Natural gas has supported Pakistan’s electricity system, fertilizer production, manufacturing sector, transport market, and urban households for decades. Extensive domestic resources allowed the country to build one of South Asia’s largest gas-distribution systems and encouraged industries to treat pipeline gas as a dependable and relatively affordable fuel.
That model is becoming increasingly difficult to maintain. Production from mature domestic fields has declined, major new discoveries have been limited, and demand remains spread across several economically and politically important consumer groups. Pakistan has responded by importing liquefied natural gas, but LNG introduces international prices, foreign-exchange costs, and supply risks into a market originally designed around domestic production.
The result is not simply a shortage of natural gas. Pakistan is managing a structural transition from an indigenous gas system to a mixed system in which declining local supply, imported LNG, regulated prices, and competing sector priorities must operate through the same national network.
Declining Domestic Gas Changes the National Supply Model
Pakistan’s natural gas industry developed around large onshore fields and a network connecting producing areas with population and industrial centers. Domestic producers including Oil and Gas Development Company Limited, Pakistan Petroleum Limited, and Mari Energies remain important suppliers, while smaller fields contribute additional volumes from several sedimentary basins.
However, many producing assets are mature. Output from older fields has declined, while new discoveries have generally been too small to restore the production levels needed to meet national demand. The Pakistan Economic Survey 2025–26 identifies depletion of indigenous reserves and the absence of significant new discoveries as major concerns for the sector.
Indigenous natural gas still contributes approximately 29.3% of Pakistan’s primary energy supply, giving it a larger national role than production rankings alone might suggest. The difficulty is that established demand was built during periods when domestic gas was more readily available.
Average natural gas consumption, including imported regasified LNG, reached approximately 2,929 million cubic feet per day during July 2025 to March 2026. Indigenous gas supplied about 2,316 MMcfd, while RLNG contributed another 613 MMcfd. Total consumption was lower than the 3,143 MMcfd recorded during the equivalent period one year earlier.
This reduction does not mean that Pakistan has solved its supply imbalance. It reflects constrained availability, fuel switching, changing industrial activity, higher energy costs, and a power system that is gradually adding more hydropower, nuclear generation, solar power, and domestic coal.
Power and Fertilizer Compete With Household Demand
Pakistan cannot allocate gas solely according to which consumer offers the highest commercial return. The major users each serve a wider economic or social function.
Power plants consumed approximately 924 MMcfd during July–March FY2026, making electricity generation the largest single gas market. Pakistan has thousands of megawatts of generating capacity designed to operate on domestic gas or RLNG. These plants can provide dispatchable electricity when hydropower, nuclear generation, wind, and solar power cannot meet demand, but their economics change considerably when imported LNG replaces lower-cost domestic gas.
Households consumed approximately 772 MMcfd. Residential gas remains important for cooking and heating, particularly in established urban distribution areas. Domestic consumers receive very little RLNG directly, which means the residential market remains strongly dependent on limited indigenous production.
Fertilizer plants consumed another 764 MMcfd. Gas is both an energy source and a chemical feedstock for ammonia and urea production, linking gas allocation with agricultural productivity and national food costs. Reducing fertilizer-sector supply can lead to lower domestic output and greater reliance on imported fertilizer.
General industry used approximately 382 MMcfd, down sharply from the preceding year. Textile mills, ceramics producers, glass manufacturers, food processors, steel operations, and other industrial users value gas for process heat and captive power. When supply is reduced or prices rise, exporters can face higher costs and weaker competitiveness.
Commercial users and compressed natural gas transport account for smaller shares than they once did. Pakistan previously developed one of the world’s largest CNG vehicle markets, but shortages and allocation changes have reduced its strategic importance.
LNG Prevented a Deeper Shortage but Created New Exposure
Pakistan entered the LNG-import market to compensate for declining domestic production. Two floating storage and regasification facilities operate near Karachi: the Engro Elengy terminal and the Pakistan GasPort terminal. Together, their regasification capacity is approximately 1,200 MMcfd.
