2031.

Sources in PSO stated that Pakistan requested QatarEnergy to lower the pricing formula for the first contract from 13.37% to 10.20% of Brent crude. QatarEnergy accepted a reduced price of 11.36% for both LNG contracts.

Pakistan also asked Qatar to maintain the gas price at 10.20% for all future supplies under the second contract, but QatarEnergy demanded an increase to 11.98%. Qatar eventually requested that Pakistan settle the prices at 11.96% for both agreements.

The current offer provides for 66 cargoes per year, whereas the existing deal involves 108 LNG cargoes between 2027 and 2031. A total of 210 LNG cargoes have been deferred for four years beyond 2031.

Both sale purchase agreements were established through a government-to-government arrangement. Under these take-or-pay basis contracts, PSO must receive 6.75 million tonnes per annum of LNG, equivalent to 108 cargoes, during each contract year.

The government authorised PSO in 2023 to negotiate with QatarEnergy to reduce the supply by two cargoes per month. Twenty-four cargoes were reduced under the Net Proceeds Differential arrangement in the 2026 annual delivery plan.

The Attorney General Office provided contractual guidance regarding these matters. QatarEnergy served a price review notice to PSO on 7 March 2026 for the second agreement, while PSO issued a notice to QatarEnergy on 19 March 2026 for the first.

Clause 15.2 of the first agreement allows either party to issue a price review notice starting 1 March 2026, while the second agreement allows notices between 7 March and 31 March 2026. Either party may terminate the agreement if no consensus is reached within six months of the notice.