Imported LNG is converted back into gas and injected into the pipeline system as RLNG. It supplies power stations, industries, fertilizer facilities, and other consumers that cannot be fully served by domestic fields. Without these imports, the gap between available supply and established demand would be considerably larger.
LNG has nevertheless changed the economics of Pakistan’s gas sector. Domestic gas prices are influenced by local production costs and government regulation, while LNG must be purchased in international markets, transported by ship, regasified, and delivered through the national network. Payments also require foreign currency, connecting gas procurement with Pakistan’s balance-of-payments position.
Long-term contracts provide a degree of supply stability, but cargo scheduling, global LNG prices, shipping conditions, and the country’s ability to finance imports remain important. Spot-market purchases can help meet unexpected demand, although they also expose Pakistan to short-term price increases and competition from wealthier LNG-importing markets.
Two additional private terminal developers, Energas and Tabeer Energy, have received construction licenses. The proposed facilities could add substantial regasification capacity, but neither had reached a final investment decision by the reporting period. More terminal capacity would improve import flexibility, yet it would not by itself make LNG affordable or guarantee that additional cargoes could be purchased.
A Large Pipeline Network Must Serve a Shrinking Resource Base
Pakistan’s gas network includes more than 13,700 kilometers of transmission pipelines, approximately 124,000 kilometers of distribution mains, and over 30,000 kilometers of service pipelines. It supplies more than 10.9 million consumers.
Sui Northern Gas Pipelines Limited operates the integrated transmission and distribution system serving Punjab, Khyber Pakhtunkhwa, Islamabad, and other northern areas. Sui Southern Gas Company serves Sindh and Balochistan. The two utilities connect domestic fields, LNG injection points, cities, power plants, fertilizer complexes, and industrial zones.
The system continues to expand despite the national supply constraint. During July 2025 to March 2026, the utilities added 729 kilometers of mains and 403 kilometers of service lines, connected 95 villages and towns, and provided almost 150,000 additional connections.
Further investment is planned in transmission, distribution, and supporting infrastructure. Expansion can bring pipeline gas to communities that previously relied on LPG, biomass, or other fuels. It also creates additional demand in a market where available gas is already insufficient to serve all consumers continuously.
Network losses add another layer to the problem. Leakage, aging infrastructure, inaccurate measurement, theft, and unpaid bills increase the difference between gas entering the system and revenue collected from consumers. Pipeline rehabilitation, metering improvements, and stricter loss control can preserve volumes that would otherwise be unavailable for productive use.
Exploration Alone Will Not Resolve the Gas Shortage Quickly
Pakistan retains unexplored and underexplored hydrocarbon potential, including conventional prospects and technically difficult resources. Improving licensing conditions, geological data, security, pricing, and contract enforcement could attract more upstream investment.
New discoveries would strengthen energy security, but exploration carries long development timelines and uncertain results. Smaller fields can slow the national production decline without necessarily reversing it. Imported pipeline proposals have also remained under discussion for years, but financing, geopolitics, sanctions, security, and cross-border infrastructure have prevented them from becoming dependable supply sources.
Pakistan’s gas strategy therefore requires more than additional production. Gas prices must encourage efficient consumption while accounting for household affordability and the economic role of fertilizer. Power planning must avoid building demand for imported gas that the country cannot consistently finance. Industries need predictable allocation rules, while utilities require investment in metering and loss reduction.
Renewable electricity, hydropower, nuclear generation, domestic coal, energy efficiency, and electrification will increasingly affect gas demand. Every unit of electricity produced without imported LNG can reduce pressure on foreign-exchange reserves, although gas-fired generation will continue to provide flexibility and backup capacity.
Pakistan is unlikely to abandon natural gas because the fuel remains deeply embedded in its economy. Its future role, however, will be more selective. The central challenge is no longer expanding gas consumption across every available market. It is deciding where limited domestic gas and costly LNG create the greatest economic and energy-security value.
